FBAR vs. Form 8938, plus when clients may need to file both

A client may see a familiar account back home. Federal law may see more than one foreign asset reporting obligation. Oct. 15 is the automatic FBAR extension deadline each year, but filing an FBAR does not satisfy a client’s other foreign asset reporting obligations.

FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), and Form 8938, Statement of Specified Foreign Financial Assets, have separate filing tests. Depending on the client’s facts, one, both or neither may be required.

Same assets, separate filing tests

The FBAR is filed electronically with the Financial Crimes Enforcement Network (FinCEN), not with the client’s federal income tax return. A U.S. person generally must file when they have a financial interest in or signature or other authority over at least one foreign financial account, and the aggregate value of all reportable foreign accounts exceeds $10,000 at any time during the calendar year. For this purpose, a U.S. person can be an individual or a domestic entity. The $10,000 threshold applies to the combined value of the accounts, not to each account separately.

Form 8938 is filed with the client’s applicable annual federal tax return. It applies to specified individuals and certain specified domestic entities whose specified foreign financial assets exceed the applicable threshold. Unlike the FBAR, Form 8938 may cover foreign financial assets that are not held in financial accounts, including certain interests in foreign entities.

Common Form 8938 thresholds for individuals are:

If an individual is not required to file an income tax return, Form 8938 is generally not required, even if the value of their specified foreign financial assets exceeds the applicable threshold.

Individual taxpayers

• For a calendar-year taxpayer filing Form 1040, Form 1040-SR or Form 1040-NR, Form 8938 is generally due April 15 of the following year.
• Taxpayers who qualify for the automatic two-month extension because their tax home and abode are outside the United States and Puerto Rico generally have until June 15 to file. A timely requested extension can generally extend the filing deadline to Oct. 15.
• An extension of time to file does not extend the time to pay any income tax due; interest generally continues from the original payment deadline.

The FBAR follows a separate filing path

The FBAR is ordinarily due April 15, with an automatic extension through Oct. 15. It must be submitted through FinCEN’s BSA E-Filing System and is not attached to the federal income tax return.

Form 8938 follows the due date of the annual return to which it is attached, including an applicable extension. Although the dates may coincide for an individual with an extended calendar-year return, the forms still travel through different filing systems.

Missing either requirement can produce a five-figure penalty. Failure to furnish Form 8938 information generally triggers a $10,000 penalty. If the failure continues for more than 90 days after the IRS mails notice, additional penalties can bring the total to $60,000. FBAR penalties depend on whether the violation was willful. For a willful violation, the maximum is generally the greater of an inflation-adjusted dollar amount or 50% of the balance in each unreported account at the time of the violation. Because FBAR maximums are adjusted periodically, practitioners should confirm the current amount before advising a client.

Give foreign assets a four-question screen

Before closing an extended return or FBAR engagement, ask:

1. Did the client have a financial interest in or signature or other authority over any account maintained outside the U.S.?
2. What was the maximum value of each account, and when did that maximum occur?
3. Did the client hold foreign financial assets outside an account, such as an interest in a foreign entity or a foreign-issued financial instrument?
4. What was the client’s filing status, and did the client qualify as living abroad for Form 8938 purposes?

Keep the answers and the resulting filing analysis in the client file. If the conversation reveals an omitted account or asset from an earlier year, pause before choosing a correction procedure. The appropriate path depends on the client’s reporting history and whether the IRS has already contacted the client.

Note: Form 8938 does not replace the separate FBAR filing requirement. If both filing thresholds are met, Form 8938 and FinCEN Form 114 must each be filed by their respective deadlines.

Go further with foreign asset reporting

Build on the basics with these NATP resources:

• Sharpen your approach before the next foreign account lands on your desk with the 2025 Foreign Financial Asset Reporting with FBAR and Form 8938 On-Demand Webinar.
• Explore the rules in greater depth with the member-only TAXPRO article FBAR (FinCEN 114) vs. Form 8938.
• Get practical answers surrounding joint accounts and commonly misunderstood foreign assets in Top questions answered: FBAR and Form 8938 compliance for U.S. taxpayers.