What happens if I never filed an FBAR?
The obligation does not lapse quietly. Exposure on this kind of report is charged by reference to the report and the delay rather than to the tax, so a run of years in which you owed nothing can still carry real cost. The sequence matters more than the arithmetic: establish which calendar years the aggregate was actually crossed, obtain statements to prove it, decide how the reports are to be brought in, and record why they were missed before anything is submitted. A late report filed without that groundwork is harder to explain afterwards.
Can I be penalised on a year where I owed no US tax?
Yes, and this is the part people find hardest to accept. The report is an information filing about accounts, not a tax computation, so the exposure attaches to the missing report rather than to a balance owing. A year with no income and no tax to pay can still be a year with a missing report. It also means a nil tax position is not a defence, although the facts that produced it are worth documenting, because they form part of the picture when the reason for the delay is set out.
How many years of FBARs do I need to go back and file?
That is decided by the accounts rather than by a rule of thumb. Each calendar year stands on its own, and a year carries a report only if the aggregate of your foreign accounts crossed the threshold at some point during it. So the first piece of work is a year-by-year schedule of highest balances, built from statements rather than recollection. Some years usually fall below the line and need no report. Getting that schedule right before filing anything also fixes the scope of what you are disclosing, which is where any later query starts.
Is each missing FBAR year a separate problem?
Treat them that way. The report covers one calendar year, so a gap of several years is several separate reports, each with its own account list, its own highest balances and its own delay. That has two consequences. Exposure is measured year by year rather than as one event, and a year in which the aggregate was under the threshold is simply not part of the disclosure. It also means the work is repetitive but not identical: accounts open and close, so the list for one year rarely serves for the next.
Should I just file the late FBARs myself and say nothing?
Filing late reports is a disclosure decision rather than a clerical one, and the order of work is what protects you. Before anything is submitted it is worth establishing which years genuinely carried a report, assembling the evidence for the balances, and writing down why the reports were missed while the reasons can still be verified. Quietly submitting a stack of back reports leaves you with filings whose scope you cannot explain and no contemporaneous record of the cause. The filing itself is the last step, not the first.
Do late FBARs go in with my late tax returns?
No, they travel separately. The account report is filed electronically with the Treasury's financial-crimes bureau while the returns go to the tax authority, so catching up is two exercises rather than one. They do have to agree with each other. If the returns disclose foreign income from an account, and the reports for the same years do not list that account, the inconsistency is visible to anyone who looks at both. Prepare the account schedule first and use it for both sets of filings.
Does the United States tax gifts I receive from a foreign person?
The recipient is not taxed on a gift, and a foreign donor with no US-situs property is outside US gift tax — so often no tax arises on either side. What does arise is reporting: a US person receiving gifts above the annual reporting thresholds from a foreign individual, or from a foreign corporation or partnership at a lower threshold, files the information return for the year. The distinction between a gift and a distribution from a foreign trust matters here, because they are reported differently. See Form 3520.
What is the difference between FBAR and Form 8938?
They overlap but are not the same report. The FBAR goes to FinCEN and covers foreign financial *accounts*; Form 8938 goes to the IRS with the return and covers a wider class of specified foreign financial *assets*, with thresholds that vary by filing status and whether you live abroad. Many people must file both for the same accounts, and satisfying one does nothing for the other. See filing both.
