FBAR vs Form 8938: Reporting Requirements of Foreign Financial Accounts

FBAR (FinCEN Form 114)

FBAR is a financial disclosure form required by FinCEN, not the IRS. It applies to U.S. persons with foreign financial accounts exceeding $10,000 at any time during the year. Types of accounts include bank, brokerage, and mutual funds.

• Deadline: April 15th, with automatic extension to October 15th.
• Penalties: Can be severe, including fines and potential criminal charges for willful non-compliance.

Form 8938 (Statement of Specified Foreign Financial Assets)

Form 8938 is an IRS tax form for individuals with specified foreign financial assets exceeding certain thresholds, varying based on filing status and residency.

• Filing: Along with the annual federal income tax return.
• Deadlines: April 15th, extendable to October 15th.
• Penalties: Include fines and potential accuracy-related penalties for underreported income.

Key Differences

• Thresholds: FBAR's threshold is $10,000, while Form 8938's start at $50,000 for single taxpayers in the U.S. and $200,000 for those abroad.
• Scope: FBAR is limited to foreign financial accounts, whereas Form 8938 encompasses a wider range of foreign financial assets.
• Filing Deadlines: FBAR has a fixed deadline with an automatic extension; Form 8938's deadline aligns with the federal income tax return.

Conclusion

Correctly reporting foreign financial assets is crucial to avoid penalties. Understanding FBAR and Form 8938 ensures compliant reporting. Seek professional tax advice for complex situations.