Many U.S. taxpayers with foreign bank accounts, investment accounts, retirement plans or other foreign financial assets are surprised to learn that they may have separate reporting obligations under FBAR vs FATCA.
These reporting requirements apply not only to Americans living abroad, but also to U.S. citizens, green card holders, dual citizens, resident aliens and certain U.S. entities with foreign financial interests. While these disclosures generally do not result in additional tax, failure to comply can lead to significant civil and criminal penalties in certain circumstances.
A common source of confusion is understanding when FBAR reporting is required, when Form 8938 must be filed under FATCA, whether both filings are necessary, and which foreign accounts and assets are subject to disclosure.
This guide explains the key differences between FBAR and FATCA, reporting thresholds, filing deadlines, common compliance pitfalls and potential penalties for non-compliance.
1. The Foreign Bank Account Report (FBAR)
1.1 What Is FBAR?
The Foreign Bank Account Report (FBAR), officially FinCEN Form 114, is an annual information return required for U.S. persons who have a financial interest in, or signature authority over, one or more foreign financial accounts whose aggregate value exceeds $10,000 at any point during the calendar year.
The FBAR is filed separately from a tax return and does not create additional tax liability. It is submitted electronically to the Financial Crimes Enforcement Network (FinCEN).
1.2 Who Must File an FBAR?
FBAR filing requirements generally apply to:
- U.S. citizens
- Resident aliens
- Green card holders
- Trusts and estates
- Domestic corporations
- Partnerships
- Limited liability companies
- Certain individuals with signature authority over foreign accounts
Many Americans living abroad are surprised to discover that foreign account reporting obligations continue to apply even while residing outside the United States. Learn more in our guide to U.S. Taxes for Americans Living Abroad.
1.3 Special Rule for Joint Accounts
A limited filing exception may apply to spouses with jointly owned foreign accounts if:
- All reportable accounts are jointly owned;
- One spouse timely files the FBAR;
- Form 114a is completed and retained.
Otherwise, each spouse must file a separate FBAR and report the full value of jointly owned accounts.
2. The Foreign Account Tax Compliance Act (FATCA)
2.1 What Is FATCA?
The Foreign Account Tax Compliance Act (FATCA) requires certain U.S. taxpayers to report specified foreign financial assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets.
Unlike the FBAR, Form 8938 is filed with the taxpayer’s federal income tax return.
Many taxpayers mistakenly assume that filing one satisfies the other. In reality, FBAR and FATCA are separate reporting regimes administered by different government agencies with different filing requirements.
2.2 Who Must File Form 8938?
Form 8938 filing requirements generally apply to:
- U.S. citizens
- Resident aliens
- Certain non-resident aliens who elect to be treated as U.S. residents
- Certain domestic entities holding specified foreign financial assets
Taxpayers must file Form 8938 when the value of their specified foreign financial assets exceeds applicable reporting thresholds.
2.3. FBAR vs FATCA: Key Differences
Table 1: Key Differences Between FBAR and FATCA
| Category | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
|---|---|---|
| Purpose | Reports foreign financial accounts to the U.S. Treasury Department. Foreign account disclosure and anti-money laundering compliance | Reports specified foreign financial assets to the IRS. Foreign asset disclosure and international tax compliance |
| Administering Agency | Financial Crimes Enforcement Network (FinCEN) | Internal Revenue Service (IRS) |
| Who Must File? | U.S. citizens, resident aliens, trusts, estates and certain domestic entities with foreign financial accounts exceeding reporting thresholds | Specified individuals and certain domestic entities with specified foreign financial assets exceeding reporting thresholds |
| Where Is It Filed? | Filed electronically with FinCEN through the BSA E-Filing System | Filed with the taxpayer’s federal income tax return |
| Reporting Threshold | Aggregate value of foreign financial accounts exceeds $10,000 at any point during the calendar year | Thresholds vary based on filing status and residence |
| What Is Reported? | Maximum value of foreign financial accounts, converted to U.S. dollars using the Treasury year-end exchange rate | Maximum fair value of specified foreign financial assets including foreign financial accounts and certain other foreign non-account investment assets converted to U.S dollars using year-end Treasury Reporting Rates of Exchange. |
| Signature Authority Accounts | Yes (subject to exceptions) | Generally No |
| Due Date | April 15 (automatic extension to October 15) | Due with federal tax return, including extensions |
| Penalties | Significant civil and criminal penalties may apply | Significant civil and criminal penalties may apply |
| Can Both Be Required? | Yes | Yes |
| Does Filing One Satisfy the Other? | No | No |
2.4 FATCA Reporting Thresholds
Unlike FBAR, FATCA reporting thresholds vary based on filing status and whether the taxpayer lives in the United States or qualifies as living abroad for Form 8938 purposes.
Table 2: Form 8938 (FATCA) Reporting Thresholds by Filing Status and Residence
| Filing Status | Living in the United States | Living Abroad |
| Single or Married Filing Separately | More than $50,000 on the last day of the tax year or more than $75,000 at any time during the year | More than $200,000 on the last day of the tax year or more than $300,000 at any time during the year |
| Married Filing Jointly | More than $100,000 on the last day of the tax year or more than $150,000 at any time during the year | More than $400,000 on the last day of the tax year or more than $600,000 at any time during the year |
| Specified Domestic Entity | More than $50,000 on the last day of the tax year or more than $75,000 at any time during the year | Not Applicable |
Important Note: Meeting the FATCA filing threshold does not eliminate FBAR reporting requirements. Depending on the circumstances, a taxpayer may be required to file an FBAR, Form 8938, or both.
3. Types of Foreign Assets and Whether They Are Reportable
One of the most common areas of confusion is determining which foreign assets are reportable under FBAR, FATCA or both.
Table 3: Reportable foreign assets under FBAR vs FATCA
| Foreign Asset | FBAR (FinCEN Form 114) | FATCA (Form 8938) |
| Foreign Bank Accounts | Yes | Yes |
| Foreign Brokerage Accounts | Yes | Yes |
| Foreign Mutual Funds Held in Foreign Accounts | Yes | Yes |
| Foreign Retirement Accounts | Generally Yes | Generally Yes |
| Foreign Life Insurance Policies with Cash Value | Yes | Yes |
| Signature Authority Accounts | Yes | Generally No |
| Foreign Stock Held Outside a Financial Account | No | Yes |
| Foreign Partnership Interests | No | Yes |
| Foreign Hedge Funds | No | Yes |
| Foreign Private Equity Funds | No | Yes |
| Foreign Trust Interests | Depends on ownership and account structure | Often Yes |
| Foreign Real Estate Held Directly | No | No |
| Foreign Currency Held Directly | No | No |
| Precious Metals Held Directly | No | No |
| Artwork, Collectibles and Personal Property | No | No |
Important Note Regarding Foreign Real Estate: Foreign real estate held directly is generally not reportable for either FBAR or Form 8938 purposes. However, ownership of foreign real estate through a foreign corporation, partnership, trust or other foreign entity may create separate reporting obligations because the foreign entity itself may be a reportable foreign asset.
Foreign investments can create reporting obligations beyond FBAR and FATCA. Our guide to U.S. Tax Rules for Foreign Investments explains how foreign investment income and ownership interests may be reported for U.S. tax purposes.
4. Filing Deadlines
FBAR: Due April 15 (automatic extension to October 15)
Form 8938 (FATCA): Due with tax payer’s normal filing deadline, including extension
5. Penalties for FBAR and FATCA Non-Compliance
Failure to comply with foreign account reporting requirements can result in significant penalties. However, penalty for non-compliance varies, depending on if violation is willful or non-willful.
5.1 FBAR Penalties
For violations assessed after January 17, 2025:
Non-Willful Violations: tax payer is subject to up to $16,536 per violation
Willful Violations: Greater of $165,353 or 50% of the account balance
In certain situations, criminal penalties may also apply. See Penalty Adjustment Table of the Title 31 of the Code of Federal Regulations (CFR) section 1010.821 for more details.
5.2 FATCA Penalties
Failure to file Form 8938 may result in:
- Initial penalties of up to $10,000
- Additional penalties if the failure continues after IRS notification
- Potential criminal exposure in certain circumstances
6. Remedy for Failure to File FBAR or FATCA
Many taxpayers discover missed foreign reporting obligations years after the fact.
Depending on the circumstances, corrective filing options may include:
- Delinquent FBAR Submission Procedures
- Streamlined Filing Compliance Procedures
- Reasonable Cause Disclosures
- Other IRS offshore compliance programs
The appropriate compliance strategy depends on the taxpayer’s specific facts and circumstances and should be evaluated carefully before making a submission.
7. Common FBAR and FATCA Compliance Pitfalls
Common mistakes include:
- Assuming accounts below $10,000 are not reportable
- Overlooking account aggregation rules
- Failing to report accounts closed during the year
- Ignoring signature authority over business or family accounts
- Missing foreign retirement account reporting obligations
- Using incorrect currency conversion rates
- Filing an FBAR but failing to file Form 8938 when required
- Assuming only U.S. citizens are subject to reporting requirements
International reporting obligations often intersect with broader tax planning and compliance considerations. Learn more about our Tax Services for individuals, investors and growing businesses.
Need Help with FBAR or FATCA Compliance?
Foreign account reporting rules can be complex, particularly when foreign bank accounts, investment accounts, retirement plans, trusts, partnerships or foreign entities are involved.
At Baccus Consulting, we assist clients with:
- FBAR filings (FinCEN Form 114)
- FATCA reporting (Form 8938)
- Foreign asset reporting reviews
- Delinquent FBAR filings
- Streamlined Filing Compliance Procedures
- Cross-border tax compliance
- U.S. tax reporting for Americans living abroad
- International tax compliance for individuals and closely held businesses
If you have foreign financial accounts or foreign assets and are unsure whether FBAR or FATCA reporting applies to your situation, we can help evaluate your filing obligations and available compliance options.
Schedule a CPA consultation with Baccus Consulting to discuss your FBAR, FATCA and international tax reporting needs.
Learn more about our Tax Planning & Compliance Services and Financial Advisory services.
Related Resources
- If you’re living abroad, see our guide to U.S. taxes for Americans Living Abroad
- Investors with international holdings may also find our guide to Foreign Investments and U.S. Tax Rules helpful
- Dealing with foreign reporting and equity compensation issues, read our comprehensive Equity Compensation Guide for a broader discussion of RSUs, ISOs, ESPPs and executive stock compensation
- Alternative Minimum Tax (AMT): What Triggers It and How AMT Credits Work
