970 / Which accounts must be reported in an FBAR filing?

Typically, any account located in a foreign institution outside of the U.S. is considered a foreign financial account. Taxpayers may be subject to FBAR reporting requirements regardless of whether the account generated taxable income during the year.

For purposes of the FBAR filing rules, a financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). Cryptocurrency holdings can also trigger FBAR filing requirements if the virtual currency is held with a non-U.S. company, or a non-U.S. company was involved in the process of converting and transferring the currency into another format.

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Planning Point: Taxpayers should check with qualified tax counsel to determine whether their cryptocurrency activity may trigger FBAR filing requirements.

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A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).

Certain types of accounts are specifically exempt from the FBAR filing requirements. According to the IRS, those include accounts that are:

• Held in an individual retirement account (IRA) the taxpayer owns or is beneficiary of,


• Held in a retirement plan in which the taxpayer a participant or beneficiary,


• Part of a trust of which the taxpayer a beneficiary, if a U.S. person (such as the trust, trustee of the trust or an agent of the trust) files an FBAR reporting these accounts


• Owned by a governmental entity,


• Owned by an international financial institution,


• Maintained on a U.S. military banking facility, or


• Correspondent/Nostro accounts.