What Is FATCA? Form 8938 Thresholds, Filing, and Penalties

FATCA reporting requirements and penalties come down to one form for most individuals: Form 8938, Statement of Specified Foreign Financial Assets, filed with your annual tax return when your foreign holdings cross set dollar thresholds. Miss it and the penalty starts at $10,000 for the year, with more stacking on if you ignore an IRS notice. The Foreign Account Tax Compliance Act, enacted in 2010 as part of the HIRE Act, sets these rules for U.S. citizens, resident aliens, and certain domestic entities.¹

Who Has to File Form 8938

FATCA’s individual reporting duty falls on “specified individuals”: U.S. citizens, U.S. resident aliens, and nonresident aliens who elect to file a joint return with a U.S. spouse. If you fit one of those categories and your foreign financial assets exceed the dollar thresholds below, Form 8938 is required with your return.²

The obligation also reaches certain domestic corporations, partnerships, and trusts closely held by a specified individual that meet passive income or passive asset tests. These “specified domestic entities” file Form 8938 on the same footing.³

Reporting Thresholds

Whether you file depends on your filing status, where you live, and how much you hold offshore. Each threshold has two triggers: a year-end value and a highest-value-during-the-year test. You file if you exceed either.

Living in the United States

Single or married filing separately: foreign assets exceed $50,000 on the last day of the year, or $75,000 at any point during the year.
Married filing jointly: foreign assets exceed $100,000 at year-end, or $150,000 at any point during the year.⁴

Living Abroad

Single or married filing separately: foreign assets exceed $200,000 at year-end, or $300,000 at any point during the year.
Married filing jointly: foreign assets exceed $400,000 at year-end, or $600,000 at any point during the year.⁴

An American living in London with $150,000 spread across local accounts has no Form 8938 obligation. Someone living in Chicago with the same balances does.

Specified Domestic Entities

A qualifying domestic corporation, partnership, or trust files if its foreign financial asset value exceeds $50,000 on the last day of the tax year or $75,000 at any point during the year.³

What Counts as a Specified Foreign Financial Asset

The category is wider than most people expect. It includes any financial account maintained at a foreign financial institution: bank accounts, brokerage accounts, savings accounts. It also reaches assets held outside any account, such as foreign stocks and securities, financial instruments or contracts issued by a foreign counterparty, and ownership interests in foreign partnerships, corporations, and trusts.²

Foreign pension plans and deferred compensation plans count too. If you accrued benefits in an overseas employer pension, that interest is reportable. The foreign equivalent of U.S. Social Security is not, and does not need to be reported.⁵

Two boundaries worth noting. An account at a foreign branch of a U.S. financial institution is not reportable on Form 8938; if your U.S. bank has a branch in Paris and you keep funds there, it falls outside the form’s reach.⁴ And if a foreign asset is already reported on Form 3520, 5471, 8865, or 8621, you don’t repeat its details on Form 8938; you identify the other form in Part IV. You still count the asset’s value when testing whether you meet the threshold.³

What Goes on the Form and How to Value Assets

For each foreign account, list the financial institution’s name and address, the account number, and the maximum value during the tax year. For stocks or securities held directly, list the issuer’s name and address and enough detail to identify the specific class or issue. For interests in foreign entities or contracts with foreign counterparties, provide the names and addresses of all parties and identifying information.²

Most of the work is in the maximum value. You need the highest balance or fair market value the asset reached at any point during the year, converted to U.S. dollars. For bank accounts, year-end statements usually give you what you need. For interests in foreign pension plans or estates, use the fair market value of your beneficial interest as of the last day of the tax year.⁵ The Treasury Department publishes official exchange rates for the conversion.⁶ You also indicate whether each asset was acquired or disposed of during the year.⁷

How and When to File

Form 8938 attaches to your annual tax return. It cannot be filed on its own. The IRS is explicit: do not send Form 8938 to the IRS unless it is attached to an annual return or an amended return. The “annual return” is broader than Form 1040 alone; it also includes Form 1040-NR, Form 1040-SR, Form 1041 for trusts and estates, Form 1065 for partnerships, and Form 1120 for corporations. The Form 8938 deadline matches the deadline for whatever return it’s attached to, extensions included.⁵

Penalties for Not Filing or Filing Incomplete

Skipping Form 8938 triggers a $10,000 penalty for each year the form is not filed. If the IRS sends you a notice and you still don’t file within 90 days, another $10,000 penalty accrues for each 30-day period of continued non-compliance, up to $50,000 in continuation penalties.² A single year of stubborn non-filing can reach $60,000.

Any underpayment of tax connected to an undisclosed foreign financial asset carries a 40% accuracy-related penalty, double the 20% rate that applies to other understatements.⁸ On $7,000 of unpaid tax from unreported foreign investment income, that’s a $2,800 penalty on top of the tax itself. Willful concealment can also escalate into criminal prosecution for tax evasion.

Non-filing has one more consequence people miss. If you fail to file Form 8938 or leave an asset off the form, the statute of limitations on your entire return stays open until three years after you finally provide the information. If the failure is due to reasonable cause, the extension is limited to items connected to the missing asset. A separate rule extends the statute to six years when you omit more than $5,000 in gross income attributable to a specified foreign financial asset, whether or not you crossed the reporting threshold.⁹

Form 8938 Is Not the Same as the FBAR

This is the confusion that trips up the most people. FATCA’s Form 8938 and the FBAR (FinCEN Form 114) both cover foreign accounts, but they are separate obligations. Filing one does not excuse you from the other, and many people with foreign accounts owe both.

Where they go: Form 8938 attaches to your tax return and goes to the IRS. The FBAR is filed electronically with the Financial Crimes Enforcement Network.⁴
Thresholds: the FBAR triggers at $10,000 in combined foreign account balances at any point during the year. Form 8938 starts at $50,000 and rises based on filing status and residence.
Scope: the FBAR covers financial accounts only. Form 8938 covers accounts plus directly held foreign stocks, interests in foreign entities, and foreign pension plans. An account at a foreign branch of a U.S. bank is reportable on the FBAR but not on Form 8938.⁴
Deadlines: both are due April 15. The FBAR has an automatic extension to October 15 with no request needed. Form 8938’s extension follows the extension on your income tax return.¹⁰

A $60,000 foreign bank account gets reported on both forms. $80,000 in foreign stock held directly (outside an account) is on Form 8938 but not the FBAR.

Fixing Missed Filings

If you have prior-year Form 8938 filings you missed, the IRS offers a few paths back into compliance. Which one fits depends on whether your failure was willful and whether the IRS has already contacted you.

Delinquent International Information Return Submission Procedures

If you have reasonable cause and the IRS hasn’t contacted you, you can attach the delinquent Form 8938 to an amended return for the relevant year with a statement explaining the reasonable cause. Penalties may still be assessed initially during processing, but your statement will be considered.¹¹

Streamlined Filing Compliance Procedures

For non-willful failures (negligence, a good-faith misunderstanding, or a genuine mistake), streamlined procedures are available for both U.S. residents and taxpayers living abroad. You must certify that your conduct was non-willful, and you are ineligible if the IRS has already opened a civil examination or criminal investigation. Streamlined procedures are limited to individual taxpayers, including estates, and you need a valid Social Security number or a concurrent ITIN application.¹²

The IRS may also reduce or remove penalties if you demonstrate reasonable cause, meaning you acted responsibly and the failure resulted from circumstances beyond your control. Not all international reporting penalties qualify for this relief, so the strength of the explanation matters.¹³ Acting before the IRS makes contact keeps the most options open.

1
Internal Revenue Service. Summary of Key FATCA Provisions
2
Office of the Law Revision Counsel. 26 USC 6038D – Information With Respect to Foreign Financial Assets
3
Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets?
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Internal Revenue Service. Comparison of Form 8938 and FBAR Requirements
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Internal Revenue Service. Instructions for Form 8938 (Rev. November 2021)
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U.S. Treasury Fiscal Data. Treasury Reporting Rates of Exchange
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Internal Revenue Service. About Form 8938, Statement of Specified Foreign Financial Assets
8
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
9
Internal Revenue Service. Summary of FATCA Reporting for U.S. Taxpayers
10
FinCEN.gov. Due Date for FBARs
11
Internal Revenue Service. Delinquent International Information Return Submission Procedures
12
Internal Revenue Service. Streamlined Filing Compliance Procedures
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Internal Revenue Service. International Information Reporting Penalties