Articles · Basics · International Tax and Global Mobility
FBAR vs. Form 8938: Foreign Account Reporting
U.S. persons with foreign financial accounts may need to file the FBAR, Form 8938, or both. They are separate requirements with different rules.
The FBAR
The FBAR, FinCEN Form 114, is required when a U.S. person's foreign financial accounts total more than $10,000 at any time during the year. It covers accounts the person owns or has signature authority over. It is filed electronically with FinCEN, not with the tax return, and is due April 15 with an automatic extension to October 15.
Form 8938
Form 8938 applies under Section 6038D and is attached to the tax return. It covers specified foreign financial assets, which can include foreign accounts, foreign stock held outside an account, and certain interests. Thresholds are higher than the FBAR, and vary by filing status and whether the taxpayer lives abroad.
Practical guidance
Meeting one requirement does not satisfy the other, so many taxpayers file both. Penalties can be severe, and accounts opened by employers on assignment are easy to miss.
Taxpayers who discover past failures should get advice on the available IRS and FinCEN procedures. Year-end and highest balances, converted to U.S. dollars, should be recorded each year.
Who is a U.S. person, and what is an account
For the FBAR, U.S. persons include citizens, residents, and U.S. entities such as corporations, partnerships, LLCs, trusts, and estates. Form 8938 applies mainly to specified individuals, and to certain domestic entities formed to hold foreign assets.
Reportable FBAR accounts include foreign bank accounts, brokerage accounts, mutual funds, and certain cash-value insurance and pension arrangements. A foreign-located account at a U.S. bank branch counts, while a U.S. account holding foreign stock generally does not.
Calculating the FBAR threshold
Add the highest balance of each account during the year, converted to U.S. dollars using the Treasury's year-end rate. If the total exceeds $10,000 at any time, every account must be reported.
For example, a taxpayer with $6,000 in one account and $5,000 in another has an aggregate of $11,000 and must report both, even though each is below $10,000. Signature authority over an employer's account can also create a filing requirement, even without a financial interest.
Form 8938 thresholds
For a single filer living in the U.S., Form 8938 generally applies if foreign assets exceed $50,000 at year-end, or $75,000 at any time. For joint filers in the U.S., the figures are $100,000 and $150,000. For qualifying taxpayers living abroad, they are $200,000 and $300,000 for single filers, and $400,000 and $600,000 for joint filers.
Form 8938 covers more than accounts. It can include foreign stock held directly, interests in foreign partnerships, and foreign-issued securities. Assets reported on certain other forms, such as Form 5471, are often listed only by reference.
Penalties
FBAR penalties are inflation-adjusted. A non-willful violation carries a civil penalty, and in Bittner v. United States (2023) the Supreme Court held that this applies per report rather than per account. Willful violations can reach the greater of a statutory amount or 50% of the account balance, and criminal penalties can apply.
Failing to file Form 8938 carries a $10,000 penalty, with further penalties for continued failure after notice. A 40% penalty can apply to underpayments tied to undisclosed foreign assets. The statute of limitations can also stay open for the return.
Catching up on missed filings
Taxpayers who missed filings have options. The Delinquent FBAR Submission Procedures may apply when all income was reported. The Streamlined Filing Compliance Procedures may suit taxpayers whose failures were non-willful. The IRS Voluntary Disclosure Practice is meant for people with willful conduct.
Advice should be taken before filing, since the choice can materially change the outcome. FBAR records should be kept for five years.
A preparer's checklist
Ask each client about foreign accounts, assets, and signature authority every year, and answer the Schedule B questions accordingly. Collect the highest balance for each account, and the year-end value, then convert them using the required exchange rates.
Test the FBAR and Form 8938 thresholds separately, and report the income from these assets on the return. Assign someone to file the FBAR electronically, because it is not submitted with the return.
Keep copies and account statements for at least five years, and review whether any holding also needs Form 8621, Form 5471, or Form 3520.
Key takeaways
- FBAR goes to FinCEN and Form 8938 goes with the return.
- The $10,000 FBAR threshold is an aggregate.
- Many taxpayers must file both.
Frequently asked questions
Do I report my foreign account on Form 1040?
Generally yes. Schedule B asks about foreign accounts, and income from those accounts must be reported, in addition to the FBAR.
Does the FBAR create tax?
No. It is an information report, but the income in the accounts remains taxable.
Can a spouse file one FBAR?
In some cases, spouses can file jointly if all accounts are jointly owned and required forms are completed.
For general education only, not tax advice. Tax law changes often, so confirm current rules and amounts with primary sources.