Overview

Having foreign financial accounts, investments, trusts, or business interests can create multiple U.S. reporting obligations. Two of the most common—and often confused—requirements are the FBAR (reporting to FinCEN using FinCEN Form 114) and FATCA reporting (Form 8938 filed with your federal tax return). Both are designed to curb offshore tax evasion, but they have different thresholds, filing channels, and covered assets. For authoritative guidance, see the Financial Crimes Enforcement Network (FinCEN) on FBAR filing and the IRS on FATCA and Form 8938 (FinCEN and IRS).

Below I summarize the triggers that typically require action, how the rules interact, common pitfalls, corrective steps, and practical compliance strategies I use when advising clients.

How FBAR and FATCA triggers differ

  • FBAR (FinCEN Form 114) is a Treasury requirement administered by FinCEN. It is required when a U.S. person has 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. Covered accounts include foreign bank accounts, brokerage or securities accounts, mutual funds, and certain custodial accounts. Filing is electronic through the BSA E-Filing System (FinCEN Form 114 submission info).

  • FATCA (Form 8938) is an IRS reporting requirement tied to your federal income tax return. It requires U.S. taxpayers to report specified foreign financial assets when the total value exceeds thresholds that vary by filing status and residency:

  • Single taxpayers living in the U.S.: $50,000 on the last day of the tax year or $75,000 at any time during the year.

  • Married filing jointly in the U.S.: $100,000 on the last day or $150,000 at any time during the year.

  • Higher thresholds apply for taxpayers living abroad (substantially higher to account for additional reporting burden).
    See the IRS FATCA page and the Form 8938 instructions for the current threshold tables and examples (IRS).

Key practical differences:

  • FBAR is filed separately to FinCEN, due April 15 with an automatic extension to October 15; FATCA (Form 8938) is attached to your tax return and follows IRS filing deadlines.
  • FBAR uses an aggregate $10,000 threshold across all foreign accounts at any point in the calendar year. FATCA thresholds are asset-specific and generally higher.
  • Each form covers some items the other does not. For example, certain foreign pensions and some foreign real estate are excluded from Form 8938 but may have other reporting consequences.

Other reporting triggers to watch

Beyond FBAR and FATCA, several additional U.S. international-reporting obligations can be triggered by ownership, transfers, or transactions:

  • Form 3520 and Form 3520-A (foreign trusts and gifts): U.S. persons who receive distributions from, or are owners of, foreign trusts, or receive large gifts from a foreign person may have to file Form 3520 (and the trust may need to file 3520-A). A substantial interaction with foreign trusts is a frequent, high-risk trigger.
  • Form 5471 / 5472 (foreign corporations): U.S. shareholders or officers of certain foreign corporations must file these information returns when thresholds of ownership or control are met.
  • Form 8865 (foreign partnerships): Filing required for reporting certain interests in foreign partnerships.
  • Form 8938 interaction with other disclosures: Form 8938 is not a substitute for FBAR; many taxpayers must file both when thresholds are met. See our in-depth comparison: “FBAR vs. Form 8938: What to File for Foreign Financial Accounts” (internal link).

(For a primer on FBAR basics, see our guide: Reporting Foreign Bank Accounts and FBAR Basics.)

Common triggers explained with examples

1) Aggregate balance trigger (FBAR): If you held $6,000 in a German checking account and $6,000 in a Swiss savings account during the year, the $12,000 aggregate triggers FBAR because it exceeded $10,000 at any point in the calendar year.

2) Asset-type trigger (Form 8938): A U.S. resident with $60,000 in foreign mutual funds and no other foreign assets will need to report on Form 8938 (single taxpayer thresholds apply), even though individual account balances may be under $10,000.

3) Ownership interest: Being a 10% shareholder of a foreign corporation can trigger Form 5471 filing obligations even if the corporation’s cash balances are small.

4) Signature authority: Holding signature authority over a foreign account (for example, as a corporate signatory) can trigger FBAR reporting even without ownership.

5) Trusts and inheritances: Receiving a distribution from a foreign trust or inheriting a foreign account can trigger Form 3520 filing and may create FBAR/FATCA obligations depending on ownership and timing.

Penalties and enforcement (high-level)

Penalties for failing to file required international reports can be severe. Willful FBAR violations have civil penalties up to 50% of the account balance for each unreported account or transaction and may include criminal prosecution in extreme cases. FATCA/Form 8938 penalties include monetary fines and potential IRS notices; additional penalties may apply for inaccurate or incomplete returns. Because penalty amounts and enforcement priorities change over time, always check FinCEN and IRS guidance for current enforcement rules and consult a tax professional when exposure exists (FinCEN; IRS).

How I evaluate client exposure (practical checklist)

In my practice I run a consistent checklist to flag potential reporting triggers:

  • List all foreign financial accounts, investments, pensions, trusts, and business interests (including accounts owned jointly or via nominees).
  • Calculate aggregate balances by calendar year for FBAR, and asset values for Form 8938 thresholds on the relevant measurement dates.
  • Identify signature authority and beneficial ownership separately.
  • Check for foreign trusts, gifts, or inheritances (Form 3520 triggers).
  • Review corporate and partnership ownership thresholds for Forms 5471/5472 and 8865.
  • If cryptocurrencies are held abroad or with foreign exchanges, treat them as possible reportable foreign financial assets (IRS guidance treats crypto as property; FATCA/FBAR implications depend on custody and account structure).

This step-by-step review helps avoid common mistakes like undercounting joint accounts, ignoring spouse ownership, or excluding custodial arrangements.

Corrective options when you discover missing filings

If you discover prior-year omissions, several pathways exist depending on facts and whether failures were willful:

  • Streamlined Filing Compliance Procedures: Designed for non-willful failures; allows eligible taxpayers to file amended returns and delinquent FBARs with reduced potential penalties. See the IRS Streamlined Procedures page.
  • Delinquent FBAR Submission Procedures: For taxpayers who have a legal obligation to file FBARs but have not filed and are not under civil examination or criminal investigation.
  • OVDP/Voluntary disclosure programs: Historically used to resolve willful conduct, these programs evolve—consult a practitioner. See our page on Voluntary Disclosure Options for Unreported Foreign Accounts (internal link) for practical next steps.

I always recommend engaging experienced international tax counsel before entering any disclosure program. In my experience, accurate documentation, an honest factual presentation, and timely corrective filings materially affect negotiation outcomes with authorities.

Common misconceptions

  • “Only wealthy people need to worry”: False. The FBAR $10,000 aggregate trigger captures many middle-class taxpayers with multiple small foreign accounts.
  • “If my foreign bank sent an annual statement, the IRS knows about it”: Banks in many countries share information under FATCA, but not all accounts are automatically matched to your IRS filings; you remain responsible for your disclosures.
  • “FBAR and Form 8938 are the same”: They overlap but are distinct. You may need to file both if thresholds for each are met.

Practical tips to stay compliant

  • Maintain a simple, centralized record (spreadsheet) of all foreign accounts and asset valuations with dates and ownership details.
  • Reassess annually: thresholds and account structures change; review before each tax season.
  • When living abroad, understand local reporting rules and how they intersect with U.S. obligations.
  • If unsure, obtain a written engagement with a CPA or international tax attorney—documented professional advice is often helpful if later questioned by authorities.

When to get professional help

High-risk situations that should prompt immediate professional consultation include:

  • Large foreign inheritances or unexpected foreign distributions.
  • Complex ownership through trusts, foreign corporations, or nominee arrangements.
  • Past failures to file FBARs or Form 8938 and concerns about willfulness.
  • Cross-border business operations with foreign payroll, branches, or subsidiaries.

Useful authoritative resources

Internal resources and further reading

Final note and disclaimer

In my practice advising clients on cross-border reporting I’ve seen straightforward situations become costly when small details—joint ownership, signature authority, or a forgotten brokerage account—are overlooked. This article is educational and not personalized tax advice. Always consult a qualified CPA or international tax attorney before making filing decisions or entering a disclosure program.