The $10,000 Threshold

The rule in one sentence

An FBAR is required when the aggregate maximum value of all your foreign financial accounts exceeded $10,000 at any time during the calendar year.

Every word in that sentence carries weight, and mistakes almost always come from dropping one of them:

The threshold has not been indexed for inflation. It has been $10,000 since the requirement was introduced, which is why it now captures a very large number of ordinary savers.

Aggregation: adding the accounts up

To apply the test, take the highest value each foreign account reached during the year, convert each to U.S. dollars, and add them together. If that sum exceeds $10,000, you file.

Two things follow, and both are counter-intuitive:

1. Small accounts can create the obligation. Five accounts peaking at $2,100 each produce an aggregate of $10,500 and a filing requirement, even though no account was ever remotely close to the threshold.
2. Once you file, everything is listed. The threshold decides whether a report is due. It does not filter which accounts appear on it. An account that peaked at $12 goes on the form alongside the one that peaked at $40,000.

Money moved between accounts

Transferring the same funds between two foreign accounts inflates the aggregate, because each account records the sum at its own peak. Move $9,000 from account A to account B and both may show a maximum of around $9,000, aggregating to about $18,000. There is no netting adjustment for this in the rules, and the resulting FBAR is still correct as filed.

Finding each account’s maximum value

The regulations ask for the maximum value of the account during the calendar year. The instructions permit a reasonable, good-faith approach:

• Use periodic account statements — monthly or quarterly — provided they fairly reflect the maximum value during the year. For most people this is the intended method, and it is the one to use unless something unusual happened.
• Take the highest figure shown across those statements, rather than the year-end figure.
• Where statements would not fairly reflect the peak — for example a large sum that arrived and left between two statement dates — use the best information you have, such as online transaction history, to identify the actual high point.
• Round up to the nearest whole dollar. The form does not use cents.
• If you genuinely cannot determine a value, the form provides a way to indicate that the maximum value is unknown — but this should be a last resort, not a convenience, and you should still make reasonable efforts to establish the figure.

Valuing particular account types

• Bank accounts — the highest balance.
• Securities or brokerage accounts — the highest total account value, cash plus securities at market value, as shown on the statements.
• Insurance and annuity policies — generally the cash surrender value, not the sum assured or the death benefit.
• Pooled funds — the value of your holding based on the fund’s net asset value.

Converting foreign currency

Values must be reported in U.S. dollars. The instructions direct filers to convert using the Treasury Reporting Rates of Exchange published by the Bureau of the Fiscal Service, using the rate as of the last day of the calendar year being reported. Where no Treasury rate exists for a currency, another verifiable exchange rate may be used, with the source identified.

A worked conversion, using an illustrative rate of 0.92 euro to the dollar at 31 December:

Note how a modest currency movement can decide the outcome. Two accounts totalling a little under $10,000 at mid-year rates can cross the line on a year-end rate, and that is the figure the rules require you to use.

Joint accounts and double counting

A jointly held account is reported at its full value by each co-owner who is a U.S. person. You do not report half of it. Each joint owner’s own aggregate therefore includes the whole balance, and the same money may appear on two people’s reports.

This is intentional. The FBAR records access to accounts, not apportioned ownership. Married couples may sometimes report jointly held accounts on a single FBAR, but only if strict conditions are satisfied — see when spouses can file one FBAR.

Similarly, an account over which you have only signature authority is included at its full value in your aggregate, even though none of the money is yours.

Threshold self-check tool

Use the tool below to add up the maximum values you have already converted to U.S. dollars. It is arithmetic only — it runs entirely in your browser, nothing is transmitted or stored, and it does not determine your filing obligation.

If JavaScript is disabled, add the figures yourself: the question is simply whether the sum of every account’s peak U.S. dollar value is more than $10,000.

Edge cases

Exactly $10,000

The requirement is triggered by a value exceeding $10,000. An aggregate of precisely $10,000 does not cross the line. Given rounding and exchange-rate uncertainty, a result that lands within a few dollars of the threshold is a poor place to rely on a technicality — many filers in that position file anyway, since filing carries no penalty and no tax cost.

An account open for one day

Duration is irrelevant. An account opened and closed within a week counts, at its maximum value during that week.

Accounts closed during the year

Reportable for that year at their maximum value. In the following year, if the account no longer existed at all, there is nothing to report for it.

Overdrawn or negative balances

A negative balance is treated as zero for the aggregation; you do not offset a negative balance in one account against a positive balance in another.

Accounts you cannot access

Blocked, frozen or dormant accounts are still accounts. Where circumstances genuinely prevent you from obtaining information, document your efforts thoroughly — that documentation is what a reasonable cause argument would rest on. See the reasonable cause defence.

Entities with a non-calendar tax year

The FBAR period is always the calendar year, regardless of the entity’s fiscal year for income tax purposes.

Where to go next

• Deadlines and extensions — when the report is due once you know you must file.
• How to file — entering these values on Form 114.
• Recordkeeping — the evidence of these values you must retain.
• Official sources — where to find the Treasury exchange rates.