US persons living abroad face a compliance landscape that is uniquely complex by international standards. Among the most frequently confused elements are two overlapping foreign asset reporting obligations: the Report of Foreign Bank and Financial Accounts (FBAR, filed on FinCEN Form 114) and the Statement of Specified Foreign Financial Assets (FATCA Form 8938, filed with the annual income tax return). Both require disclosure of foreign assets held by US persons, both carry severe penalties for non-compliance, and both exist independently — meaning that filing one does not satisfy the other.
Understanding the differences between them — who must file, what must be reported, when, and where — is essential for any US person with foreign financial accounts or assets.
This guide is for educational purposes only. US reporting obligations are complex, fact-specific, and subject to change. Nothing in this guide constitutes tax or legal advice. A qualified US tax adviser should be consulted for individual compliance analysis.
The FBAR (FinCEN Form 114)
Legal Basis
The FBAR requirement derives from the Bank Secrecy Act (31 USC §5314), which authorises the Secretary of the Treasury to require reports of foreign financial accounts. It predates FATCA by decades — the FBAR obligation has existed since 1970, though enforcement became significantly more aggressive from the late 2000s onwards.
The FBAR is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department. It is not part of the tax return filing system administered by the IRS, though the IRS has been delegated enforcement authority.
Who Must File
A US person who has a financial interest in, or signature or other authority over, one or more financial accounts in a foreign country must file an FBAR if the aggregate maximum value of all such foreign accounts exceeded USD 10,000 at any point during the calendar year.
"US person" for FBAR purposes includes: US citizens, US permanent residents (green card holders), and any person in the United States at the time of the obligation (including non-immigrants present on any visa).
"Financial account" includes bank accounts (savings, checking, time deposits), securities accounts, commodity futures or options accounts, insurance and annuity policies with cash value, mutual fund shares, and other accounts maintained at a financial institution. It does not include direct holdings of real estate, physical gold, or directly held (not through an account) securities.
"Financial interest" includes an account for which you are the legal owner or co-owner, or for which you are the owner of an entity (corporation, partnership, trust) that owns the account, or from which you receive income.
"Signature or other authority" — if you have the power to control the disposition of account funds, even if you have no ownership interest, you may have an FBAR filing obligation.
What Must Be Reported
The FBAR requires disclosure of:
- The name and address of each foreign financial institution
- The account number
- The maximum value of the account during the reporting year
- The type of account
Detailed transactional information is not required on the FBAR — it is a disclosure of existence and maximum value, not a statement of account activity.
When and How to File
The FBAR is filed annually, covering the prior calendar year. The filing deadline is 15 April (aligned with the tax return deadline), with an automatic extension to 15 October available. The FBAR is filed electronically through the BSA E-Filing System at fincen.gov. It is not filed with the IRS or as part of the income tax return.
FBAR Penalties
The FBAR penalties are among the most severe in US law:
Non-wilful violation: A statutory maximum of USD 10,000 per violation, adjusted annually for inflation (the inflation-adjusted ceiling is around USD 16,500 for 2025). Following the US Supreme Court's decision in Bittner v. United States (2023), the non-wilful penalty applies per FBAR form (per year), not per account — so a single late FBAR that should have listed ten accounts attracts one non-wilful penalty, not ten.
Wilful violation: The greater of USD 100,000 (also inflation-adjusted, to roughly USD 165,000 for 2025) or 50% of the account balance per violation per year. A finding of wilful violation can also give rise to criminal prosecution, with separate criminal fines and up to five years' imprisonment.
The application of "wilful" versus "non-wilful" determinations has been subject to extensive litigation, and the Bittner decision (2023) settled that non-wilful penalties are assessed per report rather than per account. Legal advice is essential for anyone addressing FBAR non-compliance.
FATCA Form 8938
Legal Basis
Form 8938 was created by the Foreign Account Tax Compliance Act (FATCA), enacted in 2010 and implemented progressively from 2011. It is filed as an attachment to the annual US income tax return (Forms 1040, 1040-NR, etc.) and is administered by the IRS.
Who Must File
Form 8938 must be filed by specified individuals (US citizens, resident aliens, and certain non-resident aliens) who have an interest in "specified foreign financial assets" with an aggregate value exceeding specified thresholds.
The thresholds are higher than the FBAR threshold and vary by filing status and residency:
- Single taxpayers living in the US: USD 50,000 at year end, or USD 75,000 at any point during the year
- Married taxpayers living in the US: USD 100,000 at year end, or USD 150,000 at any point
- Single taxpayers living abroad: USD 200,000 at year end, or USD 300,000 at any point
- Married taxpayers living abroad: USD 400,000 at year end, or USD 600,000 at any point
These higher thresholds for taxpayers living abroad are one significant practical difference from the FBAR: many US persons abroad with modest foreign account balances must file FBAR but are not required to file Form 8938.
What Constitutes a "Specified Foreign Financial Asset"
Form 8938 has a broader scope than FBAR in terms of asset types:
- Foreign financial accounts (banks, brokerages, insurance cash values) — these overlap with FBAR
- Foreign financial instruments held outside a financial account — including directly held foreign stocks, bonds, notes, and other instruments
- Interests in foreign entities — including foreign corporations, partnerships, and trusts (subject to exceptions)
- Foreign financial contracts — including swaps and other derivative contracts with a foreign counterparty
Notably, Form 8938 does not include:
- Foreign real estate held directly (not through a foreign entity)
- Foreign currency held directly (not in a financial account)
- Precious metals held directly
What Must Be Reported
Form 8938 requires more detailed disclosure than the FBAR:
- Identifying information about the account or asset
- Maximum value during the year
- In some cases, whether the asset generates income
- Reference to where that income is reported on the return
For foreign entities (corporations, partnerships, trusts), Form 8938 requires the entity's name, address, and the value of the interest — and cross-references to any other IRS forms filed in respect of the entity (such as Form 5471 for foreign corporations or Form 3520 for foreign trusts).
When and How to File
Form 8938 is filed as part of the income tax return (Form 1040 or 1040-NR). It follows the income tax return deadline: 15 April for US residents, with an automatic extension to 15 October available. US persons abroad automatically receive an extension to 15 June. Filing is with the IRS through the standard tax return process.
Form 8938 Penalties
Failure to disclose: USD 10,000 per year, with a further penalty of up to USD 50,000 for continued failure after IRS notification.
Substantial understatement of tax: A 40% penalty on any underpayment attributable to an undisclosed foreign financial asset.
Statute of limitations: Where a required Form 8938 is not filed, the IRS has an unlimited statute of limitations with respect to any tax related to an undisclosed asset.
Key Differences Between FBAR and Form 8938
| Feature | FBAR (FinCEN 114) | Form 8938 |
|---|---|---|
| Legal basis | Bank Secrecy Act | FATCA (IRC §6038D) |
| Filed with | FinCEN | IRS (with tax return) |
| Threshold | USD 10,000 | USD 50,000–600,000 (varies) |
| Asset scope | Financial accounts only | Broader: accounts + instruments + entities |
| Includes real estate? | No | No (direct holdings) |
| Reporting deadline | 15 April / 15 October | Tax return deadline |
| Filing method | Electronic (BSA E-Filing) | Paper or electronic with return |
| Max non-wilful penalty | ~USD 10,000/form/year (per report, post-Bittner; inflation-adjusted) | USD 10,000/year |
| Max wilful penalty | Greater of $100,000 or 50% balance | 40% underpayment + USD 50,000 |
Why You May Need to File Both
The two forms overlap in their coverage of foreign financial accounts, but they do not duplicate each other in the sense that filing one satisfies the other. A US person with a single Swiss bank account worth USD 150,000 at year end may need to file both FBAR (because the account exceeded USD 10,000) and Form 8938 (because it exceeded the USD 50,000 threshold for domestic-resident filers, or the USD 200,000 threshold for overseas-resident filers) — assuming the other Form 8938 conditions are met.
The IRS explicitly states on Form 8938 that if an asset is required to be reported on both FBAR and Form 8938, it must be reported on both. Reporting on one does not satisfy the other.
Dealing With Non-Compliance
Many US persons living abroad are genuinely unaware of these reporting obligations, particularly the FBAR, which predates the modern era of global financial information-sharing. The IRS has provided several programmes for voluntary disclosure of previously unreported foreign accounts and assets:
Streamlined Foreign Offshore Procedures. For US persons residing outside the US who have non-wilfully failed to report foreign financial assets, the streamlined offshore procedure allows filing of three years of amended returns and six years of FBARs with a reduced penalty framework. This is the most commonly used route for genuinely non-wilful non-compliance.
Delinquent FBAR Submission Procedures. Where only FBAR filings are missing (no unreported income), specific procedures allow for late FBAR filing with a lower penalty risk.
Voluntary Disclosure Programme. For potentially wilful non-compliance, the IRS Voluntary Disclosure Programme provides a structured path to compliance with certainty around the penalty outcome.
In all cases, qualified US tax counsel should be engaged before approaching the IRS. The choice of disclosure route can have significant financial and legal consequences.
How Global Investments Can Help
Global Investments advises internationally mobile US persons on the compliance framework they face, and introduces clients to specialist US international tax advisers with FATCA and FBAR experience. We help clients understand the full landscape of their US reporting obligations before implementing any citizenship or residency change that might alter those obligations.
We also coordinate the broader citizenship planning process for US persons considering expatriation, including the compliance remediation that must be complete before renunciation can be appropriately sequenced.
Contact our team for a confidential initial discussion.
This guide is for general educational information only. US reporting requirements are highly complex and subject to change. Nothing in this guide constitutes US tax or legal advice. Qualified US tax counsel must be engaged for individual compliance analysis.
This guide is for general information only and does not constitute legal, financial or immigration advice. Programme details change; verify current requirements with a qualified immigration lawyer before making any investment or application. Investment values can fall as well as rise.