FBAR vs Form 8938: $10,000 and $50,000 Thresholds, Deadlines, Penalties

The FBAR is an annual Treasury report of accounts held outside the United States, filed as FinCEN Form 114. FinCEN draws one bright line: "A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year."^[1] Nothing in that test depends on the income the accounts produced or on whether you owe any tax.

Two details catch people out. The threshold is cumulative rather than per account: "if you have 2 accounts with a combined account balance greater than $10,000 at any one time, both accounts would have to be reported."^[4] And it is a high-water mark measured at any moment in the year, so an account you emptied in March still counts at its March peak. Signature authority alone is enough, which catches owners who can move money in a company account abroad.

Form 8938, the Statement of Specified Foreign Financial Assets, is the FATCA reporting form, and it goes to the IRS with your income tax return. The filer universe is narrow: "Specified individuals and specified domestic entities that have an interest in specified foreign financial assets and meet the reporting threshold"^[3] must file it. Specified individuals are US citizens, resident aliens, and certain non-resident aliens; specified domestic entities are certain domestic corporations, partnerships, and trusts, so an entity holding assets abroad can be the filer rather than its owner.

One definitional line inside that universe is widely misread. Asked whether the United States includes the US territories, the IRS comparison chart answers no for Form 8938 and, for the FBAR, "Yes, resident aliens of U.S territories and U.S. territory entities are subject to FBAR reporting"^[3]. That row fixes what the term United States means inside each definition; it does not hand territory residents an exemption from Form 8938. A US citizen living in Puerto Rico is a specified individual like any other, and the Form 8938 instructions also treat certain non-resident aliens who are bona fide residents of Puerto Rico or American Samoa as specified individuals. Territory residency changes the analysis; it never ends it.

The first difference is the destination: the FBAR goes to FinCEN, and "Unlike Form 8938, the FBAR (FinCEN Form 114) is not filed with the IRS."^[2] Form 8938 rides your income tax return. The second is the legal footing, which almost no filer hears about: Form 8938 is a tax filing created by FATCA, while the FBAR is a Bank Secrecy Act report that Treasury collects through FinCEN. The IRS examines FBAR compliance under authority delegated from FinCEN, so an FBAR penalty is not a tax penalty and an extension of your income tax return does nothing for it. The third is scope: the FBAR captures accounts you merely control, while Form 8938 captures assets that are not accounts at all.

Neither form excuses the other. The IRS is explicit that "The Form 8938 filing requirement does not replace or otherwise affect a taxpayer's obligation to file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts)"^[2], and "certain foreign accounts may be required to be reported on both forms"^[10]. The sorting is mechanical: one account abroad that clears $10,000 but never reaches $50,000 is an FBAR item and nothing more, while adding a foreign brokerage account, a pension, and shares in a family company back home can push the same filer over both lines in the same year.

Either column triggers the filing on its own, so a single day above the any-time figure is enough even when the year-end balance is nothing. That is how a filer who ran a property sale through a foreign account in July ends up owing the form.

Two rules decide which row you land on. Living abroad is a test, not a feeling, and the FATCA summary states one route into it: "you are a U.S. citizen whose tax home is in a foreign country and you have been present in a foreign country or countries for at least 330 days out of a consecutive 12-month period."^[8] The Form 8938 instructions recognize a second route, bona fide residence in a foreign country for an uninterrupted period covering an entire tax year, so missing the day count does not settle the question by itself. Married filers who file separately are told to "include one-half the value of any specified foreign financial asset jointly owned with your spouse"^[8] when testing the threshold, then to report the entire value if they do have to file.

The two forms cover overlapping but different universes, and the mismatches are where filings go wrong. Form 8938 reaches assets that are not accounts, such as foreign stock held directly or an interest in a foreign partnership; the FBAR reaches accounts you merely control. Property in your own name abroad is on neither list: "Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938. For example, a personal residence or a rental property does not have to be reported."^[10] Hold it through a foreign company and the shares become reportable, because "the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate"^[7]. Owners of US entities with holdings abroad should read this next to the reporting guide for foreign-owned US businesses.

The FBAR covers a calendar year and is "Received by April 15 (6-month automatic extension to Oct 15)"^[5]. You do not request that extension and there is no form to file for it. Form 8938 has no deadline of its own: it is "attached to your annual return and due on the date of that return, including any applicable extensions"^[5].

The filing channels differ too, which is why the two come apart in practice. Form 8938 is filed "with income tax return pursuant to instructions for filing the return"^[5], while the FBAR goes "electronically through FinCENs BSA E-Filing System"^[5] and "The FBAR is not filed with a federal tax return."^[5] A return that transmitted cleanly tells you nothing about whether the FBAR went in, which is why we track it inside advisory solutions alongside individual tax return preparation.

Report the maximum value, not the year-end balance, and convert at a year-end rate. For the FBAR, "Use periodic account statements to determine the maximum value in the currency of the account"^[5] and then "Convert to U.S. dollars using the end of the calendar year exchange rate and report in U.S. dollars."^[5] Form 8938 instead asks for "Fair market value in U.S. dollars in accord with the Form 8938 instructions for each account and asset reported"^[5], converted at the end of the taxable year rate.

For balances held in Colombian pesos, Venezuelan bolivars, or Brazilian reais, a devaluing currency can drop you under a threshold on paper while a strengthening one pushes you over, with no transaction at all. Pull the highest statement balance for each account once a year, keep the statements rather than the closing summary, and record the rate you used.

Read the published figures carefully, because they are statutory base amounts rather than the amounts actually assessed. The IRS chart labels its civil FBAR figures for assessments "prior to Aug 1, 2016, if non-willful, up to $10,000; if willful, up to the greater of $100,000 or 50 percent of account balances"^[6], and the same chart states that "Civil monetary penalties are adjusted annually for inflation."^[6] A penalty assessed for a recent year is therefore computed from an inflation-adjusted ceiling above those base numbers, and "criminal penalties may also apply"^[6].

Willful exposure is tied to the account balance rather than to the tax at stake, so a funded account abroad can produce a penalty far larger than any tax that was ever avoided. Non-willful exposure sits at a much lower ceiling. Because willfulness turns on facts developed during an examination, the order in which you fix an old year matters more than the paperwork, which is why late filings run through IRS representation.

Form 8938 penalties stack on a clock. The comparison chart gives the mechanics: "Up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000"^[6]. The FATCA summary adds "a 40 percent penalty on an understatement of tax attributable to non-disclosed assets"^[9], which bites when the assets abroad were also producing unreported income.

The exposure that outlasts the penalty is the audit window. "The statute of limitations is extended to six years after you file your return if you omit from gross income more than $5,000 that is attributable to a specified foreign financial asset"^[9], and not reporting the asset at all keeps the year open until "three years following the time you provide the required information"^[9]. Reasonable cause is a genuine defense: where a failure is "due to reasonable cause and not due to willful neglect, no penalty will be imposed for failure to file Form 8938"^[9].

Do not quietly start filing going forward and hope the gap closes behind you. Where a return went in without the form, the instruction is direct: "If you omitted Form 8938 when you filed your income tax return, you should file Form 1040X, Amended U.S. Individual Income Tax Return, with your Form 8938 attached."^[10] A missed FBAR runs on its own track. Late FBARs go through the same FinCEN e-filing channel as a timely one, except that the cover page asks you to pick a reason for filing late and to explain it. Where the IRS has not already contacted you about that year, and the income from those accounts was reported and taxed on the return you did file, the delinquent FBAR route exists to close the gap without a failure to file penalty.

For filers who have been outside the system altogether there are formal paths back in: "If you are a non-resident U.S. taxpayer who wishes to come into compliance with your U.S. filing obligations, you may be eligible for special IRS procedures."^[9] The two routes are not interchangeable. The delinquent FBAR path assumes the income was already on your return and only the report was late; the streamlined path is built for unreported income or unfiled returns and asks you to certify that the failure was not willful. Picking the wrong one can turn a manageable disclosure into an examination, so the sequence belongs in IRS representation and advisory solutions.

Foreign account reporting fails on logistics far more often than on law. The Form 8938 attachment travels with individual tax return preparation; the FBAR is a separate transmission on its own calendar, tracked inside advisory solutions. When an entity holds the assets abroad, the entity itself can be the specified domestic entity that files, the case behind our foreign-owned LLC tax filing work and our foreign-owned U.S. entity tax services.

The file that survives an inquiry looks the same every year: every account and asset held outside the United States, the highest statement value for each, the exchange rate applied, and a note on who holds signature authority. Non-resident family members in an ownership chain usually need a taxpayer identification number first, a step covered in the ITIN application guide for Miami filers. If a notice arrives, IRS representation handles the response.