Which Indian accounts go on the FBAR?

First, do you file at all?

The FBAR (FinCEN Form 114) is filed by a US person: a citizen, a green card holder, or a visa holder who is a US resident for tax under the substantial presence test. You file if you had a financial interest in, or signature authority over, foreign financial accounts whose aggregate value exceeded USD 10,000 at any time during the calendar year (FinCEN, FBAR filing instructions).

Three details in that rule catch most people:

• Aggregate. All your foreign accounts are added together. Ten small fixed deposits can cross the line when no single one does.
• Maximum value. Each account is counted at its highest balance in the year, not its year-end balance. A deposit that briefly held a sale's proceeds counts at its peak.
• The rate. Each account's maximum is converted to dollars at the Treasury's reporting rate of exchange for the last day of the calendar year, even if the peak was in March. If no Treasury rate is available, the instructions allow another verifiable rate with its source.

The FBAR is filed online with FinCEN, separately from your tax return, by April 15, with an automatic extension to October 15.

Indian accounts that go on it

FinCEN defines a financial account to include savings, deposit, time deposit, securities and brokerage accounts, an insurance or annuity policy with a cash value, and shares in a mutual fund or similar pooled fund. For a typical Indian household that means:

• Resident savings accounts you never closed or converted.
• NRE and NRO accounts. Both are foreign accounts for the FBAR, whatever their tax treatment in India.
• FCNR(B) deposits, even though they are held in dollars.
• Fixed deposits. Each deposit with its own account number is usually a separate account, valued at its own maximum. If you have 25 or more accounts to report, the instructions let you give the number of accounts and keep the details on record.
• Demat and broking accounts, at the value of the securities in them.
• Mutual fund folios held directly with a fund house, since the definition includes shares in a pooled fund available to the public.
• Life insurance with a cash value, such as an endowment or money-back policy. A pure term policy has no cash value.
• Joint accounts with parents or a spouse. Each US person who is a joint owner reports the full value of the account, not a share, and lists the other owners. Spouses who file one FBAR together sign Form 114a.
• Accounts you can sign on but do not own, such as a parent's account where you hold a mandate. Signature authority alone can require reporting.

Things that are not accounts, and so do not go on the FBAR: property held directly, gold and jewellery, cash at home, and shares held as physical certificates rather than in an account (those can belong on Form 8938).

PPF, EPF and NPS: an honest "it depends"

The FBAR instructions exempt participants in US tax-qualified retirement plans, such as 401(k)s. They say nothing specific about India's Public Provident Fund, Employees' Provident Fund or National Pension System, and neither FinCEN nor the IRS has issued guidance on them that we can cite. Practitioners differ: some treat them as reportable accounts because they hold money at a financial institution in your name, and others treat EPF and NPS as foreign pension arrangements outside the definition. Many preparers report them on the FBAR because the cost of listing them is small and the penalty for leaving out an account is not. On Form 8938, by contrast, the instructions expressly cover interests in foreign pension plans. Decide with your preparer and apply the same answer every year.

How Form 8938 differs

Form 8938 comes from a different law, goes to the IRS with your tax return, and has its own list.

Filing one never satisfies the other. Many people file only the FBAR; people with larger holdings often file both, listing the same accounts twice. The thresholds are from the IRS comparison of Form 8938 and FBAR requirements and the Form 8938 instructions; they are higher for people living abroad.

If you missed a year

Penalties can be large, which is why people panic. The IRS has procedures for people whose failure was not wilful, including streamlined filing and separate routes for late FBARs when all the income was already reported. Which one fits depends on your facts. The Library chapter "Reporting Foreign Accounts: the FBAR and Form 8938" summarizes them, and a professional review is worth it before you file.