Two Separate Reporting Regimes
US citizens, green card holders, and US tax residents who hold financial accounts outside the United States face two overlapping but distinct reporting requirements: FBAR and FATCA. They are administered by different agencies, have different thresholds, cover different (but overlapping) asset types, and carry different penalties. Most people who must file one must also file the other — but not always.
Getting these wrong is one of the most common and most expensive compliance failures for Americans living abroad or holding international structures.
FBAR: FinCEN Form 114
The Report of Foreign Bank and Financial Accounts (FBAR) is filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury — not the IRS. It is filed electronically through the BSA E-Filing system.
Who Must File
Any US person (citizen, green card holder, or tax resident) who has a financial interest in or signature authority over one or more foreign financial accounts, if the aggregate value of all foreign accounts exceeds USD 10,000 at any point during the calendar year.
Note the critical phrase: at any point. If your accounts briefly exceeded USD 10,000 on a single day — even due to an incoming transfer that was immediately withdrawn — you have a filing obligation.
What Accounts Count
- Bank accounts — checking, savings, term deposits at foreign banks
- Brokerage accounts — securities accounts at foreign institutions
- Cryptocurrency exchange accounts — if the exchange has custody of your assets and is located outside the US (FinCEN guidance treats these as reportable)
- Insurance policies — with a cash surrender value (whole life, endowment)
- Mutual fund accounts — held directly at foreign fund companies
- Pension accounts — foreign pension or retirement savings accounts
- Accounts you have signature authority over — even if you do not own them (e.g., a business account you can sign on)
Self-custody crypto wallets (hardware wallets, software wallets where you hold the private keys) are not currently reportable on FBAR, though proposed regulations may change this.
Filing Deadline
April 15, with an automatic extension to October 15. No extension form is needed — the extension is granted automatically. There is no penalty for using the automatic extension.
Penalties
| Violation Type | Penalty |
|---|---|
| Non-willful failure to file | Up to USD 10,000 per violation (per account, per year in some circuits) |
| Willful failure to file | The greater of USD 100,000 or 50% of the account balance at the time of violation, per violation |
| Criminal penalties (willful) | Up to USD 250,000 fine and/or 5 years imprisonment |
The distinction between "willful" and "non-willful" is critical. Courts have increasingly found that constructive knowledge — meaning you should have known about the filing requirement — can establish willfulness. Ignorance of the law is a weak defense.
FATCA: Form 8938
The Foreign Account Tax Compliance Act (FATCA) requires US taxpayers to report specified foreign financial assets on Form 8938, filed with their annual income tax return and submitted to the IRS.
Who Must File
US taxpayers who hold specified foreign financial assets exceeding the following thresholds:
| Filing Status | Living in US | Living Abroad |
|---|---|---|
| Single / Married filing separately | USD 50,000 (end of year) or USD 75,000 (any point) | USD 200,000 (end of year) or USD 300,000 (any point) |
| Married filing jointly | USD 100,000 (end of year) or USD 150,000 (any point) | USD 400,000 (end of year) or USD 600,000 (any point) |
What Assets Count
FATCA covers a broader range of assets than FBAR:
- Everything reportable on FBAR (foreign bank, brokerage, and financial accounts)
- Foreign stock or securities not held in a financial account
- Foreign partnership interests
- Foreign mutual funds
- Foreign hedge funds or private equity funds
- Foreign-issued life insurance or annuity contracts with cash value
- Any financial instrument or contract held for purposes that could generate income if the issuer or counterparty is non-US
Real estate held directly is not a specified foreign financial asset. However, real estate held through a foreign entity (LLC, corporation, trust) may trigger reporting if the entity itself is a financial asset.
Filing Deadline
Form 8938 is filed with your annual tax return — April 15, with extensions as applicable to your 1040.
Penalties
Failure to file Form 8938: USD 10,000 penalty, plus up to USD 50,000 in additional penalties if the failure continues after IRS notification. A 40% penalty on underpayments attributable to undisclosed foreign financial assets also applies.
FBAR vs FATCA: Key Differences
| Feature | FBAR (FinCEN 114) | FATCA (Form 8938) |
|---|---|---|
| Filed with | FinCEN (Treasury) | IRS (with tax return) |
| Threshold | USD 10,000 aggregate | USD 50,000–600,000 (varies) |
| Asset scope | Financial accounts only | Financial accounts + other foreign assets |
| Real estate | Not reportable | Not reportable (unless held via entity) |
| Domestic accounts | Not reportable | Not reportable |
| Filing method | Electronic (BSA E-Filing) | Attached to Form 1040 |
| Deadline | April 15 (auto-ext Oct 15) | Tax return deadline |
| Non-willful penalty | USD 10,000/violation | USD 10,000 + continuation penalties |
Filing one does not satisfy the other. You must file both independently if you meet both thresholds.
Streamlined Filing Procedures
If you have been non-compliant — whether you missed FBARs, Forms 8938, or both — the IRS offers the Streamlined Filing Compliance Procedures to come back into compliance without the full weight of willful penalties.
There are two versions:
- Streamlined Domestic Offshore Procedures — For US residents. Requires a 5% miscellaneous offshore penalty on the highest aggregate balance of unreported foreign accounts.
- Streamlined Foreign Offshore Procedures — For US taxpayers living abroad who qualify as non-resident for the relevant period. No penalty — you file three years of amended returns and six years of delinquent FBARs.
Both require a certification that your non-compliance was non-willful. If the IRS determines the non-compliance was willful, the streamlined procedures do not apply and full penalties are assessed.
Common Mistakes Expats Make
- Assuming foreign income under the FEIE threshold means no filing required — The Foreign Earned Income Exclusion (FEIE) reduces taxable income but does not eliminate filing obligations. You must still file a return, and FBAR/FATCA reporting is completely independent of income thresholds.
- Forgetting accounts with signature authority — If you are a signer on a company bank account abroad, that account may be FBAR-reportable even if you have no beneficial interest.
- Ignoring foreign pension accounts — Many countries have mandatory pension contributions. These accounts are reportable on both FBAR and FATCA.
- Not reporting crypto exchange accounts — If your cryptocurrency is held on a foreign exchange (Binance, Kraken non-US entity, etc.), FinCEN guidance indicates these are reportable foreign financial accounts.
- Mixing up thresholds — FBAR is aggregate USD 10,000 across all accounts. FATCA is per-filer and depends on residence and filing status. They are not interchangeable.
How Offshore Structures Interact with Reporting
If you hold assets through offshore entities — a Nevis LLC, a Panama Foundation, or a foreign trust — reporting obligations multiply. The entity itself may trigger Forms 5471, 8865, or 3520 depending on its classification. Accounts held by the entity are still reportable on FBAR if you have a financial interest or signature authority. And the assets inside the entity may trigger FATCA reporting on Form 8938.
Offshore structures provide legal protection and planning flexibility. They do not reduce reporting obligations — they increase them. Professional compliance guidance is not optional.
Next Steps
If you hold foreign accounts or structures and are unsure of your reporting status, connect with our team to review your obligations and address any gaps before they become penalties.