FBAR & Form 3520: Reporting Indian Accounts

If you're an Indian living in the US with an NRE or NRO account back home, or you've just received a big chunk of money from family in India, there's a decent chance the IRS expects a form from you that has nothing to do with paying tax. That's the part people miss. These are information returns — you can owe zero tax and still face a five-figure penalty purely for not filing a piece of paper. That's exactly what makes this corner of compliance so dangerous, and so worth understanding.

I'll be direct about the stakes because the penalties here are genuinely severe, and I'll be equally direct that this is general information, not tax advice. The rules have real nuance, your situation has details I can't see, and a qualified cross-border CPA or tax attorney is worth every dollar if you're anywhere near these thresholds. With that said, let me walk through what FBAR and Form 3520 actually are, when they apply to Indian accounts and gifts, and what happens if you ignore them.

The two forms do completely different jobs

People lump "FBAR" and "Form 3520" together because they both involve India and the IRS, but they answer two unrelated questions.

FBAR (the Report of Foreign Bank and Financial Accounts, filed as FinCEN Form 114) asks: what foreign accounts do you control? It's about the accounts themselves — your NRE savings account, your NRO account, a fixed deposit, a demat brokerage account, even a PPF. It doesn't care where the money came from or whether it earned anything.

Form 3520 asks a different question: did you receive a large gift or inheritance from a foreign person? If your parents in India sent you a substantial sum, or you inherited from a relative there, this is the form that may apply. It's about the inflow, not the account.

So you could easily owe both, one, or neither in a given year. A software engineer in California with an NRO account holding rent income files FBAR but not 3520. Someone who received a ₹1.5 crore gift from their father to fund a US home purchase files 3520 but maybe not FBAR. Keep the two mentally separate and the rest gets much clearer.

FBAR: reporting your Indian accounts

Here's the rule that surprises almost everyone: the FBAR threshold is $10,000, and it's an aggregate. If the combined highest balance of all your foreign accounts touched more than $10,000 at any single moment during the year, you must file — for every account, not just the ones over the line.

That aggregation trips people up constantly. Say you had ₹5 lakh in an NRE savings account, ₹4 lakh in a fixed deposit, and ₹2 lakh in an NRO account. No single account is dramatic, but together they're well over $10,000 at today's rates, so all three go on the FBAR. It's the peak balance during the year that counts, not the year-end balance — if money flowed through an account and spiked it above the line for a day, that day counts.

Yes, your NRE account is reportable. So is your NRO. So is a fixed deposit, a demat or brokerage account, and accounts where you only have signature authority (like a parent's account you can operate). The PPF is a genuinely murky case that tax professionals disagree on; if you have one, that's a specific question for your preparer rather than something to guess at.

A few practical points:

• FBAR is not filed with your tax return. It goes electronically to FinCEN through the BSA E-Filing system, separately from your 1040 and from the IRS.
• The deadline is April 15, but there's an automatic extension to October 15 — you don't have to request it.
• You report the maximum value each account hit during the year, converting foreign currency to US dollars using the Treasury's exchange rate for the last day of the calendar year. You don't get to pick a favorable rate; there's a prescribed one.
• Filing FBAR doesn't create a tax bill. It's pure disclosure. The tax on any interest those accounts earned is a separate matter — and NRO interest in particular is taxable in both countries, which is part of why account choice matters so much. The NRE vs NRO accounts breakdown covers that distinction, and the broader picture is in NRI tax rules on money sent to India.

FATCA Form 8938: FBAR's bigger cousin

While we're on accounts, there's a second, often-overlapping form: Form 8938, the FATCA statement of specified foreign financial assets. This one does go with your tax return, and its thresholds are much higher and depend on where you live and how you file.

For someone living in the US, you generally file Form 8938 if your specified foreign financial assets exceed $50,000 on the last day of the year or $75,000 at any point (single or married-filing-separately), or $100,000 / $150,000 if married filing jointly. If you live abroad, those thresholds jump dramatically — to $200,000/$300,000 single and $400,000/$600,000 joint.

The annoying reality is that FBAR and Form 8938 overlap heavily but aren't identical — different thresholds, different filing channels, different (though similar) lists of what counts. Many NRIs with meaningful savings in India end up filing both. FATCA is also why your Indian bank keeps asking for your US tax details: under the US–India FATCA agreement, Indian financial institutions report US persons' account information to the IRS. In other words, the IRS often already knows about the account before you disclose it, which is exactly why quiet non-filing is a bad bet.

Form 3520: when a gift from India needs reporting

Now the gift side. If you receive more than $100,000 in a year in gifts or bequests from a nonresident alien individual (or a foreign estate), you must report it on Form 3520. That $100,000 figure is the threshold for gifts from a person — your parents, a sibling, a relative in India — and it has not been adjusted for inflation, so it's a fixed line.

Three things matter here:

1. It aggregates. $60,000 from your father and $50,000 from your mother in the same year is $110,000 combined — over the line, even though neither gift alone was. Gifts from foreign donors you know to be related to one another get added together.
2. It's a reporting form, not a tax bill. This is the crucial reassurance. A genuine gift from your parents in India is not taxable income to you in the US. India also generally treats gifts between close relatives as tax-free for the recipient. So in the typical case — parents gifting you money for a house down payment — you report it and owe nothing. The form just tells the IRS where a large inflow came from.
3. The threshold is much lower for gifts from foreign entities. If the "gift" comes from a foreign corporation or partnership rather than an individual, the reporting threshold is far lower and inflation-adjusted (roughly $20,000 for recent years). For most family situations this won't apply, but it's worth knowing the entity rule is different.

Form 3520 is generally due on your income tax return timeline (April 15, with the usual extensions, and a later deadline if you're abroad), though it's filed separately — mailed to a specific IRS service center in Ogden, Utah, rather than attached to the 1040. If you're planning a large family-funded transfer — a property purchase is the classic case — read large money transfers to India and sending money to India for property alongside this, because the reporting and the logistics interact.

One more distinction worth nailing down, because people conflate them: receiving a gift from India is a Form 3520 question. Gifting money to someone (including back to India) is a different US form entirely — Form 709, the gift tax return — triggered when you give more than the annual exclusion to one person in a year. And moving your own money out of India back to the US is a repatriation question governed by Indian rules, covered in repatriate money from India to USA. Three different directions, three different rulebooks.

The penalties are the whole point

I want to be blunt here because the numbers are what make this matter.

FBAR penalties are tiered by intent. A non-willful failure to file — you simply didn't know — carries a penalty of up to roughly $10,000 per report (the statutory base, which inflation adjustments have since pushed higher). There was real uncertainty for years about whether that applied per account or per form; the US Supreme Court settled it in Bittner v. United States (2023), ruling the non-willful penalty applies per form (per year), not per account. That's a meaningful relief — it means one missed FBAR covering five accounts is one penalty, not five. A willful failure is far worse: up to the greater of $100,000 (also inflation-adjusted, and now well above that base) or 50% of the account balance, and willful cases can even carry criminal exposure.

Form 3520 penalties are calculated differently and can be brutal for what is, after all, a reporting lapse on money you didn't owe tax on. The penalty for failing to report a foreign gift is generally 5% of the gift's value for each month it goes unreported, capped at 25%. So a $200,000 unreported gift from your parents — on which you owed zero tax — could in principle draw a $50,000 penalty. That's the kind of outcome that makes this topic worth taking seriously.

Both forms have a reasonable cause exception: no penalty if you can show the failure wasn't willful neglect and you had a genuine, defensible reason. But "reasonable cause" is a high bar you have to prove, not a box you check. Don't plan around it.

If you've already missed a filing

The good news is that the IRS would rather you come into compliance than stay hidden, and there are established paths to fix past failures — including the Streamlined Filing Compliance Procedures for people whose non-compliance was non-willful, and the Delinquent FBAR Submission Procedures for those who simply forgot the FBAR but had no unreported income. These programs exist precisely for the very common situation of an NRI who genuinely didn't know NRE accounts were reportable. This is exactly the moment to hire a cross-border tax professional rather than quietly back-filing on your own, because choosing the wrong cleanup path can do more harm than the original miss.

The practical takeaway

If you're an Indian living in the US, two simple checks cover most people. First: did the combined peak balance of all my Indian accounts cross $10,000 at any point this year? If yes, FBAR. Second: did I receive more than $100,000 in gifts from Indian family this year? If yes, Form 3520. Both are disclosures, not tax bills — and in the overwhelming majority of ordinary cases, you file the form and owe nothing. The cost of compliance is an hour and a form. The cost of ignoring it can run into five figures.

Keep clean records of your transfers and account balances year-round — confirmations, statements, the exchange rates you used — and the filing becomes mechanical. When in doubt about whether something crosses a line, treat that as the signal to talk to a qualified professional, not to guess. And when you're moving money in either direction, you can always check the live USD-to-INR rate and compare providers on the homepage rate tool before you transfer.

Frequently asked questions

Do I have to report my NRE account on FBAR? Yes, if the combined peak balance of all your foreign accounts exceeded $10,000 at any point in the year. NRE accounts are foreign financial accounts and count toward the aggregate threshold, so they're reportable on FinCEN Form 114 even though FBAR itself creates no tax liability.

What is the FBAR threshold? $10,000, measured as the aggregate maximum value of all your foreign accounts combined at any single moment during the calendar year — not per account, and not the year-end balance. If the total tops $10,000 even briefly, you must report every foreign account you hold.

When do I file Form 3520? When you receive more than $100,000 in a calendar year in gifts or bequests from a nonresident alien individual or foreign estate (the threshold is much lower for gifts from foreign corporations or partnerships). Gifts from related foreign donors are aggregated. It follows your tax return timeline (April 15, with extensions) but is filed separately and mailed to a specific IRS service center — and it's a reporting form, so a genuine family gift is generally not taxable to you.

What happens if I miss FBAR? A non-willful failure can draw a penalty of up to about $10,000 per form per year as the statutory base, raised by inflation adjustments (the Supreme Court's Bittner decision confirmed it's per form, not per account). A willful failure can reach the greater of $100,000 or 50% of the account balance, plus possible criminal exposure. A reasonable-cause exception exists, and the IRS offers streamlined and delinquent-filing programs to fix honest past misses — talk to a cross-border tax professional before back-filing.

Sources & further reading

• IRS — Report of Foreign Bank and Financial Accounts (FBAR)
• FinCEN — Report Foreign Bank and Financial Accounts
• IRS — Gifts from a Foreign Person (Form 3520)
• IRS — Instructions for Form 3520
• IRS — Do I Need to File Form 8938 (FATCA)?
• IRS — Summary of FATCA Reporting for U.S. Taxpayers
• IRS — Streamlined Filing Compliance Procedures
• U.S. Supreme Court — Bittner v. United States (2023)

Figures in this article are illustrative examples to show how the math works — they are not live quotes and change daily. See the live USD → INR rates for current numbers, and always confirm the final amount on the provider’s own site before you send.