Key Takeaways
- FBAR (FinCEN Form 114) must be filed when aggregate foreign account balances exceed $10,000 at any time during the year
- FATCA (Form 8938) thresholds vary by filing status and residency: $50,000/$75,000 for U.S. residents, $200,000/$300,000 for foreign residents
- FBAR is filed with FinCEN (Treasury), while Form 8938 is filed with the IRS attached to Form 1040
- Non-willful FBAR penalties are up to $16,117 per violation; willful penalties can be $161,166 or 50% of account balance
- Many taxpayers must file BOTH FBAR and Form 8938 as they serve different purposes and have different requirements
FBAR & FATCA Reporting
U.S. persons with foreign financial interests face two distinct reporting requirements: the Report of Foreign Bank and Financial Accounts (FBAR) and the Foreign Account Tax Compliance Act (FATCA). While both aim to prevent offshore tax evasion, they have different thresholds, filing locations, and penalties.
FBAR (FinCEN Form 114)
What is FBAR?
The Foreign Bank Account Report (FBAR) is filed using FinCEN Form 114. It is required under the Bank Secrecy Act and is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department separate from the IRS.
Who Must File?
A U.S. person must file an FBAR if:
- They have a financial interest in or signature authority over one or more foreign financial accounts, AND
- The aggregate value of all foreign accounts exceeded $10,000 at any time during the calendar year
U.S. persons include:
- U.S. citizens (including those living abroad)
- U.S. residents (green card holders)
- Domestic entities (corporations, partnerships, LLCs, trusts, estates)
Filing Threshold
| Requirement | Amount |
|---|---|
| Aggregate threshold | $10,000 at any time during the year |
| Calculation method | Combine maximum values of ALL foreign accounts |
Example: If Account A had a maximum balance of $6,000 and Account B had a maximum balance of $5,000, the aggregate is $11,000, triggering the filing requirement even though neither account individually exceeded $10,000.
What Accounts Must Be Reported?
- Bank accounts (checking, savings)
- Securities accounts (brokerage)
- Mutual fund accounts
- Accounts with signature authority (even without ownership)
- Life insurance policies with cash value
- Foreign pension accounts
Filing Details
| Item | Requirement |
|---|---|
| Form | FinCEN Form 114 |
| Where filed | Electronically through FinCEN BSA E-Filing System (NOT the IRS) |
| Due date | April 15 |
| Automatic extension | October 15 (no request needed) |
| Record retention | 5 years from the due date |
FBAR Penalties (2024 Tax Year)
| Violation Type | Maximum Penalty |
|---|---|
| Non-willful | Up to $16,117 per violation |
| Willful | Greater of $161,166 or 50% of account balance per account, per year |
| Criminal (willful) | Up to $500,000 fine and/or 10 years imprisonment |
Important: Following the Supreme Court's Bittner decision (2023), non-willful penalties are assessed per report (not per account), limiting exposure for non-willful violations.
FATCA (Form 8938)
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) requires reporting of Specified Foreign Financial Assets on Form 8938, filed with the taxpayer's annual income tax return (Form 1040).
Filing Thresholds
FATCA thresholds depend on filing status and residency:
U.S. Residents (Living in the United States)
| Filing Status | End of Year | Any Time During Year |
|---|---|---|
| Single / MFS | More than $50,000 | More than $75,000 |
| Married Filing Jointly | More than $100,000 | More than $150,000 |
Foreign Residents (Living Abroad)
| Filing Status | End of Year | Any Time During Year |
|---|---|---|
| Single / MFS | More than $200,000 | More than $300,000 |
| Married Filing Jointly | More than $400,000 | More than $600,000 |
Note: A taxpayer "lives abroad" if their tax home is in a foreign country AND they were present in foreign countries for at least 330 days during a consecutive 12-month period.
What Must Be Reported on Form 8938?
Form 8938 covers a broader range of assets than FBAR:
- Foreign financial accounts (bank, securities, brokerage)
- Foreign stocks and securities not held in a financial account
- Foreign partnership interests
- Interests in foreign trusts
- Foreign mutual funds
- Foreign hedge funds and private equity funds
- Foreign-issued life insurance or annuity contracts with cash value
Filing Details
| Item | Requirement |
|---|---|
| Form | Form 8938 (Statement of Specified Foreign Financial Assets) |
| Where filed | Attached to Form 1040, filed with the IRS |
| Due date | Same as Form 1040 (April 15, with extensions) |
| Filing requirement | Only required if filing a tax return |
Form 8938 Penalties
| Violation Type | Penalty Amount |
|---|---|
| Failure to file | $10,000 per year |
| Continued failure (after IRS notice) | Additional $10,000 per 30 days (max $50,000) |
| Accuracy-related penalty | 40% understatement penalty may apply |
| Criminal penalties | Possible under general tax fraud provisions |
FBAR vs. FATCA Comparison Chart
| Feature | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
|---|---|---|
| Legal authority | Bank Secrecy Act | Internal Revenue Code |
| Form | FinCEN Form 114 | Form 8938 |
| Filed with | FinCEN (Treasury) | IRS (attached to Form 1040) |
| Filing method | Electronic only (BSA E-Filing) | With tax return |
| Threshold | $10,000 aggregate | $50,000-$400,000 (varies) |
| Assets covered | Foreign financial accounts only | Accounts + securities + other foreign assets |
| Signature authority | Must report | Not required |
| Due date | April 15 (auto-extension to Oct 15) | Same as Form 1040 |
| Required if no tax return? | Yes | No |
| Non-willful penalty | Up to $16,117 | $10,000 + $10,000/30 days |
| Willful penalty | $161,166 or 50% of balance | 40% accuracy penalty + criminal |
EA Exam Tips
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Remember the $10,000 FBAR threshold - This is the aggregate of ALL foreign accounts at ANY time during the year, not year-end balances.
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Know the filing locations - FBAR goes to FinCEN; Form 8938 goes to the IRS with Form 1040.
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Understand who files FBAR - Anyone with signature authority over a foreign account must file, even if they don't own the account (e.g., corporate officers).
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FATCA thresholds double for MFJ - And are 4x higher for those living abroad.
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Both may be required - Filing one does NOT satisfy the other. Many taxpayers must file BOTH forms.
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No extension request needed for FBAR - The extension to October 15 is automatic.
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Form 8938 requires a tax return - If you don't file Form 1040, you don't file Form 8938 (even if you exceed thresholds).
A U.S. citizen living in the United States has two foreign bank accounts. Account A had a maximum balance of $7,000 and Account B had a maximum balance of $4,500 during 2024. Which of the following is TRUE?
Which of the following statements correctly describes the difference between FBAR and Form 8938 filing requirements?
What is the maximum civil penalty for a WILLFUL FBAR violation for 2024?