US citizens and residents with foreign financial assets often face the daunting task of determining which international reporting forms they must file. Two of the most commonly confused forms are Form 8938 (Statement of Specified Foreign Financial Assets) and the FBAR (Foreign Bank Account Report, FinCEN Form 114). Although they may seem similar, these forms serve different purposes, are filed with different agencies, and have distinct thresholds and requirements.

What Is the FBAR?

The FBAR is used to report foreign financial accounts to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The requirement applies if:

You are a US person (citizen, resident alien, trust, estate, or domestic entity), and The aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year.

The FBAR must be submitted electronically through FinCEN and is not part of your federal tax return.

What Is Form 8938?

Form 8938 is filed with the IRS as part of your annual Form 1040. It is required under the Foreign Account Tax Compliance Act (FATCA) and is used to report specified foreign financial assets such as:

Foreign bank and brokerage accounts Foreign pensions Certain foreign trusts and partnerships Foreign-issued life insurance with a cash value

The reporting thresholds for Form 8938 are higher than those for the FBAR and vary based on filing status and residency:

If you live in the US:

Single / MFS: File if foreign assets exceed $50,000 at year-end or $75,000 at any point.

MFJ: File if assets exceed $100,000 at year-end or $150,000 at any point.

If you live abroad:

Single / MFS: File if assets exceed $200,000 at year-end or $300,000 at any point.

MFJ: File if assets exceed $400,000 at year-end or $600,000 at any point.

Do You Need to File Both?

In many cases, yes. If you meet the filing thresholds for both, you must file both forms. The information may overlap, but the IRS and FinCEN use the forms for different compliance and enforcement purposes. Failure to file either form can lead to significant penalties, even if no tax is due.

What are the Penalties?

FBAR

Yes, failing to file the FBAR (FinCEN Form 114) can lead to civil penalties of up to $10,000 per non-wilful violation, and for wilful violations, penalties can reach the greater of $100,000 or 50% of the account balance per year, along with potential criminal charges.

Form 8938

Yes, failing to file Form 8938 can result in a $10,000 penalty, with additional penalties up to $50,000 for continued noncompliance, plus potential accuracy-related penalties and criminal charges in severe cases.

Common Pitfalls to Avoid

Assuming one form replaces the other: They are separate requirements.

Not reporting non-bank assets on Form 8938: Many expats overlook pensions, private equity, or life insurance.

Using incorrect account valuations: Use the maximum value during the year and convert accurately to USD.

Final Thoughts

Understanding the distinctions between Form 8938 and the FBAR is essential for staying compliant with US tax laws. Filing correctly can save you from steep penalties and ensure long-term peace of mind.

The information in this blog post is for general informational purposes only and does not constitute professional tax advice. We strongly recommend consulting a qualified tax professional before making any decisions. US Expat Tax Advisor is not liable for any actions taken based on this content.

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