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Two of the most common additional US tax forms expats have to file are the FBAR and Form 8938 — but what is the difference between FBAR vs. 8938?
While foreign assets are reported on both of these forms, they differ in terms of asset type and reporting thresholds.
It’s important to understand the differences between the forms. Doing so ensures that you are in full compliance with your reporting obligations as a US expat.
The Foreign Bank Account Report (FBAR), aka FinCEN Form 114, is used to report the balances of foreign banks and financial accounts. Form 8938 (i.e., the Statement of Specified Foreign Financial Assets), in addition to financial account balances, is used to report other types of foreign financial assets.
When comparing these forms, it’s important to bear in mind that they are not an “either-or” scenario. That is, it is not uncommon to have both an FBAR and a FATCA filing requirement.
Below, we’ll discuss each of these forms in depth. Topics covered include who needs to file them, which assets to disclose on them, what happens if you file them late, and more.
What gets reported on your income tax return?
Technically, neither the contents of the FBAR nor Form 8938 will be included on your main income tax return form (Form 1040). That form is primarily used to report the income you’ve earned, credits you’ll be claiming, and taxes you owe or refund you will receive.
Form 8938 is submitted along with your tax return as a separate attachment to Form 1040. The FBAR, however, is filed separately and with a different government agency altogether.
Pro tip:
Unlike IRS Form 8938, the FBAR filing requirement is mandated by the Financial Crimes Enforcement Network (aka FinCEN).
FATCA vs FBAR
You may see the term “FATCA” appear in discussions about Form 8938 vs FBAR as well. FATCA is an acronym for the Foreign Account Tax Compliance Act, a piece of legislation passed in 2010. FATCA paved the way for the creation of Form 8938 as a way to help deter financial crime and offshore tax evasion.
The FBAR, on the other hand, has existed for much longer. It was first created in 1970 as part of the Bank Secrecy Act (BSA). This legislative act is designed to prevent money laundering in the US.
Who is required to file Form 8938?
The following groups of expats are required to file Form 8938:
- Single filers who have accumulated foreign financial assets worth over $200,000 USD on the last day of the year, or over $300,000 USD at any point during the year
- Joint filers who have accumulated foreign financial assets worth over $400,000 USD on the last day of the year, or over $600,000 USD at any point during the year
FATCA doesn’t just apply to US expats. Americans residing stateside may also need to file Form 8938, although the domestic reporting thresholds are significantly lower. The following groups of Americans living stateside must file Form 8938:
- Single filers or specified domestic entities who have accumulated foreign financial assets worth over $50,000 USD on the last day of the year, or over $75,000 USD at any point during the year
- Joint filers who have accumulated foreign financial assets worth over $100,000 USD on the last day of the year, or over $150,000 USD at any point during the year1
Going deeper:
Specified domestic entities include certain domestic corporations, partnerships, and trusts.
FBAR reporting requirements
When looking at Form 8938 vs the FBAR, FBAR reporting requirements are more straightforward. Anyone with over $10,000 USD in foreign financial accounts at any point in the year must file an FBAR.
Note that this figure refers to the total of your foreign financial accounts, not just the individual accounts’ value.
Example FBAR reporting requirement scenario
Shauna is a single US expat living and working on a local contract in Barcelona, Spain. She opened two foreign bank accounts. One is a local Spanish account where she receives her salary, and the second is a Wise account (in euros).
She only uses the Wise account to convert euros to US dollars to send to her US brokerage account but over the course of the year.
Over the 2023 tax year, the highest amount held in the local Spanish bank account was 7,000 euros. The highest amount in the Wise account was 4,000 euros.
Did Shauna trigger the FBAR filing requirement?
The answer is yes.
Although neither account individually exceeded the equivalent of $10,000 USD at any point in the year, she still must file an FBAR. This is because the bank accounts’ total of 11,000 euros did exceed the $10,000 limit.
FBAR vs Form 8938: Determining which assets to disclose
So which assets do you need to report, and on which form should you report them? When in doubt, refer to this handy breakdown, courtesy of the IRS website:2
| Types of Foreign Assets | Form 8938 | FBAR |
|---|---|---|
| Financial accounts in foreign financial institutions | Yes | Yes |
| Financial accounts in foreign branches of US financial institutions | No | Yes |
| Foreign financial accounts over which you have signature authority | No, unless you otherwise have an interest in the account as described above | Yes, with some exceptions |
| Foreign stock or securities in financial accounts in foreign financial institutions | Account itself must be reported, but not the contents | Account itself must be reported, but not the contents |
| 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 you retain sufficient ownership or beneficial interest (i.e. over 50%) |
| Foreign mutual funds | Yes | Yes |
| Foreign accounts & foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor | Yes, for both foreign accounts & foreign non-account investment assets | Yes, but only for foreign accounts |
Note:
Currency must always be converted back to USD when completing FinCEN Form 114 or Form 8938. You can use the official US Treasury website for the official conversions.
What assets are not required to be filed on either the FBAR or Form 8938?
The assets you don’t have to report on the FBAR or Form 8938 include:
| Types of Foreign Assets | Form 8938 | FBAR |
|---|---|---|
| Financial accounts in US branches of foreign financial institutions | No | No |
| Domestic mutual fund investing in foreign stocks & securities | No | No |
| Foreign real estate held directly | No | No |
| Foreign real estate held through a foreign entity | No, but the foreign entity itself is a specified foreign financial asset & its maximum value includes the value of the real estate | No |
| Foreign currency held directly | No | No |
| Precious metals held directly | No | No |
| Personal property held directly, such as art, antiques, jewelry, cars, & other collectibles | No | No |
| ‘Social Security’- type program benefits provided by a foreign government | No | No |
Form 8938 vs FBAR late filing
Failing to file Form 8938 or the FBAR, or filing them late, can result in fines. In some particularly flagrant cases, criminal penalties may also apply. An example of a flagrant case would be if somebody intentionally hid large sums of foreign assets from the US government for years.
But for those who file late due to an honest misunderstanding, there are amnesty programs:
- Those who have fallen behind on filing Form 8938 may be able to catch up through the Streamlined Filing Procedures
- Those who have fallen behind on filing FBARs may be able to catch up through the Delinquent FBAR Submission Procedures
Finally, we encourage US expats to review our step-by-step guide to filing US expat taxes.
What if your US filing requirements could be met correctly, strategically, & effortlessly?
At Bright!Tax, our team of expat tax professionals has helped expats around the world file accurately and efficiently. Our clients benefit from a dedicated CPA with expertise in the areas you need most.
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