FBAR vs. Form 8938: Two Forms, Two Agencies, and Why Both Often Apply

The short version

They look like the same form because they ask similar questions. They are not. The FBAR exists under banking secrecy law and is filed with the Financial Crimes Enforcement Network. Form 8938 exists under FATCA and is filed with the IRS as part of your return. Two statutes, two agencies, two thresholds, and no credit for having done the other one.

The threshold trap

The FBAR threshold is the one most often misread. It is aggregate — every foreign financial account added together — and it is measured at the highest point during the calendar year rather than at year end. Six accounts holding $2,000 each cross it. A single account that briefly held $11,000 while a property sale settled crosses it, even if it ended the year at zero. And an account closed in February counts for the period you held it.

Form 8938 works differently in a way that matters when you move. Its thresholds are four times higher for people who qualify as living abroad, and they have both a last-day test and an any-time test. Someone who was comfortably under the threshold while overseas can be well over it in the year they come home, with no change in what they own.

What counts

The FBAR covers foreign financial accounts — bank accounts, brokerage accounts, and certain other accounts held at a financial institution outside the United States, including accounts you do not own but have signature authority over. That last category catches people with authority over an employer’s or a relative’s foreign account.

Form 8938 is broader in one direction and narrower in another. It covers specified foreign financial assets, which include foreign financial accounts but also reach certain assets held outside an account — foreign stock or securities held directly, interests in foreign entities, and certain foreign financial instruments. Directly held foreign real estate is generally not covered by either form, though income from it is still reportable on the return.

Records to keep

• The highest value of each account during each calendar year, in the account currency and converted to dollars
• The institution’s name and address and the account number for each account
• The dates each account was opened and closed
• Any account over which you have signature authority but no financial interest
• Statements supporting the peak value, retained for the record-keeping period

Three mechanics that produce wrong numbers

Common mistakes

• Reporting year-end balances instead of the maximum value during the year
• Treating the $10,000 as per account rather than aggregate across all accounts
• Filing the FBAR with the tax return — it goes to FinCEN separately
• Omitting accounts held for a few months, or closed during the year
• Omitting accounts you do not own but can sign on
• Assuming that because no tax is owed, neither form is required

When to get specialist help

Foreign pensions, foreign pooled or mutual funds, interests in foreign companies, partnerships or trusts, and any year the IRS has already asked about all need review beyond the two forms discussed here — they can bring additional information returns with substantial penalties of their own. If a required form was missed in an earlier year, read the guide on delinquent filing paths before filing anything late.