Foreign Asset Reporting: FBAR, Form 8938, and Penalties

If you are a U.S. citizen, green card holder, or tax resident with money or investments outside the country, foreign asset reporting requirements come from two separate rules: the FBAR (FinCEN Form 114), which is triggered when your foreign accounts add up to more than $10,000 at any point in the year, and IRS Form 8938, which kicks in at thresholds ranging from $50,000 to $600,000 depending on your filing status and whether you live in the United States or abroad. The two filings have different deadlines, different thresholds, and different penalties, and clearing one does not excuse the other. Missing either can cost thousands of dollars per year even if you owe no additional tax.

Who Has to File

Both rules apply to “U.S. persons.” That covers every U.S. citizen (whether you live in the country or abroad), lawful permanent residents holding a green card, and anyone who qualifies as a tax resident under the substantial presence test.¹

The FBAR also reaches domestic corporations, partnerships, LLCs, trusts, and estates.¹ Form 8938 covers individuals and certain domestic entities, including some closely held corporations, partnerships, and trusts with foreign financial assets.²

You can owe an FBAR even for accounts you don’t own. Employees or officers with signature authority over a company’s overseas account must file if the aggregate account values cross $10,000. FinCEN has repeatedly extended the deadline for people with signature authority but no financial interest, so check the latest FinCEN notice for the current date.¹

What Counts as a Foreign Asset

The FBAR covers financial accounts held at institutions outside the United States: checking and savings accounts, brokerage accounts holding securities or commodities, and mutual funds maintained with a foreign bank or financial institution.¹ An account is reportable even if it produces no income.

Form 8938 reaches further. Beyond foreign bank and brokerage accounts, it captures ownership interests in foreign corporations, partnerships, and trusts, stock or securities issued by a non-U.S. entity (even paper certificates you keep at home), and foreign-issued life insurance policies or annuity contracts with a cash surrender value.³

Foreign pensions are a common source of confusion. Employer-sponsored plans with segregated individual accounts, foreign individual retirement accounts (like Canadian RRSPs), and defined contribution plans where you can track a balance generally need to be reported on Form 8938 if you meet the threshold, and some also trigger FBAR filings. Government social insurance programs resembling Social Security, and traditional defined benefit pensions where you cannot determine a current account value, are typically excluded from Form 8938.

One boundary that surprises people: foreign real estate held directly in your name does not need to be reported on either form. But if you hold that property through a foreign corporation, partnership, or trust, your interest in that entity is reportable on Form 8938.³ Anyone who used a foreign LLC to hold a vacation home or rental should factor that in.

The FBAR $10,000 Threshold

You must file an FBAR if the combined value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year.⁴ The word that matters is “aggregate.” Take the highest balance from each account, add them together, and if the sum crosses $10,000 for even a single day, you owe the filing. Splitting money across multiple accounts to stay under does not work.

To value each account, find its maximum balance during the year in local currency, then convert to U.S. dollars using the Treasury Department’s end-of-year exchange rate.⁵ A reasonable approximation of the highest value is acceptable; you do not need penny-level accuracy.

Form 8938 Thresholds

Form 8938 thresholds are much higher than the FBAR’s, and they vary by filing status and residency.

If you live in the United States:

Single or married filing separately: file if total foreign financial assets exceed $50,000 on the last day of the tax year, or $75,000 at any time during the year.⁶
Married filing jointly: the thresholds double to $100,000 at year-end or $150,000 at any time.⁶

If you live abroad:

Those thresholds measure total asset value, not income, so a modest foreign retirement account plus ordinary savings can push you over. Clearing the Form 8938 threshold does not release you from the FBAR — the two filings are independent, and many people owe both.

How and When to File

FBAR (FinCEN Form 114)

The FBAR is filed electronically through FinCEN’s BSA E-Filing System, not with your tax return.¹ You’ll need the name and address of each foreign financial institution, the account number, account type, and the maximum value during the year, and you indicate whether you have a financial interest in the account or only signature authority.

The deadline is April 15 following the calendar year you’re reporting. If you miss that date, an automatic extension pushes the deadline to October 15. You do not need to request it.¹

IRS Form 8938

Form 8938 attaches directly to your annual federal income tax return (Form 1040, 1040-NR, 1040-SR, or the applicable entity return).⁸ Its deadline matches your return deadline, including any extensions. The form asks you to describe each asset, name the institution holding it, report its maximum value during the year, and list any income or gains. If it isn’t attached to a return, the IRS does not consider it filed.

What Happens if You Miss an FBAR

FBAR penalties apply per account, per year, so someone with three unreported accounts over four years faces up to twelve separate violations.

For non-willful violations, the maximum civil penalty is $16,536 per violation as of the most recent inflation adjustment, effective for penalties assessed on or after January 17, 2025.⁹ A reasonable cause exception exists: if you can show the violation was due to reasonable cause and you properly reported the account balance, the penalty should not apply.¹⁰

Willful violations are much worse. The maximum is the greater of $165,353 or 50 percent of the account balance at the time of the violation.⁹ For a large account, the 50-percent measure can dwarf the flat cap. The reasonable cause exception does not apply.¹⁰

Criminal prosecution is possible for willful failures. A conviction carries up to five years in prison and a fine of up to $250,000. If the violation is part of a pattern of illegal activity involving more than $100,000 in a twelve-month period, the maximum fine rises to $500,000 and the prison term doubles to ten years.¹¹

The government has six years from the FBAR’s due date to assess civil penalties, whether the violation was willful or not.¹²

What Happens if You Miss Form 8938

Form 8938 has its own penalty structure. Failure to file draws a $10,000 penalty. If you still haven’t filed 90 days after the IRS mails you a notice, an additional $10,000 accrues for each 30-day period (or partial period) that the failure continues. The additional penalties cap at $50,000, bringing the total maximum to $60,000 per year of missed filing.¹³

If the IRS determines you have foreign financial assets but you don’t provide enough information to establish their value, the agency can presume the assets exceed the reporting threshold and assess penalties on that basis.¹³ The burden shifts to you to prove you were under.

Because the FBAR and Form 8938 are independent, the same underlying accounts can generate penalties under both regimes. For someone who ignored both filings across several years, the math gets frightening quickly.

Fixing Past Failures

If you’ve missed prior filings, the IRS offers several paths back into compliance. Which one fits depends on whether the failure was willful and whether you owe back taxes.

Delinquent FBAR Submission Procedures

The simplest path. If you properly reported all foreign income on your tax returns and paid all tax due but missed the FBAR itself, submit the late FBARs through the BSA E-Filing System. On the cover page, choose a reason for filing late and attach a statement. The IRS will not impose a penalty if the income was properly reported and taxed and you haven’t already been contacted about the delinquency.¹⁴

Delinquent International Information Return Procedures

A parallel process exists for late Form 8938 filings and similar returns. You attach the late Form 8938 to an amended tax return and file through normal channels. The IRS may still assess penalties during processing, even with a reasonable cause statement attached, so you may need to respond to correspondence to have them abated.¹⁵

Streamlined Filing Compliance Procedures

If you owe back taxes because foreign income was unreported and the failure was non-willful — meaning negligence, a mistake, or a good-faith misunderstanding of the law — the streamlined procedures let you file amended returns and delinquent FBARs with reduced penalties.¹⁶ You cannot use the program if the IRS has already opened a civil examination or criminal investigation.

The penalty depends on residency. U.S. residents pay a miscellaneous offshore penalty of 5 percent of the highest aggregate value of unreported foreign financial assets during the covered period.¹⁷ Taxpayers who qualify under the foreign resident track pay no miscellaneous offshore penalty at all. Either way, accuracy-related penalties, information return penalties, and FBAR penalties are waived for returns properly filed through the program.

Voluntary Disclosure Practice

If your failure was willful, the streamlined procedures are off limits. IRS Criminal Investigation runs a voluntary disclosure practice for taxpayers who come forward before the agency discovers the noncompliance on its own.¹⁸ A voluntary disclosure does not guarantee immunity, but it significantly reduces the risk of prosecution. The disclosure must be timely — meaning the IRS hasn’t already started examining you, received a third-party tip, or obtained evidence through criminal enforcement. You must cooperate fully, pay all tax, interest, and penalties owed, and acknowledge in writing that the failure was willful.

Records to Keep

You must keep records supporting your FBAR for five years from the filing due date, including the account name, account number, the name and address of the foreign institution, the account type, and the maximum value during the year.¹ If someone else files the FBAR on your behalf, such as an employer for accounts you have signature authority over, they hold the recordkeeping duty.

For Form 8938, standard IRS retention rules apply: generally three years from the date you file the return. Six years is the safer target given the FBAR’s six-year penalty assessment window and the extended audit period that unreported foreign assets can trigger. Keeping foreign bank statements, brokerage records, and entity documents for at least six years is the practical move.

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Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
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Internal Revenue Service. Comparison of Form 8938 and FBAR Requirements
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Internal Revenue Service. Basic Questions and Answers on Form 8938
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Financial Crimes Enforcement Network. Report Foreign Bank and Financial Accounts
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Financial Crimes Enforcement Network. Reporting Maximum Account Value
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eCFR. 26 CFR 1.6038D-2 – Requirement to Report Specified Foreign Financial Assets
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Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
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Internal Revenue Service. Instructions for Form 8938 – Statement of Specified Foreign Financial Assets
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eCFR. 31 CFR 1010.821 – Penalty Adjustment and Table
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Office of the Law Revision Counsel. 31 USC 5321 – Civil Penalties
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Office of the Law Revision Counsel. 31 USC 5322 – Criminal Penalties
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Internal Revenue Service. 8.11.6 FBAR Penalties
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Office of the Law Revision Counsel. 26 USC 6038D – Information With Respect to Foreign Financial Assets
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Internal Revenue Service. Delinquent FBAR Submission Procedures
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Internal Revenue Service. Delinquent International Information Return Submission Procedures
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Internal Revenue Service. Streamlined Filing Compliance Procedures
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Internal Revenue Service. U.S. Taxpayers Residing in the United States
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Internal Revenue Service. IRS Criminal Investigation Voluntary Disclosure Practice