FBAR vs Form 8938: Reporting Your Foreign Accounts

#What FBAR actually is (and what triggers it)

FBAR stands for Foreign Bank Account Report. The formal name is FinCEN Form 114 — Report of Foreign Bank and Financial Accounts. It lives under the Bank Secrecy Act (31 U.S.C. § 5314), not the Internal Revenue Code. That is the first thing most people miss: FBAR is a Treasury/FinCEN filing, not an IRS filing.

#Who must file

Any U.S. person who had a financial interest in, or signature authority over, one or more foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year must file. “U.S. person” includes:

• U.S. citizens (including dual citizens living abroad)
• U.S. residents (green card holders and those meeting the substantial presence test)
• Domestic entities — corporations, LLCs, trusts, and partnerships formed in the U.S.

Signature authority is the catch most people don’t expect. If you have authority to control the disposition of assets in a foreign account — even if the money is not yours — you may have a personal FBAR obligation. A controller who can sign on a foreign operating account, for example, could have personal exposure even with no ownership stake in the funds.

#What counts as a “foreign financial account”

The reporting covers more than bank accounts:

• Foreign bank accounts (checking, savings, certificates of deposit)
• Foreign brokerage and securities accounts
• Foreign mutual funds
• Foreign-registered life insurance with cash surrender value
• Foreign hedge funds and private equity fund interests held through an account
• Accounts held at foreign branches of U.S. banks (yes, those count)

Notably, FBAR does NOT cover real estate held directly (only accounts), and crypto held on foreign exchanges remains an open question — the IRS has proposed but not finalized FBAR rules for crypto assets, so that area is still evolving.

#Where and when you file

FBAR is filed electronically through FinCEN’s BSA E-Filing System at bsaefiling.fincen.treas.gov. It does not go with your tax return and is not filed with the IRS directly. The deadline is April 15, with an automatic extension to October 15 (no extension request required).

#Form 8938 — FATCA’s higher-threshold companion

Form 8938 (Statement of Specified Foreign Financial Assets) is the IRS’s FATCA compliance form. It is filed attached to your Form 1040 and targets a broader category of assets at higher dollar thresholds.

#The 8938 thresholds by filing status

For U.S. residents filing for 2025:

• Single or Married Filing Separately: file if total value exceeds $50,000 on the last day of the year OR $75,000 at any time during the year
• Married Filing Jointly: file if total value exceeds $100,000 on the last day of the year OR $150,000 at any time during the year

For taxpayers living abroad who meet the foreign residency test:

• Single or MFS: $200,000 on the last day OR $300,000 at any time
• MFJ: $400,000 on the last day OR $600,000 at any time

These thresholds have not been inflation-adjusted since FATCA passed in 2010. The nominal figures are the same today as they were at enactment.

#What Form 8938 covers that FBAR doesn’t

Form 8938 reports specified foreign financial assets, which is a broader category than FBAR’s “foreign financial accounts”:

• Foreign stocks held directly (not through a brokerage account — physical share certificates or direct registry entries in a foreign company)
• Foreign partnership interests
• Foreign-issued notes, bonds, or other debt instruments
• Foreign annuity or life insurance contracts
• Any financial instrument or contract with a foreign issuer or counterparty

If you own shares in a foreign company directly on paper (not through a foreign brokerage account), that may trigger Form 8938 but not FBAR, because FBAR requires an “account.”

#The IRC authority and penalty structure

Form 8938 is authorized under IRC §6038D, enacted as part of FATCA in 2010. The failure-to-file penalty under §6038D starts at $10,000 per year, escalating up to $50,000 for continued failure after IRS notice. These are separate from FBAR penalties and can run simultaneously for the same underlying assets.

#How the two overlap — and why you often file both

Here is the thing most people don’t realize until it’s too late. If you have a foreign bank or brokerage account, the same account can trigger both FBAR and Form 8938 at the same time. They are not alternatives. Filing one does not satisfy the other.

#A practical overlap example

You have a HSBC UK checking account with a peak balance of $80,000 during the year and a year-end balance of $62,000. You also hold shares in a UK company directly (not in a brokerage) worth $15,000.

• FBAR: Required. The checking account exceeded $10,000 at some point during the year. The directly held shares don’t trigger FBAR (no “account”), but the checking account alone does.
• Form 8938 (U.S. resident, single): Required. The checking account is $62,000 at year-end — above the $50,000 threshold. Add the $15,000 in shares and you’re clearly above $75,000 during the year as well.
• Both forms must be filed. The checking account appears on both. The direct share interest appears only on Form 8938.

Just so you know, that double-filing situation is exactly what we see most often. People file FBAR because their bank flagged it, then skip Form 8938 because they never heard of it. Both are due — and both carry independent penalties when missed.

#The brutal penalty math

FBAR penalties are the ones that get people into real trouble. Let me show you the actual numbers.

#Non-willful scenario: 5 years missed, $50,000 account

Say you had a foreign account with a consistent $50,000 balance for five years and did not know FBAR existed. Your conduct is non-willful — no intentional disregard, no recklessness, just not knowing the rule applied to you.

• Non-willful FBAR penalty: up to $16,536 per annual filing
• Five years of FBARs: up to $82,680 in FBAR penalties alone
• Form 8938 failure (single U.S. resident, $50K exceeds the threshold): add $10,000 per year = $50,000
• Total potential exposure: $132,680 on a $50,000 account — more than twice the account value

That is the non-willful scenario, which is the favorable one. The willful numbers are significantly worse.

#Willful scenario: 3 years, $300,000 account

Now say you had a foreign account with $300,000 for three years. You were told by someone that foreign accounts were “private” and didn’t look into the reporting requirements further. The U.S. Court of Appeals for the Second Circuit has held that reckless disregard of the FBAR requirement is sufficient to trigger the willful penalty standard. That’s a low bar.

• Willful penalty in year 1: greater of $165,353 or 50% of $300,000 ($150,000) — so $165,353
• Same math for years 2 and 3 at the same or higher balance
• Total civil exposure across three years: up to $496,059
• Criminal penalties also apply under 31 U.S.C. § 5322: fines up to $500,000 and up to 10 years imprisonment per violation

The gap between “I didn’t know” and “I should have known and didn’t look” is where willful treatment lives. Get ahead of this before the IRS does.

#How to get compliant if you’re late

The IRS has specific procedures for taxpayers who missed FBAR or Form 8938. The right path depends on whether your conduct was willful or non-willful and whether you live in the U.S. or abroad. If you have missed foreign account filings and are figuring out your exposure, these are the structured options available.

#Streamlined Domestic Offshore Procedures (SDOP)

For U.S. residents whose missed filings were non-willful:

• File amended returns for the prior 3 years with all required international forms
• Submit delinquent FBARs for up to 6 years
• Pay all back taxes and interest owed
• Certify under penalty of perjury that your conduct was non-willful
• Pay a 5% miscellaneous offshore penalty on the highest aggregate value of your unreported foreign assets during the covered period

The 5% is a negotiated compromise. Compared to full FBAR penalties across multiple years, it is dramatically better for most non-willful cases.

#Streamlined Foreign Offshore Procedures (SFOP)

For taxpayers who meet the foreign residency test (lived outside the U.S. for at least one full year in the prior three years):

• Same filing requirements as SDOP
• No miscellaneous offshore penalty at all
• Must certify non-willful conduct

SFOP is the most favorable path for expats with overlooked compliance obligations. The $0 penalty outcome is available as long as the conduct genuinely was non-willful and foreign residency is established.

#Delinquent FBAR Submission Procedures (DFSP)

If you properly reported all income from the foreign accounts on your U.S. tax returns but simply forgot to file the FBAR itself:

• File all late FBARs electronically through the BSA E-Filing System
• Include a statement explaining why you are filing late
• The IRS will generally not impose a penalty if income was correctly reported and you have not been contacted about an examination

This is the simplest fix when the income reporting was right but the separate FinCEN filing was missed. We see this constantly with people who opened a foreign account, reported the interest on their 1040, and had no idea FBAR was a completely separate obligation.

#What does not work

Filing late on your own without going through a procedure does not protect you. If the IRS finds the missed FBAR before you correct it, you lose access to the streamlined programs and face full penalty exposure. For context on what else draws IRS attention, foreign account discrepancies are a known high-examination category. The window to self-correct is open right now — it closes the moment the IRS contacts you.

#What foreign assets stay off both forms

Not everything you own overseas creates a reporting obligation. Common items that are NOT reported on either FBAR or Form 8938:

• Direct ownership of foreign real estate that you hold personally (a rental property or vacation home in your name, not inside a foreign entity)
• Foreign social security or government pension payments (you report the income on your 1040, not the underlying account in many cases)
• U.S. mutual funds that hold foreign stocks (the fund is a domestic entity; you hold it in a U.S. brokerage)
• Precious metals or art held physically overseas if not held inside a financial account

Where it gets complicated: if your foreign real estate sits inside a foreign LLC or foreign trust, the interest in that entity may trigger both FBAR and Form 8938. The real estate itself is not the problem — the foreign entity holding it is.

Crypto held on foreign exchanges is still evolving legally. The IRS proposed FBAR rules for crypto on foreign platforms, but those rules are still proposed, not final, as of 2026. The income tax rules for crypto are settled — the foreign account reporting rules are not. This is one area where staying current on regulatory developments matters, and the OBBBA implementation timeline gives useful context for how pending federal tax rules are moving through the system.

#Common questions

What if I only had $8,000 in my foreign account — do I still need to file FBAR? Not if $8,000 was the peak across all foreign accounts combined. The $10,000 threshold is aggregate, meaning it applies to the total across every foreign account you have, not each one individually. Two accounts that each peaked at $6,000 but overlapped at the same time would hit $12,000 aggregate and trigger the filing requirement.

I found out about FBAR years after the fact. Is it too late to fix without maximum penalties? Probably not — as long as the IRS hasn’t contacted you first. The streamlined procedures remain available until the agency initiates contact about an examination or requests delinquent returns. Many people come in having missed FBARs for five to ten years. The streamlined path resolves most non-willful cases with a 5% penalty and no criminal exposure.

Can I use first-time abatement for FBAR penalties? No. First-time abatement (FTA) applies to Internal Revenue Code penalties, not Bank Secrecy Act penalties. FBAR penalties are administered by FinCEN under 31 U.S.C. § 5321 — they are outside the FTA framework. The relief options are the delinquent submission procedures and the streamlined programs. However, for the Form 8938 failure-to-file penalty under §6038D, first-time abatement may apply depending on your prior compliance history.

My employer made me a signatory on a foreign operating account. Do I personally have an FBAR obligation? Yes. Signature authority alone creates an FBAR obligation even if you have no ownership in the funds. You would file FBAR disclosing the account and marking your relationship as “signature authority only.” Many corporate employees with foreign account signing authority are unaware they have a personal filing requirement separate from their employer’s obligations.

What is the difference between a “foreign financial account” (FBAR) and a “specified foreign financial asset” (Form 8938)? An account requires a depository or custodial relationship — somewhere that holds money or securities for you. A specified foreign financial asset is broader: it includes stock in a foreign company held directly (a physical certificate or registry entry), foreign partnership interests, and financial contracts with foreign counterparties. The FBAR triggers at $10,000 and covers only accounts. Form 8938 triggers at $50,000 for single U.S. residents and covers a wider asset class.

Do I need to file both FBAR and Form 8938 for the same foreign bank account? Often yes. If a foreign bank account exceeds the $10,000 FBAR threshold and also pushes your total specified foreign financial assets above the $50,000 Form 8938 threshold, both forms are required for that same account. You’re not double-reporting in error — you’re satisfying two independent federal requirements. The IRS cross-references them.

My accountant has filed my taxes for years but never asked about foreign accounts. What now? The omission does not reduce your legal obligation. The duty to file FBAR and Form 8938 exists regardless of whether your preparer asked. If you had reportable foreign accounts and they were not disclosed, the fix is going through the streamlined or delinquent procedures. Coming forward voluntarily is always the better outcome compared to an IRS-initiated examination.

Are foreign retirement accounts (UK SIPP, Canadian RRSP, Australian super) reportable? Most private foreign retirement accounts must be reported on FBAR and potentially on Form 8938. The income tax treatment depends on applicable tax treaties — for example, the U.S.-Canada treaty gives favorable treatment to RRSPs — but the treaty benefit for income does not eliminate the reporting obligation. If you have a foreign retirement account, assume reporting is required unless you have received specific legal advice that an exception applies to your situation.

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#Ready to sort out your foreign account reporting?

Look — this area of tax law is genuinely confusing, and most people don’t find out about FBAR or Form 8938 until something goes wrong. The good news is the window to fix missed filings is still open, and the streamlined procedures exist specifically to bring people into compliance without maximum penalties.

Book a 15-minute Tax Discovery — Google Meet, no pitch, free advice either way. We’ll review what you have, identify which forms apply, and walk you through exactly what getting compliant looks like. See our tax return and compliance services for ongoing support once you’re current.