Tax

FBAR and Form 8938: Foreign Account Reporting Walkthrough

FBAR (FinCEN 114) and Form 8938 (FATCA) report foreign financial accounts to the U.S. government. Different thresholds, different penalties, both essential.

By Aparna Devalla, CPA3 min · 5 slidesUpdated June 15, 2026

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Why Two Forms

FBAR (FinCEN Form 114): Bank Secrecy Act report to FinCEN. Filed separately from tax return.
Form 8938 (FATCA): IRS tax-return attachment for specified foreign financial assets.
Different thresholds, different agencies, different definitions of 'foreign account.'
Often required together; overlap is significant but not complete.

FBAR Threshold and Mechanics

Required if aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year.
Includes: bank accounts, brokerage accounts, mutual funds, retirement accounts (in some cases), and insurance policies with cash value.
Signature authority counts: if you can sign on a foreign account even as authorized agent (not owner), you may have FBAR exposure.
Filed electronically via BSA E-Filing System. Due April 15, automatic 6-month extension to October 15.
Penalties: $10,000+ per violation non-willful; up to 50% of account balance willful.

What Counts and What Doesn't

FBAR: financial accounts at foreign financial institutions. Cash, securities, mutual funds, retirement accounts, and life insurance policies with cash value.
FBAR does NOT count: foreign real estate held directly, foreign business interests held directly (though shares of foreign corp count as a securities account).
Form 8938 broader: includes FBAR items PLUS direct holdings of foreign stock and securities not held through accounts, foreign partnership interests, and foreign mutual funds.
Both ignore: U.S. accounts with foreign branches (these are U.S. accounts).

Common Mistakes

Missing FBAR because '$10K isn't much': the penalty is $10K+ even for non-willful misses.
Forgetting signature authority, which is common with non-citizen spouses and family members in foreign countries.
Listing wrong account types: retirement accounts in some countries (Indian PPF, UK ISA) are reportable.
Late filing: an automatic October 15 extension exists, so don't miss it.
Need help with FBAR and FATCA compliance? Rubric Financial handles foreign account reporting as part of cross-border tax engagements (especially U.S.-India clients).

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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.

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