FBAR vs. Form 8938: Two Forms, Two Agencies, Two Sets of Penalties

If you have money outside the United States, you will meet two forms that look like twins and are not. The FBAR, FinCEN Form 114, comes from the Bank Secrecy Act. Form 8938 comes from FATCA and lives in the Internal Revenue Code at 26 U.S.C. 6038D. The IRS publishes a comparison chart, and it opens with the most important point: filing Form 8938 does not relieve you of the requirement to file an FBAR if you are otherwise required to.

Here is how they differ, in the order that matters.

Who files

FBAR: United States persons, which includes citizens, resident aliens, and domestic entities such as corporations, partnerships, LLCs, trusts and estates. Minor children count.

Form 8938: specified individuals, meaning U.S. citizens, resident aliens and certain nonresident aliens, plus certain domestic corporations, partnerships and trusts that are formed or used to hold specified foreign financial assets.

The IRS chart notes a territorial difference too. The FBAR applies to resident aliens of U.S. territories and territorial entities. Form 8938 does not reach them in the same way.

Thresholds

FBAR: aggregate maximum value of foreign financial accounts over $10,000 at any time during the calendar year. One threshold for everyone.

Form 8938: four thresholds under 26 CFR 1.6038D-2, ranging from more than $50,000 at year end or $75,000 at any time for single filers in the U.S., up to more than $400,000 at year end or $600,000 at any time for joint filers living abroad. See Form 8938 thresholds.

In practice, an American abroad with modest savings often files the FBAR and not Form 8938. An American abroad with larger holdings files both.

What makes you a filer: interest vs. authority

FBAR: you file if you have a financial interest in an account, which includes owning it, having it held by your agent, or owning more than 50 percent of an entity that holds it, or if you have signature authority over it. See signature authority.

Form 8938: you have an interest in an asset if income, gains, losses, deductions, credits, gross proceeds or distributions from it are or would be required to be reported on your return. Signature authority alone does not make an account reportable on Form 8938.

What is reported

FBAR: financial accounts located in a foreign country: bank, securities and other financial accounts, including foreign mutual funds and cash value insurance or annuity policies.

Form 8938: specified foreign financial assets, which include foreign financial accounts and certain assets held outside of accounts.

The differences show up in specific assets. According to the IRS comparison chart:

• Foreign stock or securities held directly, not in an account: Form 8938 yes, FBAR no.
• Foreign partnership interests: Form 8938 yes, FBAR no.
• Foreign hedge funds and private equity funds: Form 8938 yes, FBAR no.
• Indirect interests in foreign accounts through an entity: Form 8938 no, FBAR yes if you own more than 50 percent.
• Account at a foreign branch of a U.S. financial institution: Form 8938 no, FBAR yes.
• Account at a U.S. branch of a foreign financial institution: neither.
• Foreign real estate, currency, precious metals or personal property held directly: neither.
• Foreign mutual funds and foreign-issued cash value life insurance or annuities: both.

Where and when you file

FBAR: electronically with FinCEN through the BSA E-Filing System. Due April 15 with an automatic extension to October 15. Not filed with your tax return. See the FBAR deadline guide.

Form 8938: attached to your annual income tax return and due with it, including extensions. If you are not required to file an income tax return, you do not file Form 8938.

That last point is a real difference. A U.S. citizen abroad with income below the filing threshold may have no Form 8938 obligation, but still have an FBAR obligation for accounts over $10,000.

How values are determined

Both forms use a maximum value and convert foreign currency at a year-end exchange rate. The FBAR relies on the maximum account value, which periodic statements may establish if they fairly reflect it. Form 8938 uses the fair market value of the asset in U.S. dollars under its own instructions. For assets other than accounts, valuation can take more work on the 8938 side.

Penalties

FBAR: governed by Title 31. Non-willful violations carry a maximum of $10,000 in the statute, adjusted to $16,536 for penalties assessed on or after January 17, 2025, applied per report after Bittner. Willful violations carry a maximum of the greater of an inflation-adjusted $100,000 or 50 percent of the account balance at the time of the violation.

Form 8938: governed by Title 26. Under 26 U.S.C. 6038D(d), a $10,000 penalty for failure to file, plus $10,000 for each 30-day period the failure continues more than 90 days after an IRS notice, up to $50,000 in additional penalties. An underpayment tied to an undisclosed foreign financial asset can draw a 40 percent accuracy-related penalty under 26 U.S.C. 6662(j). The statute of limitations on the whole return can stay open under 26 U.S.C. 6501(c)(8). See Form 8938 penalties.

Both have reasonable cause defenses, and both have one thing in common: the fact that a foreign country would penalize you for disclosing the information is not reasonable cause for the 8938 penalty. Section 6038D(g) says so expressly.

Three common scenarios

Modest savings abroad. A U.S. citizen working in Germany with $35,000 in German bank accounts and a filing obligation for her U.S. return. She files an FBAR because she is over $10,000. She is well under the Form 8938 thresholds for someone living abroad, so no Form 8938.

An employee who signs on company accounts. A U.S. citizen in Singapore with signature authority over his employer's local accounts, and no exception under 31 CFR 1010.350(f)(2). The company accounts go on his FBAR. They do not go on his Form 8938, because he has no tax interest in them.

An investor with direct foreign holdings. A U.S. resident holding shares of a foreign company directly, registered in her name with the issuer rather than in a brokerage account, worth $120,000. Those shares are not a financial account for FBAR purposes, so they are not on the FBAR, but they are a specified foreign financial asset for Form 8938 and put her over the $50,000 and $75,000 thresholds.

Each one of those people is compliant only if they run both tests separately. That is the whole lesson.

Who usually handles each form

Because Form 8938 rides with the income tax return, it is usually prepared by whoever prepares the return, and it lives inside the tax software. The FBAR is a separate electronic filing with FinCEN. Some preparers file it as a matter of routine. Some do it only if you ask. Some never do it. That split is how so many people end up with a perfect Form 8938 and no FBAR, or the reverse. Ask your preparer, in writing, which forms they filed for you, and keep the BSA E-Filing confirmation for each FBAR.

The practical takeaway

Keep the master list for at least six years. It becomes the backbone of any amended filing, any streamlined submission and any answer to an IRS question about why a number changed from one year to the next.

Make one master list of every foreign account and asset each year. From that list, run two separate tests: the FBAR test and the Form 8938 test. Do not let a software program decide for you by skipping a question. And do not assume that because your preparer handled one, the other was handled too.

When two forms ask overlapping questions, the answers have to match. Inconsistent FBARs and Forms 8938 are the kind of thing that invites questions. If yours do not line up, let's fix that.