FBAR vs. FATCA Form 8938: What U.S. Taxpayers With Foreign Accounts Must File
Two separate reporting regimes — both potentially applicable
U.S. taxpayers with foreign financial accounts are subject to two distinct but overlapping reporting requirements: the Report of Foreign Bank and Financial Accounts (FBAR), filed with the Financial Crimes Enforcement Network (FinCEN), and the Statement of Specified Foreign Financial Assets (Form 8938), filed with the IRS under the Foreign Account Tax Compliance Act (FATCA). Many taxpayers must file both. The requirements are similar in spirit but differ in meaningful ways — and the penalties for noncompliance with either are severe.
The FBAR: FinCEN Form 114
The FBAR is not a tax form — it is a financial disclosure filed with FinCEN, a bureau of the Treasury Department. U.S. persons (citizens, residents, and certain entities) must file an FBAR if, at any point during the calendar year, the aggregate value of all foreign financial accounts they have a financial interest in or signature authority over exceeds $10,000. The threshold is measured by the aggregate of all accounts on any single day of the year, not the year-end balance.
The FBAR is filed electronically through FinCEN's BSA E-Filing System and is due by April 15, with an automatic extension to October 15. It covers bank accounts, brokerage accounts, mutual funds, and other financial accounts held at foreign financial institutions. It does not cover direct ownership of foreign real estate, foreign stock held directly (not through an account), or interests in foreign entities — those may be reportable elsewhere, but not on the FBAR.
FATCA Form 8938
Form 8938 is filed with the federal income tax return and covers a broader category of "specified foreign financial assets," including not only foreign financial accounts but also foreign stock and securities held directly, interests in foreign entities, and foreign financial instruments. The reporting thresholds are higher than the FBAR and vary based on filing status and whether the taxpayer resides in the United States:
• Single or married filing separately, residing in the U.S.: $50,000 at year-end or $75,000 at any point during the year
• Married filing jointly, residing in the U.S.: $100,000 at year-end or $150,000 at any point during the year
• Taxpayers residing abroad have higher thresholds: $200,000 at year-end or $300,000 at any point (single); $400,000 at year-end or $600,000 at any point (married filing jointly)
Key differences between FBAR and Form 8938
The FBAR is filed with FinCEN, not the IRS, and is not part of the tax return. Form 8938 is attached to the income tax return and filed with the IRS. The asset categories differ: the FBAR covers foreign financial accounts only, while Form 8938 covers a broader range of foreign assets. The thresholds differ. The statutes of limitations differ. And critically, the penalties differ — both are serious, but they are imposed under separate legal authorities.
Penalties for noncompliance
FBAR penalties are among the most severe in the tax system. Non-willful failure to file can result in penalties of up to $10,000 per violation per year, though recent Supreme Court precedent limits this to a per-form (not per-account) calculation in some cases. Willful violations carry penalties of up to the greater of $100,000 or 50% of the account balance per year — and can result in criminal prosecution. Form 8938 penalties begin at $10,000 for failure to file, with an additional $10,000 for each 30-day period of continued failure after IRS notice, up to $50,000.
The statute of limitations for FBAR penalties is six years. For Form 8938, the general tax statute of limitations is extended to six years when the omitted income from unreported foreign assets exceeds $5,000, and the IRS can in some cases assert the return never started the limitations period at all.
If you have foreign financial accounts or assets and are unsure whether you are meeting your FBAR and FATCA obligations, our cross-border tax attorneys can review your situation and help you come into compliance — before the IRS comes to you. Contact us today.
