FATCA and FBAR are the two primary reporting regimes that require US persons to disclose their foreign financial accounts to the US government. They are separate obligations with separate forms, separate thresholds, and separate penalty regimes. The penalties for non-compliance are among the most severe in US tax law: up to $10,000 per violation for non-wilful failures and 50% of the account balance per year for wilful violations. And ignorance, under current case law, is generally not a defence.
FBAR: The FinCEN 114
The Foreign Bank Account Report (FBAR) is filed with the Financial Crimes Enforcement Network (FinCEN), not the IRS. It is required for any US person (citizen, resident, or entity) who has a financial interest in or signature authority over foreign financial accounts with an aggregate balance exceeding $10,000 at any point during the calendar year. The threshold applies to the aggregate across all foreign accounts; even one day at $10,001 triggers the obligation.
FBAR is filed electronically via FinCEN's BSA E-Filing System by April 15 (with an automatic extension to October 15). The FBAR is separate from your tax return and is required even if all your foreign income is excluded by the FEIE.
- Threshold: $10,000 aggregate in foreign financial accounts at any point during the year
- Signature authority: you must file even if you don't own the account but have signature authority (e.g., over an employer's account)
- Covered accounts: bank accounts, brokerage accounts, mutual funds, pensions in some cases: broad definition
- Penalty: up to $10,000 per violation for non-wilful; up to the greater of $100,000 or 50% of account balance per violation for wilful; criminal prosecution possible
FATCA: Form 8938
The Foreign Account Tax Compliance Act (FATCA) requires US persons to report specified foreign financial assets on Form 8938, attached to their annual tax return. The thresholds are higher than FBAR and vary by filing status and location: $50,000 (year-end) or $75,000 (at any point) for single filers in the US; $200,000/$300,000 for single filers abroad; double for married filing jointly.
FATCA also requires foreign financial institutions to report US account holders to the IRS, meaning the IRS can crosscheck your Form 8938 against reports it receives directly from your foreign bank. Banks that do not comply face a 30% withholding penalty on US-source payments, creating a very strong incentive for global compliance.
- Threshold for US residents: $50,000 at year-end or $75,000 at any point (married filing jointly: double these thresholds)
- Threshold for expats abroad: $200,000 at year-end or $300,000 at any point (married filing jointly: double)
- Covered assets: broader than FBAR: includes foreign stock, foreign partnership interests, foreign-issued annuities, and financial accounts at foreign institutions
- Penalty: $10,000 for failure to disclose; up to $50,000 for continued failure after IRS notice; 40% accuracy penalty on any understatement attributable to undisclosed assets
How FBAR and FATCA Overlap (and Where They Differ)
Many foreign accounts must be reported on both FBAR and Form 8938. But the forms are not identical; FBAR covers accounts where you have 'signature authority' regardless of ownership; Form 8938 covers 'specified foreign financial assets' based on ownership. Some items appear on Form 8938 but not FBAR (foreign stock held directly, not in a custodial account). Filing both is not double-reporting; they serve different regulatory purposes.
- Both forms required: if a foreign account triggers both, file both; they cannot substitute for each other
- FBAR filed with FinCEN: separate e-filing, not part of your tax return
- Form 8938 filed with IRS: attached to your annual federal tax return (Form 1040)
- Foreign pension plans: often covered by FATCA but not FBAR; country-specific rules and treaty positions apply
Catching Up: Streamlined Filing Procedures
US persons who have not filed FBAR or Form 8938 in prior years and meet the eligibility criteria can use the IRS Streamlined Filing Compliance Procedures to catch up with reduced penalties. The Streamlined Foreign Offshore Program (for US persons residing abroad) allows filing of 3 years of amended returns and 6 years of FBARs with a 5% miscellaneous offshore penalty. The Streamlined Domestic Offshore Program applies a 5% penalty on the highest aggregate account balance.
These programs require the non-filing to be non-wilful, meaning not deliberate tax evasion. Willful non-filers must use the full Voluntary Disclosure Program (OVDP) or face criminal referral.
Our US expat compliance team handles FBAR and FATCA reporting as part of annual compliance and can manage Streamlined filings for clients who need to catch up on prior-year obligations.
Nomadic Tax Filing
Our advisors handle your US expat tax return end-to-end: FEIE, FTC, FBAR, and every form that comes with living abroad.