Two US forms ask about money held outside the United States. The FBAR, filed on FinCEN Form 114, comes from the Bank Secrecy Act and is a financial crimes report. Form 8938 comes from FATCA and is part of the income tax return. They overlap heavily, and the overlap leads people to assume that one of them covers the other.
It does not. Each form has its own trigger, its own list of reportable assets and its own penalties. An American with a UK current account, a savings account and a workplace pension may need one form, both, or neither in a given year, and the answer can change from one year to the next as balances move.
Where does each form go, and when is it due?
The FBAR is filed electronically with FinCEN through its own e-filing system. It is not sent to the IRS and it is not attached to Form 1040. It is due 15 April, extended automatically to 15 October, and no request is needed for the later date. Because it stands apart from the tax return, it is required even in a year when no tax return is due.
Form 8938 is the opposite. It is attached to the income tax return and filed with it, so it follows the return's due date and any extension. If a person has no obligation to file a US return for the year, there is no Form 8938 to file, however large their foreign assets are. A late return means a late Form 8938 as well.
Both forms are completed in US dollars. The usual method converts each account's highest sterling balance at the Treasury exchange rate for the last day of the year, rather than the rate on the day the balance peaked. Using the same rates and the same maximum values on both forms avoids small differences that look like errors when the two are compared.
How do the FBAR and Form 8938 thresholds differ?
The FBAR threshold is low and cumulative. A report is required once the combined maximum value of all foreign financial accounts exceeds $10,000 at any point in the calendar year. Three accounts that each peaked at a modest balance can cross it together, and once the threshold is crossed, every account is listed, not only the larger ones.
Form 8938 thresholds are higher and depend on where the filer lives and on filing status. A taxpayer who meets the foreign residence tests has a much larger allowance than one living in the United States. The figures below are the published thresholds for specified foreign financial assets, and exceeding either the year-end or the any-time figure is enough.
- Living abroad, not filing jointly: $200,000 at year end or $300,000 at any time
- Living abroad, filing jointly: $400,000 at year end or $600,000 at any time
- Living in the US, not filing jointly: $50,000 at year end or $75,000 at any time
What does each form ask you to list?
The FBAR covers financial accounts: bank accounts, savings accounts, brokerage and investment accounts, and certain insurance and pension products with a cash value. It turns on a financial interest or signature authority. A US person who can sign on an employer's account or an elderly parent's account may have to report it even though none of the money is theirs.
Form 8938 covers specified foreign financial assets, which is both wider and narrower. It picks up foreign shares and securities held outside an account and interests in foreign entities, which the FBAR does not. It leaves out accounts over which the filer has signature authority only. Neither form reaches a UK house held directly in the filer's own name.
Jointly held accounts are a frequent point of confusion. On the FBAR, a US person reports the full value of an account held jointly with a non-US spouse. Form 8938 has its own rules for joint ownership and for spouses who file separately, and those rules can give a different figure for the same account.
What happens if a report is late or missed?
Failing to file Form 8938 carries an initial penalty of $10,000, with further penalties if the failure continues after IRS notice. An unfiled Form 8938 can also keep the assessment period open for the return it belongs to. A reasonable cause defence exists, and whether it succeeds depends on the facts and the records kept.
FBAR penalties depend on whether the failure was wilful. In 2023 the Supreme Court held in Bittner v. United States that the non-wilful penalty applies per report, not per account. That limits the exposure for someone with many accounts who missed a year, but it leaves the wilful penalty regime untouched.
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
