FBAR account closed during year means you must still report the foreign bank account if it was held at any time during the calendar year, even if closed before December 31. FinCEN requires disclosure of maximum account value, thresholds, and compliance details under 31 CFR §1010.350.
Key Takeaways
- Closed accounts must be reported if held during the year.
- Threshold: Aggregate foreign accounts over $10,000 trigger FBAR filing.
- Zero balance or dormant accounts may still require reporting.
- Penalties for omission: up to $10,000 (non‑willful) or higher for willful violations.
- Wise, PayPal, and other fintech accounts often count as foreign financial accounts.
The Foreign Bank Account Report (FBAR), formally known as FinCEN Form 114, is a cornerstone of U.S. international tax compliance. It requires U.S. persons—including citizens, residents, and certain entities—to disclose foreign financial accounts if the aggregate value exceeds $10,000 at any point during the year.
One of the most misunderstood aspects is the treatment of accounts closed during the year. Many taxpayers assume that once an account is shut down, it no longer needs to be reported. In reality, the obligation persists if the account existed at any time during the reporting year. This nuance is critical for expats, CFOs, and high‑net‑worth individuals managing complex portfolios.
Our guide is designed to be both authoritative and accessible. Drawing on statutory references such as 31 CFR §1010.306 and IRS guidance, we will explain the rules, highlight common pitfalls, and provide actionable strategies to avoid penalties. The tone mirrors publications like The Wall Street Journal or Big Four accounting firms, but simplified for practical use.
Throughout this article, we will integrate related concepts such as FBAR thresholds, account types, maximum account value calculations, and fintech reporting obligations. By the end, you will understand not only the compliance requirements but also the hidden nuances that competitors often overlook.
Whether you are a beginner seeking clarity or a professional safeguarding corporate compliance, this guide will serve as your definitive resource on FBAR account closed during year reporting.
What is an FBAR Account?
An FBAR account refers to any foreign financial account that must be reported to the U.S. Treasury under the Bank Secrecy Act (BSA). The requirement is codified in 31 CFR §1010.350 and enforced by the Financial Crimes Enforcement Network (FinCEN). U.S. persons—including citizens, residents, and certain entities—must disclose qualifying accounts annually through the BSA E‑Filing system.
FBAR accounts include a wide range of financial instruments: foreign bank accounts, brokerage accounts, securities accounts, custodial accounts, and even certain fintech accounts such as Wise or PayPal. The definition is broad to prevent taxpayers from hiding assets offshore.
Key identifiers of an FBAR account include:
- Account Number or Designation – IBAN, SWIFT, or other identifiers.
- Account Value – Maximum balance during the year, converted to USD.
- Account Address – Location of the foreign financial institution.
Common LSI terms integrated here: fbar account types, fbar financial account definition, fbar securities account meaning, fbar custodial account. These reinforce semantic relevance while clarifying scope.
FBAR Account Closed During Year — Core Rule
The critical nuance is that closed accounts must still be reported if they existed at any time during the calendar year. Even if the account was terminated in March or July, it remains reportable for that year’s FBAR filing. This obligation is outlined in 31 CFR §1010.306(d).
Why? Because the FBAR requirement is based on whether the account was held, not whether it remained open at year‑end. The IRS and FinCEN want visibility into all foreign accounts touched during the year, regardless of closure status.
Examples:
- A brokerage account closed in June with a $15,000 balance → must be reported.
- A dormant account with zero balance closed in September → report if aggregate exceeds $10,000.
- A Wise account closed mid‑year → report if threshold triggered.
Thresholds & Maximum Account Value
The FBAR filing threshold is triggered when the aggregate value of all foreign accounts exceeds $10,000 at any point during the year. This includes closed accounts, zero balance accounts, and accounts with fluctuating balances. The maximum account value must be calculated and reported in U.S. dollars.
Steps to determine maximum account value:
- Identify the highest balance during the year for each account.
- Convert foreign currency to USD using the U.S. Treasury’s year‑end exchange rate.
- Aggregate values across all accounts.
- If total exceeds $10,000, FBAR filing is mandatory.
Important nuances:
- Even if one account is below $10,000, aggregate balances may trigger reporting.
- Accounts with unknown values must be estimated using available records.
- Joint accounts must include the full balance, not just the portion owned.
| Account Type | Threshold Rule | Conversion Requirement | Closed Account Reporting | Dormant/Zero Balance | Hidden Nuance |
|---|---|---|---|---|---|
| Bank Account | Aggregate > $10,000 | Convert using Treasury rate | Yes, must report | Yes, if aggregate threshold met | Include even if closed mid‑year |
| Brokerage Account | Aggregate > $10,000 | Convert securities value | Yes, must report | Yes, if aggregate threshold met | Include dormant accounts |
| Wise / Fintech Account | Aggregate > $10,000 | Convert digital balances | Yes, must report | Yes, if aggregate threshold met | Treated as foreign financial account |
| Joint Account | Aggregate > $10,000 | Convert full balance | Yes, must report | Yes, if aggregate threshold met | Report entire balance, not partial share |
Account Types & Special Cases
FBAR reporting extends beyond traditional bank accounts. Taxpayers must consider a wide range of account types, each with unique compliance nuances:
Zero Balance & Dormant Accounts
Even accounts with no activity or zero balance must be reported if aggregate thresholds are met. Closing the account mid‑year does not exempt it.
Joint Accounts
Joint accounts with spouses, parents, or non‑U.S. citizens must be reported in full. Ownership percentage does not reduce the reporting obligation.
Wise & Fintech Accounts
Fintech platforms like Wise, PayPal, and Revolut are generally treated as foreign financial institutions. These accounts must be included in FBAR filings if thresholds are triggered.
Crypto Accounts
Currently, FinCEN has indicated that cryptocurrency wallets are not reportable on FBAR. However, this guidance is evolving, and taxpayers should monitor IRS updates.
Children’s & Custodial Accounts
Accounts owned by minors or held in custodial arrangements are reportable if the filer has signature authority or financial interest.
Company Accounts
Business accounts held abroad must be reported if the U.S. person has ownership or signature authority.
LSI terms integrated: fbar crypto account, fbar joint account, fbar children’s accounts, fbar company accounts, is wise considered a foreign bank account fbar.
Compliance Risks & Penalties
Failure to report an FBAR account closed during year can trigger severe consequences. The IRS and FinCEN impose both civil and criminal penalties depending on the nature of the violation.
Civil Penalties
- Non‑Willful Violations: Up to $10,000 per account, per year.
- Willful Violations: Greater of $100,000 or 50% of the account balance at the time of violation.
Criminal Penalties
- Up to $250,000 in fines.
- Up to 5 years imprisonment.
- Or both, depending on severity.
Beyond monetary fines, reputational damage and asset seizure risks are real. Taxpayers may need to pursue Voluntary Disclosure or Compliance Remediation programs to mitigate liability.
LSI terms integrated: fbar penalty per account, compliance remediation, tax liability, voluntary disclosure, asset seizure prevention.
Hypothetical Scenarios
To illustrate the nuances of FBAR compliance, consider these scenarios:
Scenario 1: Closed Mid‑Year Bank Account
A U.S. expat closes a Swiss bank account in June with a $15,000 balance. Even though the account is closed, it must be reported because it exceeded the $10,000 threshold during the year.
Scenario 2: Wise Account Closed
A CFO uses Wise for international transfers. The account is closed in September, but aggregate balances across multiple accounts exceeded $10,000. Reporting is mandatory.
Scenario 3: Dormant Brokerage Account
A brokerage account with zero balance is closed in March. If aggregate balances across other accounts exceed $10,000, the dormant account must still be reported.
Scenario 4: Joint Account with Parents
A joint account in Canada with parents is closed in July. The full balance must be reported, not just the filer’s share.
These scenarios highlight common pitfalls and reinforce the importance of including closed accounts in FBAR filings.
Closed vs Active Accounts Reporting
The table below compares reporting obligations for different account types:
| Account Type | Closed During Year | Reporting Required? | Threshold Rule | Conversion Requirement | Hidden Nuance |
|---|---|---|---|---|---|
| Bank Account | Yes | Must Report | Aggregate > $10,000 | Convert using Treasury rate | Include even if zero balance |
| Wise / Fintech Account | Yes | Must Report | Aggregate > $10,000 | Convert digital balances | Treated as foreign financial account |
| Crypto Wallet | Yes | Currently Exempt | N/A | N/A | IRS guidance evolving |
| Joint Account | Yes | Must Report | Aggregate > $10,000 | Convert full balance | Report entire balance, not partial share |
| Custodial / Children’s Account | Yes | Must Report | Aggregate > $10,000 | Convert balances | Include if filer has signature authority |
| Company Account | Yes | Must Report | Aggregate > $10,000 | Convert balances | Include if U.S. person has ownership or control |
Step-by-Step Guide to Reporting Closed Accounts
Reporting an FBAR account closed during year requires precision and adherence to FinCEN rules. Even if the account is no longer active, the reporting process must capture its maximum value and closure details. Follow this structured guide:
- Gather Account Information Collect the account number (IBAN, SWIFT, or other designation), maximum balance during the year, and the foreign institution’s address. Include closed accounts in your records.
- Convert Balances to USD Use the U.S. Treasury’s official year‑end exchange rate to convert balances into U.S. dollars. This ensures consistency across all FBAR filings.
- Log in to BSA E‑Filing Portal Access the FinCEN portal (fbar bsa login, fbar filing login, fbar fincen login) using your credentials. Ensure you have secure internet access and updated browser settings.
- Complete FinCEN Form 114 Enter all account details, including closed accounts, maximum values, and institution addresses. Double‑check for accuracy to avoid penalties.
- Submit Before Deadline File by April 15 each year. An automatic extension to October 15 is available, but late filings may trigger penalties.
This step‑by‑step process ensures compliance and reduces the risk of costly mistakes. Remember: closed accounts are not exempt from FBAR reporting obligations.
Pro Tips & Common Pitfalls
This section provides a quick overview of practical strategies to ensure FBAR compliance and highlights common mistakes that often lead to penalties. Applying these tips and avoiding pitfalls will help taxpayers report closed accounts accurately and minimize risk.
Pro Tips
- Always include closed accounts – Even if balance is zero, they must be reported.
- Track exchange rates – Use official Treasury rates for consistency.
- Maintain records – Keep account statements for at least 5 years.
- Leverage compliance remediation – If you missed a filing, voluntary disclosure can reduce penalties.
- Consult professionals – International tax attorneys or CPAs can help navigate complex cases.
Common Pitfalls
- Assuming closed accounts are exempt.
- Forgetting fintech accounts like Wise or PayPal.
- Reporting only partial balances in joint accounts.
- Using incorrect exchange rates for conversion.
- Missing the April 15 deadline and relying on extensions without documentation.
Frequently Asked Questions
Do I need to report FBAR every year?
Yes. FBAR must be filed annually if aggregate foreign accounts exceed $10,000, even if accounts are closed during the year.
What happens if you miss the FBAR deadline?
Late filings may trigger civil penalties up to $10,000 for non‑willful violations, and higher for willful violations. Extensions to October 15 are automatic but must be documented.
Does Wise account need to be reported on FBAR?
Yes. Wise and similar fintech accounts are treated as foreign financial accounts and must be reported if thresholds are met.
How to calculate maximum account value for FBAR?
Identify the highest balance during the year, convert to USD using Treasury exchange rates, and aggregate across all accounts.
Are dormant or empty accounts exempt?
No. Dormant or empty accounts must be reported if aggregate balances exceed $10,000 during the year.
What is the penalty per account?
Non‑willful violations may incur penalties up to $10,000 per account. Willful violations can reach 50% of the account balance or $100,000, whichever is greater.
Does FBAR include retirement accounts?
Yes, foreign retirement accounts such as RRSPs may be reportable depending on ownership and control.
Conclusion
Understanding the rules around FBAR account closed during year is essential for compliance. Closed accounts are not exempt; they must be reported if held at any time during the year. By tracking thresholds, including fintech and joint accounts, and following proper filing procedures, taxpayers can avoid costly penalties and safeguard their financial integrity.
For expats, CFOs, and high‑net‑worth individuals, proactive compliance is the best defense. With accurate reporting, statutory awareness, and professional guidance, you can ensure that your FBAR filings remain complete, timely, and penalty‑free.