U.S. taxpayers with money or investments abroad may have two separate reporting obligations: the FBAR (FinCEN Form 114) and Form 8938. The two overlap, but they are filed in different places, use different thresholds, and carry different penalties.
Two separate reports
The FBAR is a Bank Secrecy Act report. It is filed electronically through FinCEN’s BSA E-Filing System, not with your federal income tax return.
Form 8938, Statement of Specified Foreign Financial Assets, comes from the Foreign Account Tax Compliance Act (FATCA). It is attached to your income tax return.
Filing one does not satisfy the other. Many people with foreign accounts need to file both.
Who must file
FBAR. A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust or estate, must file if it had a financial interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the calendar year.
Form 8938. Specified individuals (generally U.S. citizens and resident aliens) and certain specified domestic entities must file Form 8938 with their income tax return if their specified foreign financial assets exceed the applicable threshold. Signature authority over someone else’s account does not, by itself, require Form 8938.
Thresholds compared
The FBAR threshold is the same for everyone: more than $10,000 in aggregate at any time during the year, counting all foreign financial accounts together.
The Form 8938 thresholds depend on filing status and where you live:
- Unmarried, living in the United States: more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
- Married filing jointly, living in the United States: more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.
- Unmarried, living abroad: more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
- Married filing jointly, living abroad: more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.
What each report covers
The FBAR covers foreign financial accounts, such as bank and securities accounts held at foreign financial institutions, including accounts over which you have only signature authority.
Form 8938 covers foreign financial accounts and also other specified foreign financial assets held outside an account, such as foreign stock or securities and interests in foreign entities.
Neither form asks you to report foreign real estate that you hold directly. Income from that property is still reportable on your tax return, and a foreign bank account that receives the rent can count toward the FBAR.
Deadlines
The FBAR is due April 15 following the calendar year reported, with an automatic extension to October 15. Form 8938 is due with your income tax return, including any extension.
Penalties
FBAR civil penalties are set by 31 U.S.C. § 5321. For a non-willful violation, the maximum is $10,000, adjusted for inflation. In Bittner v. United States, 598 U.S. 85 (2023), the Supreme Court held that this penalty applies per report, not per account. No non-willful penalty applies if the violation was due to reasonable cause and the balance was properly reported. For a willful violation, the maximum is the greater of $100,000 (adjusted for inflation) or 50% of the balance at the time of the violation. Criminal penalties are also possible.
Form 8938 penalties include up to $10,000 for failure to disclose, plus additional penalties of up to $50,000 if the failure continues after the IRS sends notice. A 40% accuracy-related penalty can apply to an underpayment of tax attributable to undisclosed foreign financial assets, and failing to file Form 8938 can extend the time the IRS has to assess tax for that year.
Records
FBAR filers generally must keep records of their foreign accounts for five years from the FBAR due date.
Review both requirements every year. A Form 8938 filed with your return does not replace the FBAR, and an FBAR does not replace Form 8938.
If a report was missed
The IRS offers ways to correct unreported foreign accounts and income, including the Streamlined Filing Compliance Procedures for non-willful conduct. Which option fits depends on the facts, including whether the IRS has already opened an examination. See Streamlined Filing Compliance Procedures for an overview.
Questions about foreign account reporting?
Tax attorney Cassra Minai, Esq. can review your situation in a confidential consultation.