When it comes to disclosing foreign financial accounts, many U.S. taxpayers—especially expats and those with global investments—face confusion around FBAR (FinCEN Form 114) and Form 8938 (FATCA). While both forms deal with foreign financial assets, they serve different purposes, have distinct thresholds, and are submitted to different agencies. Understanding the key differences between FBAR vs. Form 8938 is critical to staying compliant with the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN).
This guide provides a side-by-side comparison, practical explanations, and important insights for taxpayers unfamiliar with reporting foreign financial accounts.
What Is the Difference Between Form 8938 and FBAR?
While both forms report foreign bank accounts and investment accounts, they apply in different circumstances. Below is a side-by-side breakdown.
Form 8938 vs FBAR: Reporting Requirements Comparison
| Form 8938 (FATCA) | FBAR (FinCEN Form 114) | |
|---|---|---|
| Who must file? | Specified individuals (US citizens, resident aliens, and certain non-resident aliens) and domestic entities that have an interest in specified foreign financial assets and meet the reporting threshold. | US persons (US citizens, resident aliens, trusts, and estates) that have an interest in foreign financial accounts and meet the reporting threshold. |
| Does it include US territories? | No, it doesn't include US territories. (Puerto Rico, American Samoa, Guam, The United States Virgin Islands, and The Northern Mariana Islands) | Yes, resident aliens of US territories and US territory entities are subject to FBAR reporting. |
| What's the reporting threshold? | For U.S. taxpayers who live in the United States and are married filing jointly, the threshold is met if the total value of their foreign assets is more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the tax year. For unmarried taxpayers who live in the United States, the threshold is met if the total value of their foreign assets is more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the tax year. For married taxpayers filing jointly who live abroad, the threshold is met if the total value of their foreign assets is more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the tax year. | The aggregate value of all foreign financial accounts exceeds $10,000. |
| What is reported? | The maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets. | The maximum value of financial accounts maintained by a financial institution physically located in a foreign country. |
| How are maximum account or asset values determined and reported? | Fair market value in US dollars in accord with the Form 8938 instructions for each account and asset reported; convert to US dollars using the end of the taxable year exchange rate and report in US dollars. | Use periodic account statements to determine the maximum value in the currency of the account; convert to US dollars using the end of the calendar year exchange rate and report in US dollars. |
| When is the form due? | The form is due with your federal income tax return, including extensions. | The form is due April 15, with an automatic extension to October 15 available. |
| How to file? | With your federal income tax return. | Filed electronically through FinCEN’s BSA E-Filing System. |
| Penalties | Up to $10,000 for failure to disclose and an additional $10,000 for every 30-day period of non-filing up to a potential maximum penalty of $50,000. Criminal penalties may also apply. | Up to $10,000 per violation for non-willful failure to file. If your failure to file is considered willful, the fine can be $100,000 or 50% of the balance of the account at the time of the violation, whichever is greater. Criminal penalties may also apply. |
Form 8938 vs. FBAR Assets: Which Financial Accounts Are Reportable on Each Form?
Many taxpayers incorrectly assume that both forms cover just bank accounts. However, Form 8938 also includes foreign non account investment assets, such as foreign hedge funds, and indirect interests in certain foreign entities. FBAR applies to financial accounts maintained by a financial institution physically located in a foreign country, including those over which you have signature authority.
Related: FBAR and FATCA: Reporting Foreign Accounts as a US Expat
Which Assets Must Be Reported?
| Form 8938 (FATCA) | FBAR (FinCEN Form 114) | |
|---|---|---|
| Financial accounts held at a foreign financial institution | Yes | Yes |
| Financial accounts held at a foreign branch of a US bank | No | Yes |
| Financial accounts held at a US branch of a foreign bank | No | No |
| Foreign financial account for which you have signature authority | No—unless you have an interest in the account as described above | Yes |
| Foreign stock or securities held in a foreign brokerage account | The account is reportable; however, the stock within the account does not need to be reported separately. | The account is reportable; however, the stock within the account does not need to be reported separately. |
| Foreign stock or securities not held in a financial account | Yes | No |
| Foreign partnership interests | Yes | No |
| Indirect interests in foreign financial assets through an entity | No | Yes, if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity. See instructions for further detail. |
| Foreign mutual funds | Yes | Yes |
| Domestic mutual funds that invest in foreign stock | No | No |
| Foreign accounts or non-accounts investments held by foreign or domestic grantor trusts where you are the grantor | Yes for both | Yes for foreign accounts |
| Foreign-issued life insurance or annuity with cash value | Yes | Yes |
| Foreign hedge funds and private equity funds | Yes | No |
| Foreign real estate held directly | No | No |
| Foreign real estate held through a foreign entity | No; however, the foreign entity is a specified foreign financial asset, and its value will include the value of the real estate. | No |
| Foreign currency held directly | No | No |
Who Is Required to File FBAR or Form 8938?
If you hold foreign assets, you may be required to file one or both forms depending on the nature of the asset and its maximum account value during the year. For example:
- You must file Form 8938 if your specified foreign financial assets exceed IRS thresholds for your filing status, residency, or if you’re a U.S. expat, and only if you have a financial interest in those assets.
- You must file an FBAR if the aggregate value of your foreign financial accounts exceeds $10,000 at any time in the tax year, even if it’s just for one day.
Ownership, financial interest, or beneficial interest in both foreign accounts and certain foreign accounts may trigger a reporting obligation.
What Are the Penalties for Not Filing?
Failure to file either form can result in severe criminal penalties, especially in cases of tax evasion or concealment of foreign assets:
- Form 8938 Penalties: An initial $10,000 for non-disclosure, with an additional $10,000 per month up to $50,000 for continued failure after IRS notification. Inaccurate or missing filing may allow the IRS to extend the statute of limitations for audits.
- FBAR Penalties: $10,000 for non-willful violations. For willful violations, up to $100,000 or 50% of the account balance, and criminal charges may apply.
FBAR and Form 8938: Common Misconceptions
- It’s not just bank accounts: These forms also cover financial accounts held in foreign trusts, insurance policies, and investment vehicles.
- Foreign financial institutions play a central role: Reporting applies only if the account is with a financial institution located abroad.
- They are not interchangeable: Each form has distinct requirements. Some foreign accounts are only reportable on FBAR, while others are only on Form 8938.
- Foreign stock or securities held directly do not need to be reported on FBAR but must be disclosed on Form 8938. Taxpayers with significant foreign investments, specifically those holding foreign stocks, must be aware of their reporting obligations.
- FBAR is filed separately and not included with your income tax return, while Form 8938 is submitted with your tax filing. Personal property, such as art, jewelry, and cars, is not reportable under these forms.
Filing Support and Flat Fees
Whether you need to file Form 8938, file an FBAR, or both, our team simplifies the process:
- Form 8938 filing is included with your standard return—no limit on the number of foreign accounts or assets.
- FBAR preparation costs a flat $100—covering all your foreign bank account report needs.
Don’t wait until the day of the tax deadline. Act early and avoid non-compliance.
Get Expert Help with FBAR and Form 8938 — Especially for U.S. Expats
Understanding the difference between FBAR and Form 8938 can save you from costly filing mistakes, IRS audits, and steep penalties. These two forms cover a wide range of foreign financial accounts, foreign entities, and investment assets, each with its own unique reporting thresholds and filing obligations.
At 1040 Abroad, we specialize in U.S. expat taxes. Whether you’re confused about reporting requirements or unsure which form applies to your situation, our U.S. tax experts are here to help.
Best of all, we offer free tax advice from our experienced team to guide you through your reporting obligations.
Don’t take chances with your foreign asset reporting. Contact us today to get expert guidance and ensure you’re fully compliant — wherever in the world you live.
