What Is FBAR and FATCA: Thresholds, Deadlines, and Penalties

FBAR and FATCA are the two federal reporting rules that apply when a U.S. person holds money or investments outside the country. The FBAR (FinCEN Form 114) is triggered when your foreign financial accounts together top $10,000 at any point in the year. FATCA (IRS Form 8938) kicks in at higher thresholds that depend on your filing status and whether you live in the United States or abroad. They are separate filings on separate systems, and one does not substitute for the other.¹

Who Has to File

Both rules apply to “United States persons,” a category broader than citizenship. It covers U.S. citizens (including minor children), U.S. residents, and entities created or organized under U.S. law, including corporations, partnerships, LLCs, trusts, and estates.² Green card holders and people who meet the substantial presence test count as U.S. residents even if they spend most of the year overseas.

One detail that catches business owners: how an entity is treated for income tax doesn’t control its FBAR obligation. A single-member LLC that’s disregarded for tax purposes still files its own FBAR if it holds qualifying foreign accounts.²

You also have an FBAR obligation if you have signature authority over someone else’s foreign account, even without any financial interest in the money. This commonly affects corporate officers and employees authorized to transact on company accounts. Former employees with past signature authority must still file, providing what information they can, including the former employer’s name and their title.³

For a jointly held foreign account, each owner reports the full account value on their own FBAR — you don’t split the balance. Spouses get a shortcut: if all the foreign accounts are jointly held with your spouse, one of you can file a single FBAR for both. Both sign FinCEN Form 114a authorizing the arrangement and keep it in your records rather than sending it to FinCEN.⁴

The FBAR 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.⁵ It’s an aggregate figure, so three accounts holding $4,000 each would put you over the line even though no single account hits $10,000. The trigger is the highest combined balance at any moment during the year, not the year-end total.

FBAR covers foreign financial accounts where you have a financial interest or signature authority: bank accounts, brokerage accounts, mutual funds, insurance policies with a cash value, and certain retirement accounts held at foreign institutions.⁶ The common thread is that the account sits at a financial institution outside the United States.

The FATCA Thresholds

FATCA reporting under 26 U.S.C. § 6038D uses higher dollar thresholds that shift with your filing status and whether you’re a U.S. or foreign resident.⁷

If you live in the United States:

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

If you live abroad, the thresholds jump:

Single or married filing separately: $200,000 on the last day of the tax year or $300,000 at any time.
Married filing jointly: $400,000 on the last day of the year or $600,000 at any time.

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FATCA reaches further than FBAR. Along with foreign financial accounts, it covers investment assets held outside a financial institution: foreign stock and securities held directly, interests in foreign partnerships, foreign financial instruments, and contracts with non-U.S. counterparties.⁹ Shares of a foreign company held directly, rather than through a brokerage account, are a FATCA asset even though they wouldn’t appear on an FBAR.

If you hit both the FBAR and a FATCA threshold, you file both.¹

What’s Not Reportable

Not every foreign connection triggers a filing. For the FBAR, you can skip accounts owned by a governmental entity or international financial institution, accounts on a U.S. military banking facility, and accounts held in an IRA or retirement plan where you’re an owner, beneficiary, or participant. Accounts covered by another U.S. person’s FBAR through a trust arrangement also don’t need to be duplicated.⁶

For FATCA, assets held at U.S. financial institutions don’t count, including domestic branches of foreign banks. U.S. mutual fund accounts, IRAs, 401(k) plans, and brokerage accounts at U.S. firms are all excluded. Foreign social security equivalent benefits are excluded; foreign pension plans are not.¹⁰

Directly held foreign real estate doesn’t go on Form 8938. But if you own that property through a foreign entity, your interest in the entity itself is a reportable asset.¹¹ That distinction catches people off guard with vacation properties held through offshore companies.

Cryptocurrency sits in an unsettled place. Under FinCEN Notice 2020-2, a foreign account holding only virtual currency is not reportable on the FBAR, though FinCEN has said it intends to amend the regulations to change that.¹² If a foreign account holds both cryptocurrency and traditional currency or other reportable assets, the whole account is reportable. FATCA’s broader “specified foreign financial assets” language may still capture crypto held at a foreign institution when the FATCA thresholds are met, and guidance is still developing.

How and When to File Each

The two forms use completely separate systems.

The FBAR is filed electronically through FinCEN’s BSA E-Filing System. It doesn’t go with your tax return and isn’t sent to the IRS.¹ It’s due April 15 for the prior calendar year. Miss that date and you get an automatic extension to October 15, no request needed.⁶

Form 8938 gets attached to your annual federal income tax return — 1040, 1041, 1065, 1120, or another qualifying return.¹³ Because it’s part of the return, its deadline matches yours, including any extensions.¹

Both forms ask for the maximum value of each account during the year, not just the year-end balance. For accounts in foreign currency, convert the maximum balance to U.S. dollars using the Treasury’s Reporting Rates of Exchange for the last day of the calendar year. Where Treasury doesn’t publish a rate, use another verifiable source and note it.¹⁴ Records tied to your foreign accounts must be kept for five years after the FBAR filing date.¹⁵

Penalties

The penalties are steep enough to dwarf the balances in many of the accounts they apply to, and FBAR and FATCA carry separate penalty structures.

For a non-willful FBAR violation, the maximum civil penalty is $16,536 per violation under the most recent inflation adjustment. Each unreported account in each year is a separate violation. For a willful violation, the penalty is the greater of $165,353 or 50% of the account balance at the time of the violation.¹⁶ On a $500,000 account, that’s a $250,000 penalty for a single year.

Willful FBAR failures also carry criminal exposure under 31 U.S.C. § 5322: a fine of up to $250,000 and up to five years in prison. If the violation is part of a pattern of illegal activity involving more than $100,000 in a 12-month period, the maximum fine rises to $500,000 and the prison term doubles to ten years.¹⁷

Failing to file Form 8938 starts at a $10,000 penalty. If the return still isn’t filed 90 days after the IRS mails a notice of failure, another $10,000 accrues for each additional 30-day period, capped at $50,000, for a possible total of $60,000 per year.⁷

Penalties aren’t automatic. The IRS considers whether you had reasonable cause — whether you exercised ordinary business care and prudence but were still unable to comply — looking at your compliance history, the timeline of events, and circumstances beyond your control.¹⁸

Fixing Past Filing Mistakes

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

The Delinquent FBAR Submission Procedures apply when you properly reported all foreign income on your tax returns but didn’t know you needed to file the FBAR. You file the late FBARs through the BSA E-Filing System, include a statement explaining the delay, and select the reason on the cover page. The IRS won’t impose penalties if you haven’t been contacted about the delinquent FBARs, aren’t under civil examination or criminal investigation, and have already paid all tax due on the account income.¹⁹

The Streamlined Filing Compliance Procedures apply when you owe back tax on foreign income but your failure was not willful. You certify that the failure was due to negligence, inadvertence, mistake, or a good faith misunderstanding of the law. There are separate tracks for U.S. residents and taxpayers abroad, and you can’t use these procedures if the IRS has already opened a civil examination or a criminal investigation.²⁰

The IRS Criminal Investigation Voluntary Disclosure Practice is the route when the failure was willful and carries criminal exposure. It requires a truthful and complete disclosure before the IRS contacts you, full cooperation, and payment of all tax, interest, and penalties owed. The process starts with a preclearance request on Form 14457, followed by a full application within 45 days of receiving preclearance. It’s not available for income from illegal sources.²¹

1
Internal Revenue Service. Comparison of Form 8938 and FBAR Requirements
2
Financial Crimes Enforcement Network. Who Is A United States Person
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Financial Crimes Enforcement Network. Reports of Foreign Financial Accounts (FBARs) Requirements for Former Employees
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Financial Crimes Enforcement Network. Reporting Jointly Held Accounts
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Financial Crimes Enforcement Network. Report Foreign Bank and Financial Accounts
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Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
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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. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
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Internal Revenue Service. Summary of FATCA Reporting for U.S. Taxpayers
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Internal Revenue Service. Instructions for Form 8938
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Internal Revenue Service. Basic Questions and Answers on Form 8938
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Financial Crimes Enforcement Network. Report of Foreign Bank and Financial Accounts (FBAR) Filing Requirement for Virtual Currency
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Internal Revenue Service. Instructions for Form 8938
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Financial Crimes Enforcement Network. Reporting Maximum Account Value
15
eCFR. 31 CFR 1010.430 – Nature of Records and Retention Period
16
Federal Register. Financial Crimes Enforcement Network – Inflation Adjustment of Civil Monetary Penalties
17
Office of the Law Revision Counsel. 31 USC 5322 – Criminal Penalties
18
Internal Revenue Service. IRM Part 20 – Penalty and Interest – 20.1.1 Introduction and Penalty Relief
19
Internal Revenue Service. Delinquent FBAR Submission Procedures
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Internal Revenue Service. Streamlined Filing Compliance Procedures
21
Internal Revenue Service. IRS Criminal Investigation Voluntary Disclosure Practice