FBAR vs. FATCA (Form 8938): Understanding the Differences for U.S. Expats

2025-08-15 04:38:40

 Learn the key differences between FBAR and FATCA filing rules so you can stay compliant and avoid penalties.

Why This Topic Matters for Expats

If you’re a U.S. citizen or green card holder living abroad, you might think filing your annual tax return is all you need to do. But the IRS and the U.S. Treasury have two separate reporting rules for foreign financial accounts: FBAR (FinCEN Form 114) and FATCA (IRS Form 8938). Missing one can lead to penalties, even if you’ve complied with the other.

This article breaks down the differences between FBAR and FATCA — including thresholds, what each form covers, and how to file — so you can handle your overseas finances with confidence.

Start Filing

What Is the FBAR?

The Foreign Bank Account Report (FBAR) is filed with the Financial Crimes Enforcement Network (FinCEN), not the IRS. It’s officially known as FinCEN Form 114 and is required when:

• You’re a “U.S. person” (citizen, resident, green card holder, or qualifying business)
  
  

• The combined value of your foreign accounts exceeds $10,000 at any point in the year
  
  

Accounts covered:

• Checking and savings accounts
  
  

• Foreign pensions
  
  

• Investment accounts
  
  

• Business accounts abroad
  
  

It’s important to note that this is a separate filing from your tax return. You submit FBAR electronically through the BSA E-Filing System.

What Is FATCA (Form 8938)?

The Foreign Account Tax Compliance Act (FATCA) was introduced in 2010 to curb offshore tax evasion. Under FATCA, U.S. taxpayers must file IRS Form 8938 to report certain foreign financial assets if they exceed specific thresholds.

Thresholds vary depending on your filing status and residence:

• Living in the U.S.:
  
  

• Single: $50,000 on the last day of the year or $75,000 at any point
  
  

• Married filing jointly: $100,000 on the last day or $150,000 at any point
  
  

• Living abroad:
  
  

• Single: $200,000 on the last day or $300,000 at any point
  
  

• Married filing jointly: $400,000 on the last day or $600,000 at any point
  
  

Unlike FBAR, FATCA is filed with your federal income tax return.

FBAR vs. FATCA: Key Differences

Why Both Rules Can Apply to You

Many expats assume that filing one report is enough. In reality, you might need both. For example:

“I had a bank account in France worth $15,000 and an investment portfolio valued at $250,000,” explains James, a U.S. engineer living in Paris. “I learned the hard way that I needed to file both FBAR and FATCA for the same accounts.”

The overlap exists because FBAR focuses on accounts, while FATCA covers broader assets — including foreign stock shares held directly, interests in foreign entities, and certain insurance products.

How to File FBAR Step-by-Step

1. Gather all account statements for the year.
   
   

2. Convert balances to U.S. dollars using the year-end Treasury rate.
   
   

3. Log in to the BSA E-Filing System.
   
   

4. Complete FinCEN Form 114 with account details and maximum balances.
   
   

5. Submit electronically and keep a copy for your records.
   
   

How to File FATCA (Form 8938)

1. Determine if your total foreign assets meet the threshold.
   
   

2. Fill out Form 8938 with detailed information on each asset.
   
   

3. Attach Form 8938 to your federal tax return.
   
   

4. Keep documentation in case of IRS questions.
   
   

Common Mistakes Expats Make

• Thinking one form replaces the other
  
  

• Forgetting joint accounts or accounts in a spouse’s name
  
  

• Missing foreign pension or retirement accounts
  
  

• Using mid-year exchange rates instead of the year-end rate
  
  

Penalties You Don’t Want to Face

• FBAR: Non-willful violations can be up to $10,000 per account per year. Willful violations can exceed $100,000 or 50% of account balance.
  
  

• FATCA: Failure to file can cost $10,000, with additional fines up to $50,000 for continued non-compliance.
  
  

According to a 2022 IRS report, more than 56,000 taxpayers were assessed FBAR penalties between 2015 and 2020.

Best Practices for Staying Compliant

• Track all accounts and asset values monthly
  
  

• Use IRS-approved exchange rates
  
  

• Work with a tax professional familiar with expat issues
  
  

• File early to avoid deadline stress
  
  

FAQ

Do FBAR and FATCA cover cryptocurrency?
FBAR may cover foreign crypto held in certain accounts; FATCA rules are still evolving. Always check the latest IRS guidance.

If my accounts are closed now, do I still need to file?
Yes, if the balance exceeded the threshold at any point in the reporting year.

Can the IRS audit past years?
Yes, typically up to six years for FBAR non-compliance.

Do foreign businesses I own count?
Possibly, depending on structure and asset type.

Final Takeaway

FBAR and FATCA are two separate rules with different filing processes, thresholds, and agencies — and many expats must comply with both. Staying organized and informed is the best way to avoid penalties. With the right preparation, reporting your foreign accounts becomes just another part of your annual tax routine.

Recommended visuals:

• Chart comparing FBAR vs. FATCA requirements
  
  

• Infographic showing filing deadlines and thresholds
  
  

Schema suggestion:

• Article schema + FAQ schema for the Q&A section
  
  

M.Daniyal