The acronym FBAR officially stands for Foreign Bank Account Reporting.

Unofficially, we think the last three letters ought to stand for Beyond All Repair if you decide to ignore it (we’ll let you guess what the “F” stands for).

A recent Justice Department case highlights just how serious the U.S. government takes FBAR. A retired American couple, believed to be in their 70s or 80s and living in New Zealand, is now facing more than $3.6 million in penalties for failing to report overseas accounts over multiple years.

The money wasn’t hidden offshore. It came from normal salaries and inheritances earned outside the U.S. No tax evasion was alleged. Yet the penalties alone threaten to wipe out their retirement savings.

Here’s the rule every expat needs to know: if the combined total of all your non-U.S. financial accounts exceeds $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114). That threshold has not changed since 1970, even though inflation has made it increasingly easy to cross.

And the penalties are severe.

A non-willful violation can trigger fines of over $16,000 per missed year per form. A willful violation can reach the greater of $165,000 or 50% of the account balance — per year. Over multiple years, this can effectively confiscate most or all of an account’s value.

What makes this especially dangerous for expats is that FBAR penalties apply even if you owe zero U.S. tax. Many Americans abroad legally owe nothing due to the Foreign Earned Income Exclusion or Foreign Tax Credit, yet still face massive reporting penalties if forms are missed.

If you’re behind, do not panic, but do not ignore it either. The IRS offers catch-up programs like the Streamlined Filing Procedures, which allow eligible expats to file past returns and FBARs with reduced or even zero penalties when mistakes were non-willful.

For Americans abroad, FBARs aren’t paperwork trivia. They’re a legal obligation with real financial consequences. Staying proactive is the difference between a manageable filing issue and a life-altering penalty.

Oh, and needless to say, don’t forget to file your FBAR with the Treasury Department by April 15:

👉 https://bsaefiling.fincen.treas.gov

In the past, South Dakota was often touted as the best and easiest state for expats to get residency. But does this nomad hack still work in 2026?

Short answer: yes and no.

South Dakota makes it easy to establish a domicile, and there is zero personal income tax at the state level. However, new rules for unemployment disbursement make South Dakota a terrible option for W2 employees.

The law now says that nomads cannot use a mailbox address or mail forwarding service to establish residency for official purposes, such as voting or tax obligations.

Recently, the South Dakota Department of Labor has interpreted that to mean that you need a physical street address for unemployment insurance accounts and payroll tax reporting.

Watch our full rundown on YouTube for an in-depth explanation.

Save an extra 4%-14.8% of your annual income with tax-savvy strategies. Change your domicile in the US: let Savvy Nomad help with the hassle.