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For Americans with foreign financial assets, the acronyms FBAR and IRS Form 8938 can create confusion, stress, and, if ignored, serious financial penalties. Understanding the difference between the two forms, their filing requirements, and when you need to file one or both is essential for staying compliant with U.S. tax law.
At Tax Relief Counsel, a Maryland-based tax law firm representing clients nationwide and internationally, we regularly assist individuals, expatriates, and dual citizens in sorting out their foreign asset reporting obligations. In this blog, we’ll break down FBAR and Form 8938 to help you avoid common pitfalls and penalties.
What Is the FBAR?
FBAR stands for Foreign Bank Account Report, officially known as FinCEN Form 114. It must be filed by any U.S. person, including citizens, residents, and entities, who has signatory authority or financial interest in one or more foreign financial accounts exceeding $10,000 in aggregate at any time during the calendar year.
Who Must File FBAR:
- U.S. citizens and green card holders
- U.S. residents for tax purposes
- Corporations, partnerships, or LLCs organized under U.S. law
FBAR Covers:
- Bank accounts
- Securities accounts
- Mutual funds or other pooled funds
- Foreign retirement accounts (in some cases)
- Foreign life insurance policies with cash value
Deadline: April 15 (with automatic extension to October 15).
Filed electronically with the Financial Crimes Enforcement Network (FinCEN), not the IRS.
What Is IRS Form 8938?
Form 8938, also called the Statement of Specified Foreign Financial Assets, is part of the IRS’s effort to crack down on offshore tax evasion. It was introduced with the Foreign Account Tax Compliance Act (FATCA).
Unlike the FBAR, Form 8938 is filed with your tax return (Form 1040).
Who Must File Form 8938:
U.S. citizens, resident aliens, and certain non-resident aliens if they hold specified foreign financial assets above certain thresholds.
Form 8938 Thresholds:
- Single taxpayers living in the U.S.: Total value exceeds $50,000 on the last day of the year or $75,000 at any time during the year
- Married taxpayers filing jointly in the U.S.: Over $100,000 on the last day or $150,000 at any point during the year
- Taxpayers living abroad have higher thresholds, generally starting at $200,000
Form 8938 Covers:
- Foreign bank and securities accounts
- Foreign mutual funds and ETFs
- Foreign stock or interests in foreign entities
- Foreign pensions
- Certain foreign trusts and partnership interests
Filed with your IRS Form 1040 and subject to IRS jurisdiction.
Key Differences Between FBAR and Form 8938
| Feature | FBAR (FinCEN Form 114) | IRS Form 8938 |
|---|---|---|
| Governing Agency | FinCEN (Treasury Dept.) | IRS |
| Filing Method | Online via FinCEN website | With your federal tax return |
| Threshold | > $10,000 aggregate | Starts at $50,000 (varies by filing status) |
| Assets Reported | Mostly foreign bank accounts | Includes financial accounts and other foreign assets |
| Penalties | Severe, including criminal charges | IRS penalties and audits |
| Filing Deadline | April 15 (auto extension to Oct. 15) | April 15 (with tax return) |
Do I Need to File Both?
In many cases, yes. If you meet the filing requirements for both the FBAR and Form 8938, you must file both forms.
Each form has different reporting thresholds and asset categories, and filing one does not satisfy the other’s requirements.
Example:
You’re a U.S. citizen living in Maryland with a Canadian bank account holding $60,000 and a mutual fund in the UK worth $25,000.
- You must file the FBAR because the aggregate value of foreign accounts exceeds $10,000.
- You must also file Form 8938 because your foreign assets total $85,000.
Failing to file either can expose you to harsh civil and criminal penalties.
What Are the Penalties for Not Filing?
FBAR Penalties:
- Non-willful violation: Up to $10,000 per violation
- Willful violation: Up to $100,000 or 50% of account value—per year
- Possible criminal charges
Form 8938 Penalties:
- $10,000 for failure to file
- Up to $50,000 for continued failure after IRS notification
- 40% penalty on underreported income related to undisclosed assets
What If I Haven’t Filed in the Past?
There are IRS programs available for taxpayers who unintentionally failed to report foreign accounts, such as:
- Streamlined Filing Compliance Procedures (SFOP) – for non-willful taxpayers living abroad
- Streamlined Domestic Offshore Procedures (SDOP) – for non-willful taxpayers living in the U.S.
- Delinquent FBAR Submission Procedures
We recommend reviewing our pages on SFOP, SDOP, and Streamlined Filing to understand your options.
Why Work with Tax Relief Counsel?
At Tax Relief Counsel, we:
- Represent clients nationwide and internationally
- Have deep experience with FBAR, FATCA, and cross-border tax compliance
- Protect your rights with attorney-client privilege
- Assist in filing both forms correctly and strategically
- Help you qualify for penalty relief through IRS amnesty programs
If you’re unsure about your filing requirements or need to get back into compliance, we’re here to help.
Get Peace of Mind Today
The U.S. government takes offshore reporting compliance seriously, and mistakes can cost you. Don’t let uncertainty or missed filings put your finances or freedom at risk.
Contact Tax Relief Counsel at (202) 630-4095 to schedule a confidential consultation with an experienced tax attorney who understands FBAR, Form 8938, and everything in between.