Introduction
Reporting foreign financial accounts can feel like a maze because two separate regimes overlap: the Treasury Department’s FBAR (FinCEN Form 114) and the IRS’s Form 8938 (Statement of Specified Foreign Financial Assets). Both aim to capture offshore holdings, but they differ in scope, thresholds, filing channels, and penalties. This article explains the differences, shows when you must file each form, and gives a practical checklist to help you comply.
How FBAR and Form 8938 differ (quick summary)
- Agency and submission: FBAR is filed through the Financial Crimes Enforcement Network (FinCEN) using the BSA E-Filing System. Form 8938 is filed with your federal income tax return (Form 1040). (FinCEN; IRS)
- What’s reported: FBAR focuses on foreign financial accounts (bank, brokerage, custodial, certain foreign retirement accounts) where you have a financial interest or signature authority. Form 8938 covers a broader list of specified foreign financial assets, including certain foreign stocks, financial instruments, and interests in foreign entities that may not be in an account. (IRS)
- Thresholds: FBAR’s threshold is an aggregate account balance over $10,000 at any time in the calendar year. Form 8938 thresholds depend on filing status and residence (lower for residents in the U.S., higher for those living abroad).
- Filing method and deadlines: FBAR is filed electronically via FinCEN’s BSA E-Filing System by April 15 with an automatic extension to October 15. Form 8938 is attached to your Form 1040 and follows the tax return deadline (generally April 15; extensions to file a return may apply). (FinCEN; IRS)
Official threshold details for Form 8938 (2025)
- Taxpayers living in the U.S.:
- Single or married filing separately: $50,000 on the last day of the tax year or $75,000 at any time during the year.
- Married filing jointly: $100,000 on the last day of the tax year or $150,000 at any time during the year.
- Taxpayers living abroad:
- Single or married filing separately: $200,000 on the last day of the tax year or $300,000 at any time during the year.
- Married filing jointly: $400,000 on the last day of the tax year or $600,000 at any time during the year.
These thresholds are taken from the IRS instructions for Form 8938. Always check the latest IRS guidance before filing. (IRS Form 8938 instructions)
Who must file FBAR?
You must file an FBAR (FinCEN Form 114) if you are a U.S. person (U.S. citizen, U.S. resident alien, certain trusts, estates, and domestic entities) and you have a financial interest in or signature authority over one or more foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year. Accounts include bank accounts, securities accounts, mutual funds, and certain foreign retirement accounts. (FinCEN; IRS)
Who must file Form 8938?
Form 8938 applies to specified individuals (U.S. citizens, resident aliens, and certain nonresident aliens who elect to be treated as residents) who have an interest in specified foreign financial assets and exceed the thresholds shown above. Specified foreign financial assets include:
- Foreign financial accounts reported on FBAR (if they meet the value limits for 8938),
- Foreign stocks and securities not held in a U.S. account,
- Foreign partnership interests, and
- Certain foreign-issued financial instruments.
Form 8938 is not a complete substitute for other reporting—some assets already reported on other IRS forms may be exempt from 8938, but many taxpayers must file both FBAR and Form 8938 when thresholds for each are met. (IRS)
Key filing and timing differences
- FBAR filing: Electronically via the FinCEN BSA E-Filing System. Due April 15 of the calendar year following the reporting year with an automatic extension available to October 15. (FinCEN)
- Form 8938 filing: File with Form 1040 (or return due for the tax year). If you file for an extension to file your federal tax return, Form 8938 will generally be due with that extended return. (IRS)
Penalties and enforcement (what’s at stake)
- FBAR penalties: Failure to file an FBAR can trigger civil penalties. For non-willful violations, civil penalties can be up to $10,000 per violation. Willful violations are severe: penalties can reach the greater of $100,000 or 50% of the account’s balance at the time of the violation, and criminal prosecution is possible. There are limited mitigation procedures for taxpayers who qualify (e.g., Streamlined Filing Compliance Procedures). (FinCEN; see FinHelp resource on Willful vs. Non-Willful FBAR Penalties)
- Form 8938 penalties: The IRS can assess a $10,000 failure-to-file penalty, plus an additional $10,000 penalty if the failure continues after IRS notice (up to more for continued noncompliance). The tax underpayment and negligence penalties may also apply if the underlying income from offshore assets was not reported. (IRS)
Common situations and examples
1) Accounts that trigger FBAR but not Form 8938
A U.S. resident holds two foreign bank accounts that peak at $8,000 and $4,000 during the year (aggregate $12,000). FBAR is required because the $10,000 aggregate threshold is exceeded. However, if their specified foreign financial assets do not include other reportable items and their total falls below the Form 8938 threshold for their filing status, Form 8938 may not be required.
2) Assets that trigger Form 8938 but not FBAR
A U.S. taxpayer owns shares in a foreign private company and a foreign mutual fund held outside an account that do not flow through a bank/brokerage account. Those holdings may trigger Form 8938 even though no foreign account balances require FBAR.
3) Both forms required
A dual-citizen client I advised had multiple accounts and foreign investments. Their aggregate account balances exceeded $10,000 (FBAR), and the total value of specified foreign financial assets exceeded Form 8938 thresholds. We filed both FBAR and Form 8938, plus additional returns where necessary (e.g., Form 5471 for foreign corporations). Timely, accurate disclosure helped avoid willful-violation penalties. In practice, overlapping disclosures are common and often necessary.
Practical checklist: Decide what to file
- Step 1: List every foreign financial account (bank, brokerage, custodial, foreign pension or retirement, foreign mutual funds) and record highest balance during the calendar year.
- Step 2: Add up the highest balances. If aggregate > $10,000 at any time → file FBAR.
- Step 3: List specified foreign financial assets (accounts plus foreign stocks, foreign partnership interests, foreign-issued bonds). Compare to Form 8938 thresholds based on your filing status and residency.
- Step 4: Check whether any of these assets are already reported on other IRS forms (e.g., Forms 3520, 5471). Some assets reported elsewhere may affect whether you must also report on 8938.
- Step 5: File FBAR via FinCEN’s BSA E-Filing system if required, and attach Form 8938 to your Form 1040 where required. Consider working with a tax professional if values, ownership, or beneficial interests are unclear.
Common mistakes and how to avoid them
- Mistake: Assuming one form covers all reporting. FBAR and Form 8938 have different rules. File both if both thresholds are met.
- Mistake: Using year-end balances only for FBAR. FBAR requires the highest balance at any point during the calendar year.
- Mistake: Ignoring signature authority. Even if you don’t own an account, having signature authority can create an FBAR obligation.
- Mistake: Believing foreign tax residency exempts you from filing. U.S. citizens and residents may still owe FBAR and 8938 reporting obligations regardless of where they live.
Filing help and relief programs
If you discover a missed FBAR or Form 8938 filing, options exist to come into compliance. Programs include the Streamlined Filing Compliance Procedures for certain non-willful failures, and other voluntary disclosure programs for cases that may involve willfulness. These programs have eligibility rules and consequences; consult an experienced international tax practitioner or the FinHelp guide on Streamlined Foreign Offshore Procedures.
Author’s note (professional insight)
In my practice helping taxpayers with cross-border reporting, I see two recurring themes: incomplete recordkeeping and the mistaken belief that one disclosure covers all requirements. Keeping a running spreadsheet of account numbers, ownership, high balances, and statements for each year cuts through most compliance headaches. When values are near thresholds, document the calculation and date-stamp statements—these records are important if the IRS or FinCEN asks for substantiation.
Where to find official guidance
- FinCEN — FBAR filing instructions and BSA E-Filing: https://bsaefiling.fincen.gov
- IRS — Instructions and current guidance for Form 8938 and related penalties: https://www.irs.gov/forms-pubs/about-form-8938
- IRS — FBAR overview and links: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
Internal FinHelp resources
- Form 114 — Report of Foreign Bank and Financial Accounts (FBAR): https://finhelp.io/glossary/form-114-report-of-foreign-bank-and-financial-accounts-fbar/
- Form 8938 — Statement of Specified Foreign Financial Assets: https://finhelp.io/glossary/form-8938-statement-of-specified-foreign-financial-assets-reiterated-for-high-value-transactions/
- Willful vs. Non-Willful FBAR Penalties: https://finhelp.io/glossary/willful-vs-non-willful-fbar-penalties/
Disclaimer
This article is educational and does not constitute tax or legal advice. Tax situations are highly fact-specific; consult a qualified tax professional before acting. While this article references official sources, you should verify current thresholds, filing procedures, and enforcement guidance with the IRS and FinCEN before filing.