FBAR and FATCA explained: FinCEN Form 114 vs Form 8938

Americans with money abroad keep running into two acronyms, FBAR and FATCA, often in the same sentence. They are two separate reports with different thresholds, different rules about what counts, and different places to file. The IRS says it plainly: Form 8938 "does not replace or otherwise affect a taxpayer's obligation to file FinCEN Form 114", and unlike Form 8938, the FBAR "is not filed with the IRS".¹

Here is what each one is, side by side, using the IRS's own comparison and the forms' instructions.

The two reports at a glance

Summarised from the IRS comparison of the two forms.¹

Where the names come from

FBAR is short for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114. It comes from the Bank Secrecy Act⁴ and goes to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury separate from the IRS.¹

FATCA is the Foreign Account Tax Compliance Act, passed as part of the HIRE Act. Most of it is about foreign financial institutions reporting on their US account holders. The same act also added a requirement for US persons to report, depending on value, their foreign financial accounts and assets.⁵ For individuals that report is Form 8938, so when people say "FATCA reporting" about their own taxes, they usually mean Form 8938.

Who files each one

The FBAR applies to US persons (citizens, resident aliens, trusts, estates and domestic entities) with a financial interest in or signature authority over foreign financial accounts above the threshold. Form 8938 applies to "specified individuals", meaning US citizens, resident aliens and certain nonresident aliens, and to certain domestic entities.¹

One difference trips people up. Form 8938 rides on the income tax return: its instructions say that someone with no income tax return to file for the year doesn't file Form 8938 either, whatever their foreign assets are worth.²

The thresholds

FBAR. FinCEN's rule is about the combined value of your foreign financial accounts exceeding $10,000 at any time during the calendar year, counting accounts you own and accounts you only have signature authority over.³ "Combined" means adding up each account's highest value for the year. IRS Publication 5569 gives the example of three accounts at $3,000, $1,000 and $8,000: together they pass $10,000 even though none does alone.⁴ Our maximum account value guide walks through the arithmetic. IRS examiner guidance adds one wrinkle: money moved from one foreign account to another during the year "must only be counted once".⁷ The calculator doesn't net out transfers, so its total can be higher than an examiner's. Ask a tax professional if that matters for you.

Form 8938. The thresholds are much higher and depend on your filing status and whether you live abroad. Each has two tests: the value on the last day of the tax year, and the value at any time during the year.¹

"Living abroad" has a specific meaning here. Your tax home must be in a foreign country, and you must either have been a bona fide resident of a foreign country for an uninterrupted period that includes a whole tax year, or have been present abroad at least 330 full days in a 12-month period that ends in the tax year.²

What counts

Both forms cover ordinary accounts at foreign banks. Beyond that they diverge: the FBAR is about accounts, while Form 8938 also reaches some assets held outside any account. The IRS's table of asset types, abridged:¹

Two rows surprise people. A US bank's branch in, say, London holds a foreign account for the FBAR, because the FBAR looks at where the account is, not whose bank it is.⁴ And signature authority, such as a power of attorney over a parent's account abroad, is an FBAR matter but generally not a Form 8938 one.¹

Fintech accounts and foreign pensions get their own guides: Wise and Revolut on the FBAR and foreign pensions and the FBAR.

How values and exchange rates work

Both forms start from the highest value during the year, in the asset's own currency, converted to dollars at a year-end exchange rate: the end of the calendar year for the FBAR, the end of the tax year for Form 8938.¹

The FBAR instructions name the Treasury's rate for the last day of the calendar year, and only where Treasury has no rate do they allow "another verifiable exchange rate" with its source.³ Form 8938's instructions also point to the Treasury rate, but add an exception: you may rely on the conversion rate shown on an account statement issued at least annually.² They also spell out that the year-end rate applies even to an asset you sold or otherwise disposed of before the end of the year.²

Our FBAR exchange rates guide lists the Treasury's year-end rates, and the free FBAR calculator converts each account's maximum at them and rounds up the way FinCEN asks.

Deadlines and where each one goes

FBAR: it must be received by April 15 of the following year. FinCEN grants an automatic extension to October 15, and you don't need to ask for it.³ It is filed electronically through FinCEN's BSA E-Filing System and is not part of your tax return.⁶

Form 8938: it is attached to your annual return and due when that return is due, including extensions. The instructions say not to send it to the IRS on its own.²

The two do meet on the tax return in one place. Form 1040's Schedule B asks FBAR-related questions (7a and 7b), even though the FBAR itself goes to FinCEN.⁴

Penalties, briefly

For Form 8938, the IRS lists up to $10,000 for failing to disclose, plus $10,000 for each 30 days of non-filing after an IRS notice, up to $60,000, and possible criminal penalties. FBAR civil penalties are adjusted for inflation every year, and criminal penalties may also apply.¹ Publication 5569 adds that when a late FBAR is properly filed and the IRS finds reasonable cause, no penalty is imposed.⁴

Where Borderless Budget fits

Borderless Budget is a budgeting and net worth app, not a tax preparer, and it doesn't work out Form 8938. What it can help with is the slow part of the FBAR: knowing each foreign account's highest balance and converting it at the Treasury's year-end rate. The calculator does the conversion for figures you type. The numbers you type stay in your browser; we don't send or store them.

Related reading: FBAR maximum account value, explained, FBAR exchange rates, Wise and Revolut on the FBAR, Foreign pensions and the FBAR, Expat financial planning guide.