Many Indian citizens who have relocated to the U.S. on work visas or green cards are unaware that their Indian bank accounts and investments may trigger U.S. foreign reporting requirements. Their CPAs often ignore or misguide them, leading to thousands of dollars in IRS penalties for non-filing of FBAR (FinCEN Form 114).
At Kewal Krishan & Co, we frequently help Indian-origin taxpayers living in the U.S. become compliant with IRS foreign account reporting laws. Timely and correct filings have saved our clients from severe penalties and enabled them to continue investing in India with confidence.
IRS Code and FBAR Authority
- 31 U.S.C. § 5314 – Reporting requirement for foreign financial accounts
- 31 CFR § 1010.350 – FinCEN regulations mandating FBAR filings
- IRC § 6038D – Foreign asset reporting coordination with IRS (Form 8938)
- Form: FinCEN Form 114 (FBAR) – Filed online via the BSA e-filing system
When Must You File an FBAR?
You must file FBAR if:
- You are a U.S. resident alien, green card holder, or meet the Substantial Presence Test (SPT) in 2025
- You had financial interest or signature authority over foreign accounts
- The combined maximum balance in those accounts exceeded $10,000 (USD equivalent) at any point during the year
Example:
You hold ₹4 lakh in an SBI NRO savings account and ₹6.5 lakh in an HDFC FD = ₹10.5 lakh (~$12,500). Even if only for one day, you must file FBAR.
Which Indian Accounts Are Included?
- NRE, NRO, FCNR deposit accounts
- Indian bank savings/current accounts
- Fixed Deposits (FDs)
- Demat and Trading accounts (Zerodha, Groww, etc.)
- PPF and EPF (if accessible or under your control)
- Joint accounts with parents or family members
- Accounts where you have power of attorney
U.S. Tax Residency Triggers FBAR
Many Indian citizens believe they don’t need to file FBAR because:
- They are still Indian citizens
- Their accounts were opened before moving to the U.S.
- The income in those accounts is minimal
However, U.S. tax residency-not citizenship-is the trigger for FBAR. If you meet the Substantial Presence Test (SPT) in 2025, you are treated as a U.S. resident for tax purposes and must file FBAR.
Step-by-Step: How to Determine and File FBAR
Step 1: Determine Your Tax Residency
Use the Substantial Presence Test (IRC §7701(b)):
You are a resident if you are present in the U.S. for:
- 31 days in 2025, and
- 183 days over 3 years (weighted formula: all 2025 days + 1/3 of 2024 + 1/6 of 2023)
Step 2: Calculate Account Balances
- Check the maximum value of all your Indian accounts during 2025
- Use the U.S. Treasury Year-End Exchange Rate to convert INR to USD
Step 3: File FinCEN Form 114
- Go to: https://bsaefiling.fincen.treas.gov
- Complete and submit FinCEN Form 114
- No filing required with IRS, it’s a separate submission
Step 4: Retain Records
- Keep documentation of balances, interest income, account details, and submission confirmations for 5 years
Important Deadlines
- Due Date: April 15, 2025
- Automatic Extension: October 15, 2025 (no separate request required)
Penalties for Non-Filing
| Type | Penalty Amount |
|---|---|
| Non-Willful Violation | Up to $10,000 per account per year |
| Willful Violation | Greater of $100,000 or 50% of account |
| Criminal Penalties | Up to $500,000 fine and/or 10 years jail |
Even non-willful mistakes-like believing your CPA took care of it-can result in serious financial consequences.
Conclusion
As an Indian citizen living in the U.S., the moment you become a U.S. tax resident, your Indian accounts fall under FBAR compliance. Ignorance of the law is not accepted by the IRS, and even unintentional failures can lead to penalties.
Ensure your Indian financial accounts are properly reported through FinCEN Form 114, and take control of your global tax situation with expert help.
Call to Action
Anshul Goyal, CPA EA FCA is a U.S. Certified Public Accountant and IRS-authorized Enrolled Agent, specializing in cross-border tax compliance for Indian-Americans. He helps clients report Indian accounts properly, avoid IRS notices, and resolve past FBAR errors.
About Our CPA
Anshul Goyal advises Indian-origin taxpayers on IRS compliance, FBAR filings, Form 8938, and PFIC rules. His approach blends accurate tax strategy with hands-on support for Indian financial complexities in the U.S. tax system.
Disclaimer
This blog is for general informational purposes only. Filing obligations vary based on individual tax residency, account ownership, and U.S. law. Always consult with a qualified tax professional before acting on any reporting requirement.
Top 5 FAQs
1. Do Indian citizens with U.S. work visas need to file FBAR?
Yes, if they meet the Substantial Presence Test and account thresholds.
2. What if my account balance was $10,001 for just one day?
FBAR is still required.
3. Are dormant Indian accounts reportable?
Yes, if you maintain ownership or access.
4. My CPA never told me. Will the IRS waive penalties?
You may qualify for relief under non-willful categories, but documentation is critical.
5. Is FBAR same as Form 8938?
No. FBAR is filed with FinCEN, while Form 8938 is attached to your tax return.