FBAR for Digital Nomads: The $10K Threshold Trap

If you're a US citizen working remotely from Portugal, Thailand, or anywhere outside the US — and you have a Wise multi-currency account, a Revolut card, or a local bank account — you may have a reporting obligation you've never heard of.

It's called FBAR (Foreign Bank Account Report), and the penalty for not filing can be larger than your account balance.

The $10,000 threshold is not what you think

The FBAR filing requirement triggers when the aggregate maximum value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year.

This is not about how much money you have at year-end. It's about the highest balance at any moment across all accounts combined.

If you had $6,000 in a Portuguese bank account and $5,000 in Wise on the same day in March — even if both accounts were empty by December — you had a filing obligation for that year.

Wise and Revolut count as foreign accounts

This is the trap that catches most digital nomads.

Wise (formerly TransferWise) holds funds in accounts outside the US. When you hold a balance in EUR, GBP, or other currencies, those funds are held in foreign financial institutions. The same applies to Revolut if you're using their European entity.

The IRS and FinCEN consider these reportable foreign accounts. The fact that you access them through a US-based app doesn't change where the money is held.

Many nomads use Wise as their primary receiving account for international clients. They never think of it as a "foreign bank account" — but structurally, that's exactly what it is.

The penalty structure is designed to hurt

FBAR penalties exist on a spectrum, and the spectrum is steep:

Non-willful violation: Up to $10,000 per account, per year. This applies when you genuinely didn't know about the requirement — but ignorance has limits.

Willful violation: The greater of $100,000 or 50% of the account balance, per account, per year. This applies when the IRS determines you "should have known."

The terrifying part: "willful" doesn't require intent to evade. It includes willful blindness — situations where a reasonable person would have investigated their obligations but chose not to.

Living abroad as a US citizen while maintaining foreign accounts? The IRS may argue you should have known to research your reporting requirements.

The structural observation

Most nomads have a mental model that goes: "I file my US taxes, I'm compliant."

FBAR is separate from your tax return. It's filed with FinCEN (Financial Crimes Enforcement Network), not the IRS. Different form, different deadline, different system.

The structural gap: You can be fully compliant with your tax obligations and still have a five-figure FBAR penalty accumulating. The two systems don't automatically talk to each other — until they do.

What gets reported and what doesn't

Reportable accounts include:

• Bank accounts (checking, savings)
• Brokerage accounts
• Mutual funds held directly
• Most foreign financial accounts where you have signature authority
• Wise, Revolut, and similar multi-currency platforms (when holding balances)

Not reportable (for FBAR purposes):

• US-based accounts, even if they hold foreign currency
• Foreign real estate (directly owned)
• Crypto held in self-custody wallets (though other reporting may apply)

The distinction that matters: It's about where the institution is located, not what currency you hold.

The timing creates additional exposure

FBAR is due April 15, with an automatic extension to October 15.

But the penalty period is not limited to recent years. FBAR has a six-year statute of limitations for non-willful violations — and no statute of limitations for willful violations.

A nomad who has been abroad for five years with unreported Wise accounts has potentially five years of exposure. Each year is assessed separately. The penalties compound.

The path forward

If you have unreported foreign accounts, options exist:

• Streamlined Filing Compliance Procedures: For those who were non-willful and are now coming into compliance
• Voluntary Disclosure: For those with more significant exposure
• Quiet disclosure: Filing late without using formal programs (carries risk)

Each path has different implications. The structural observation is not about which path to take — that requires professional guidance specific to your situation.

The structural observation is this: Many digital nomads have FBAR exposure they don't know about. The exposure accumulates silently. And the cost of discovery is far higher than the cost of compliance.

What this means for your structure

If you're a US person living abroad with any foreign financial accounts, FBAR is a structural characteristic of your situation — not an optional consideration.

The question is not "do I need to worry about this?" The question is "have I mapped what I actually have, and does my structure account for it?"

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Visual: FBAR Reporting Decision Flow

Key Takeaways

• The FBAR filing obligation triggers when the aggregate maximum value of all foreign financial accounts exceeds $10,000 at any point during the calendar year — not the year-end balance.
• Wise, Revolut, and similar multi-currency platforms count as foreign financial accounts for FBAR purposes because funds are held in institutions outside the US.
• FBAR penalties range from up to $10,000 per account per year (non-willful) to $100,000 or 50% of account balance per account per year (willful) — "willful blindness" (should have known) qualifies as willful.
• FBAR is filed with FinCEN, not the IRS — a founder can be fully tax-compliant and still have a five-figure FBAR penalty accumulating.
• FBAR has a six-year statute of limitations for non-willful violations and no statute of limitations for willful violations.

References

• FinCEN FBAR Filing Requirements — Official FinCEN guidance on who must file FBAR
• IRS FBAR Reference Guide — IRS overview of FBAR obligations and penalties
• Streamlined Filing Compliance Procedures — IRS program for taxpayers who non-willfully failed to report foreign accounts

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