In today’s hyperconnected world, it’s easier than ever for U.S. taxpayers to hold money abroad—whether that’s owning rental property in Costa Rica, having signature authority over a family account in Ghana, or maintaining an online poker account in Malta. But with global opportunity comes serious tax responsibility.
If you’re a U.S. person (citizen, green card holder, resident alien, or certain business entities), Uncle Sam wants to know about your foreign financial activity. Two key forms govern this disclosure: FinCEN Form 114 (FBAR) and IRS Form 8938 (under FATCA).
Let’s break it down: who needs to file, what the thresholds are, when they overlap, and—importantly—what happens if you don’t comply.
What Is FBAR (FinCEN Form 114)?
The Foreign Bank Account Report, or FBAR, is required if you have a financial interest in, or signature authority over, foreign financial accounts totaling over $10,000 at any time during the year.
Examples of foreign accounts that count:
- Savings, checking, or brokerage accounts in foreign banks
- Foreign mutual funds
- Online gambling accounts in non-U.S. jurisdictions
- Inherited accounts from relatives abroad
- Business or personal accounts held jointly with a family member overseas
Key Point: It’s not about whether the money is “yours” in the traditional sense. If your name is on the account or you can move money around, the IRS wants to know.
Who Must File FBAR?
The following types of U.S. persons must file FBAR if the aggregate value of their foreign accounts exceeds $10,000 during the year:
- Individuals (citizens, residents)
- Partnerships
- Corporations
- Trusts and estates
You’re also on the hook if you simply have signature authority—even if the account isn’t technically yours.
FBAR Filing Thresholds & Exceptions
| Condition | Requirement |
| Total foreign accounts > $10,000 | Must file FBAR |
| Includes multiple small accounts | Aggregate value matters, not per-account basis |
| Spouse already filing jointly | One spouse may file with a Form 114a authorization |
| Foreign branch of U.S. bank | Not reportable |
| U.S. military banking facility abroad | Not reportable |
Penalties for Not Filing FBAR (2025 Rates)
| Violation Type | Penalty (Per Violation) |
| Non-Willful | Up to $16,536 |
| Willful | Greater of $165,353 or 50% of the account balance |
| Criminal Charges | Possible for willful violations—think fines & imprisonment |
Even if the account is dormant or no tax is due, not reporting it can cost you dearly.
What Is IRS Form 8938 (Under FATCA)?
Form 8938 is the IRS’s way of asking: “Got any big money overseas?” It applies to specified foreign financial assets and is part of your annual tax return—not filed separately like FBAR.
Unlike FBAR, Form 8938 has higher thresholds, especially for Americans living abroad.
Form 8938 Reporting Thresholds for Individuals
| Filing Status | Living in U.S. | Living Abroad |
| Single / Head of Household | $50,000 (year-end) / $75,000 (during year) | $200,000 / $300,000 |
| Married Filing Jointly | $100,000 / $150,000 | $400,000 / $600,000 |
Tip: The IRS considers you “living abroad” if you were a bona fide resident of another country for an entire tax year or were physically outside the U.S. for 330 full days in any 12-month span.
Assets Covered by Form 8938
- Foreign bank and brokerage accounts
- Foreign-issued stocks, bonds, mutual funds
- Interests in foreign partnerships or corporations
- Foreign retirement accounts
- Foreign life insurance with cash value
Many of these assets also trigger FBAR reporting—so double-check both sets of rules!
Key Differences: FBAR vs. Form 8938
| Feature | FBAR (FinCEN 114) | Form 8938 (FATCA) |
| Filed With | FinCEN (not IRS) | IRS (with your 1040) |
| Threshold | $10,000 aggregate | $50K–$600K depending on filing status/location |
| Who Must File | U.S. persons with foreign accounts | U.S. taxpayers with foreign financial assets |
| Types of Assets | Foreign accounts only | Broader: accounts + stocks, partnerships, etc. |
| Penalties | Civil/criminal; large per-account fines | $10,000 minimum + $50,000 max + IRS penalties |
Overlapping Scenarios
Let’s say Terry, a U.S. citizen living in Spain, owns €50,000 in a Spanish investment account and a €20,000 rental income account. Since the accounts together exceed the FBAR threshold and the investment account counts as a specified asset, Terry must file both FBAR and Form 8938.
Ignoring this? Not worth it.
Best Practices to Stay Compliant
- Review All Foreign Ties: Signature authority, indirect ownership, or family-connected accounts still count.
- Track Account Balances: Use the highest annual value (not just year-end).
- Don’t Assume You’re Exempt: Even dormant or jointly-held accounts might trigger filing.
- Consult an Expert: JS Morlu specializes in international compliance. We help individuals, nonprofits, and government contractors navigate these murky waters.
Record Retention: Keep documentation (statements, contracts) for at least five years.
Final Thoughts: Don’t Gamble with Foreign Reporting
Whether you’re a global real estate investor, a digital nomad with European bank accounts, or a successful entrepreneur with overseas partnerships—FBAR and FATCA compliance isn’t just about paperwork. It’s about protecting your wealth and your peace of mind.
At JS Morlu, our international tax planning services are tailored to uncover every reporting obligation and ensure you’re not blindsided by penalties down the road. Ready to protect your assets and stay compliant?
