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 must file. This applies if those accounts had an aggregate value over $10,000 at any point during the calendar year. “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. Say 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. It only covers accounts. FinCEN, not the IRS, runs the FBAR. For now, FinCEN says virtual currency held in a foreign account is not reportable on the FBAR. But it has said it plans to change that. Watch for new rules.

#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 (a citizen or green card holder who had no U.S. abode and was outside the U.S. at least 330 full days in at least one of the last three years):

• 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 dollar 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

Say you own shares in a foreign company directly on paper, not through a foreign brokerage account. That may trigger Form 8938 but not FBAR. 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 Form 8938 penalty is $10,000 per year. Still haven’t filed 90 days after the IRS sends notice? It adds $10,000 for each 30 days, up to $50,000 more. That is a $60,000 top for one year. Reasonable cause can remove the penalty. These are separate from FBAR penalties, and they can run at the same time 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. Say you have a foreign bank or brokerage account. That 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. Its peak balance was $80,000 during the year, and its year-end balance was $62,000. You also hold shares in a UK company directly (not in a brokerage), worth $15,000.

• FBAR: Required. The checking account went over $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 too.
• 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. 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, $60,000 account

Say you had a foreign account with a steady $60,000 balance for five years. You 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, $60K exceeds the threshold): add $10,000 per year = $50,000
• On paper, the non-willful FBAR penalty can be up to $16,536 per year. In practice, the IRS caps total non-willful FBAR penalties at 50% of the highest account balance. It may only send a warning letter. No penalty applies if you had reasonable cause and file correctly. Still, do not wait.

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. Someone told you foreign accounts were “private,” and you didn’t look into the reporting requirements further. The IRS treats reckless disregard of the FBAR rules as willful. Courts have agreed. 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
• By law the IRS can charge up to the ceiling each year, which could total about $496,059 here. In many willful cases, the IRS caps the total at 50% of the highest balance, about $150,000 here. But the IRS can choose a different amount.
• A willful violation can also be a crime under 31 U.S.C. § 5322. The top penalty is a $250,000 fine and 5 years in prison. That rises to $500,000 and 10 years per violation if it is part of a pattern of illegal activity involving more than $100,000 in a year, or happens along with another crime.

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. Have you missed foreign account filings and are figuring out your exposure? Here 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 with full FBAR penalties across multiple years, it is dramatically better for most non-willful cases.

#Streamlined Foreign Offshore Procedures (SFOP)

For people who lived abroad: you had no U.S. home, and you were outside the U.S. at least 330 full days in at least one of the last three years. The 5% penalty in the domestic program is fixed, not negotiated.

• 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: 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: say your foreign real estate sits inside a foreign LLC or foreign trust. Then 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. The OBBBA implementation timeline gives useful context for how pending federal tax rules move 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. It applies to the total across every foreign account you have, not each one individually. Not if the highest value of each account, added together, stays at $10,000 or less. The peaks do not have to happen at the same time. Two accounts that each peaked at $6,000, even in different months, add up to $12,000 and trigger the filing.

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. First-time abatement does not apply to the Form 8938 penalty either. The way out is to show reasonable cause, which the law allows if you did not act with willful neglect.

My employer made me a signatory on a foreign operating account. Do I personally have an FBAR obligation? Yes, usually. Signature authority alone can create an FBAR duty. But there are exceptions, such as for officers and employees of companies listed on a U.S. stock exchange. Check whether your employer fits one before you file or skip. If no exception applies, you would file FBAR disclosing the account and mark your relationship as “signature authority only.” Many corporate employees with foreign account signing authority don’t know this: 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 needs 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. 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. Say a foreign bank account goes over the $10,000 FBAR threshold. If it 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 whether or not your preparer asked. Did you have reportable foreign accounts that went undisclosed? The fix is going through the streamlined or delinquent procedures. Coming forward voluntarily is always the better outcome compared with 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 too. 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. Have a foreign retirement account? Assume reporting is required, unless you have received specific legal advice that an exception applies to your situation.

Form 8938 vs FBAR: which one applies to me? Possibly both. FBAR (FinCEN Form 114) triggers at a lower $10,000 aggregate threshold and covers only foreign financial accounts, filed with FinCEN, not the IRS. Form 8938 triggers at a higher threshold starting at $50,000 for a single U.S. resident and covers a broader category of assets, filed attached to your Form 1040. The same foreign bank account can require both filings at the same time, since they are separate requirements under separate laws.

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#Ready to sort out your foreign account reporting?

Look, this area of tax law is genuinely confusing. 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. The streamlined procedures exist specifically to bring people into compliance without maximum penalties.

Book a 20-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.