Understanding The Differences Between FBAR And Form 8938

April 6, 2021

Expats must file and pay taxes to the U.S. government even on income earned worldwide — including income kept in foreign accounts. FBAR and Form 8938 are two of the most common forms used to report this income, but these can’t be used interchangeably. If you are wondering, “What is FBAR?” it is the Foreign Bank Account Reporting form, which was first released in 1970. In recent years, the federal government is paying more attention to who files (or should file) FBAR, with penalties imposed on those who should have filed but did not.

Fortunately, individuals can avoid being penalized and make up for missed payments under a voluntary disclosure initiative. Form 8938 is used to satisfy obligations under FATCA — the Foreign Account Tax Compliance Act — which states that expats must officially report their foreign-held income. While Form 8938 and FATCA may seem as if they can be used interchangeably, in truth they cannot. Keep reading to find out the difference between FBAR and 8938, as well as FATCA, to discover which form you should use.

Differences Between FATCA and FBAR

FATCA and FBAR reporting requirements may appear to be the same, but there are many variances. At a glance, here is what you need to know:

  • Reporting thresholds: Form 8938 requires taxpayers living in the U.S. to report when they reach an asset threshold of $75,000 in the year, or $50,000 on the final day of the tax year (for married taxpayers, these amounts are $150,000 and $100,000, respectively). Unmarried expats must file Form 8938 when they reach an asset threshold of $300,000 in the year, or $200,000 on the final day of the tax year (for married taxpayers, these amounts are $600,000 and $400,000, respectively).

    Alternatively, any expat who has a combined $10,000 in their foreign-held accounts must report under FBAR. Therefore, FBAR is the more common form due to the significantly lower asset threshold that triggers its filing.

  • What is disclosed: On Form 8938, individuals are supposed to report the maximum value of the particular foreign-held asset. FBAR requires individuals to disclose the maximum value of the foreign-held account, rather than the asset.
  • Who needs to report: Form 8938 is filed by U.S. citizens, as well as resident and non-resident aliens who meet the income threshold and hold foreign assets. FBAR is filed by U.S. citizens, resident and non-resident aliens, and trusts and estates with interest in foreign-held accounts that meet the income threshold listed above.
  • Due date: Form 8938 is due with your tax return on April 15, or with any extensions of which you take advantage. In contrast, FBAR is due on April 15, but taxpayers can get an extension until October 15.
  • Filing: Form 8938 should be filed alongside the federal return; thus, it may be generated by your accountant, tax preparer or tax preparation software. FBAR, in contrast, should be filed separately using the E-Filing System from FinCEN, which is the Financial Crimes Enforcement Network.
  • Penalties: Failure to file Form 8938 results in a $10,000 penalty, plus $10,000 for every additional month of non-filing up to $60,000. FBAR penalties are pegged to inflation and change annually. The IRS assesses one penalty for non-willful failure to file (for example, ignorance or omission of filing) and a far stiffer penalty for willful failure to file.

How Expat CPA Can Help With FBAR and FATCA Filling Requirements

While this primer should help you understand your reporting obligations, there is a lot more to know about FBAR, FATCA and Form 8938. Look to Expat CPA to help you with FBAR and FATCA reporting services. A professional tax filing firm designed with the needs of expats in mind, Expat CPA can provide FBAR filing help, explain other expat tax obligations, file the necessary documents and help you avoid penalties associated with missed taxpayer obligations. To learn more or talk about your tax needs, contact us today.

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