FBAR and FATCA Compliance for US Expats: What You Must File and When

The United States taxes its citizens on worldwide income — regardless of where they live. That principle alone sets the US apart from nearly every other country. But beyond income reporting, American expats face a second layer of obligation: reporting foreign financial accounts and assets to two separate government agencies under two separate legal frameworks.

Miss either one and the penalties can be catastrophic — up to $10,000 per violation for non-willful failures, and up to the greater of $100,000 or 50% of the account balance per violation for willful failures. The IRS has collected billions in FBAR penalties alone over the past decade.

As former US Treasury and IRS agents, we have seen these cases from both sides. This guide explains exactly what FBAR and FATCA require, how they overlap, and what to do if you are behind.

FBAR stands for the Report of Foreign Bank and Financial Accounts. It is filed on FinCEN Form 114 with the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury — not the IRS. This distinction matters: FBAR is a Treasury reporting requirement, not a tax return, and it is governed by the Bank Secrecy Act rather than the Internal Revenue Code.

You must file FBAR if you are a US person — a citizen, resident alien, domestic entity, trust, or estate — and you have a financial interest in or signature authority over one or more foreign financial accounts, and the aggregate maximum value of those accounts exceeded $10,000 at any point during the calendar year.

The $10,000 threshold is aggregate, not per account. If you have three foreign accounts that each held $4,000 at their peak, you still must file because the aggregate ($12,000) exceeds the threshold.

The definition is broad:

• Bank accounts (checking, savings, time deposits)
• Securities accounts (brokerage, mutual fund)
• Commodity futures or options accounts
• Insurance policies with cash value
• Annuity policies with cash value
• Accounts held at foreign branches of US financial institutions

Notably, foreign real estate held directly does not require FBAR reporting — but a foreign bank account used to hold proceeds from a real estate sale does.

FBAR is filed electronically through the BSA E-Filing System at fincen.gov. The deadline is April 15, with an automatic extension to October 15 — no extension request required.

FBAR is filed separately from your tax return. It is not attached to Form 1040 and is not submitted to the IRS.

The penalty structure is severe:

• Non-willful violation: Up to $10,000 per violation per year. Courts have split on whether "per violation" means per account or per form — some circuits have held it means per account, which multiplies exposure dramatically.
• Willful violation: Up to the greater of $100,000 or 50% of the account balance per violation per year. Multiple years of willful non-filing can result in penalties exceeding the total account value.
• Criminal penalties: Willful violations can also result in criminal prosecution, fines up to $250,000, and imprisonment up to five years.

The IRS has aggressively pursued FBAR enforcement, particularly against taxpayers with Swiss, Israeli, and other offshore accounts. The statute of limitations for FBAR violations is six years from the filing deadline.

FATCA was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. It operates on two levels: it requires US taxpayers to report specified foreign financial assets on Form 8938, and it requires foreign financial institutions (FFIs) to report information about US account holders directly to the IRS.

The FFI reporting component is what gives FATCA its teeth. Foreign banks that fail to comply with FATCA face a 30% withholding tax on certain US-source payments. As a result, most major foreign financial institutions now report US account holder information to the IRS automatically — meaning the IRS often knows about your foreign accounts before you file.

Form 8938 is filed with your federal income tax return (Form 1040). The filing thresholds depend on your filing status and whether you live in the US or abroad:

Living outside the US:

• Single or married filing separately: Aggregate value exceeds $200,000 on the last day of the year or $300,000 at any point during the year
• Married filing jointly: Aggregate value exceeds $400,000 on the last day of the year or $600,000 at any point during the year

Living in the US:

• Single or married filing separately: Aggregate value exceeds $50,000 on the last day of the year or $75,000 at any point during the year
• Married filing jointly: Aggregate value exceeds $100,000 on the last day of the year or $150,000 at any point during the year

The higher thresholds for expats reflect the reality that foreign accounts are often the primary banking relationship for Americans living abroad, not offshore tax shelters.

Form 8938 covers specified foreign financial assets, which include:

• Foreign financial accounts (bank, brokerage, pension)
• Stock or securities issued by a foreign corporation
• Any interest in a foreign entity
• Any financial instrument or contract with a foreign counterpart
• Foreign pension plans and deferred compensation plans
• Foreign partnerships, trusts, and estates in which you have an interest

This is broader than FBAR. Form 8938 captures foreign stock holdings, foreign business interests, and foreign pension plans that FBAR does not require you to report.

• Failure to file Form 8938: $10,000 penalty, plus an additional $10,000 for each 30-day period of continued failure after IRS notice, up to a maximum of $50,000.
• Underpayment attributable to undisclosed foreign assets: 40% accuracy-related penalty (vs. the standard 20%).
• Statute of limitations: The IRS has 6 years to assess tax if you omit more than $5,000 of income attributable to a specified foreign financial asset. If you fail to file Form 8938 entirely, the statute of limitations does not begin to run at all for items related to the omitted assets.

The two forms overlap significantly — most foreign bank accounts that trigger FBAR also trigger Form 8938 at higher balances. But they are not duplicative: you must file both when both thresholds are met. Filing one does not satisfy the other.

Foreign pension plans — including the UK's ISA, Canada's RRSP, Australia's superannuation, and similar vehicles — are among the most commonly misreported foreign assets. They are often subject to FBAR reporting, Form 8938 reporting, and potentially additional forms depending on the structure:

• Form 3520 / 3520-A: Required for foreign trusts, which includes many foreign pension arrangements not covered by a US tax treaty.
• Form 8621: Required for passive foreign investment companies (PFICs), which includes many foreign mutual funds held inside pension accounts.

The intersection of FBAR, FATCA, and pension reporting is one of the most complex areas of US international tax law. Getting it wrong — even innocently — can result in stacked penalties across multiple forms.

If you are behind on FBAR and FATCA filings, the IRS offers two amnesty-style programs designed to bring non-willful non-filers into compliance without the full weight of civil or criminal penalties:

For taxpayers who are non-residents (meet the foreign residency requirement). You file 3 years of amended returns, 6 years of FBARs, pay any back taxes and interest, and certify that your non-compliance was non-willful. No miscellaneous offshore penalty applies.

For taxpayers who are US residents. Same filing requirements, but a 5% miscellaneous offshore penalty applies on the highest aggregate balance of unreported foreign assets.

Both programs require a non-willfulness certification. If the IRS determines your non-compliance was willful — or if you are already under examination — you are not eligible. The programs are not available indefinitely; the IRS can close them at any time.

The window to use these programs is open now. Once the IRS contacts you about your foreign accounts, eligibility ends.

1. Inventory all foreign accounts and assets annually. Track the maximum balance of every foreign account during the year. Even a dormant account with a small balance counts toward the FBAR aggregate threshold.

2. File FBAR every year you exceed $10,000 aggregate. The threshold is low and the penalties are high. When in doubt, file.

3. Determine your Form 8938 threshold based on residency. The higher thresholds for expats mean many Americans abroad owe FBAR but not Form 8938 — but do not assume. Calculate both.

4. Address foreign pension plans separately. Do not assume your foreign pension is covered by FBAR or Form 8938 alone. It may require Form 3520 or Form 8621 as well.

5. If you are behind, act before the IRS contacts you. The Streamlined procedures are the most cost-effective path to compliance. Once you are under examination, that option closes.

International tax compliance for US expats is not a DIY project. The intersection of FBAR, FATCA, foreign pension reporting, treaty positions, and the foreign earned income exclusion requires specialists who understand both the rules and how the IRS enforces them.

Our team of former IRS and Treasury agents has handled hundreds of international tax matters — from routine expat returns to complex Streamlined filings and voluntary disclosures. We know what the IRS looks for, what documentation survives scrutiny, and how to structure a compliance strategy that minimizes penalties and closes exposure.

If you are a US citizen living abroad, have foreign financial accounts, or have never filed FBAR or Form 8938, contact us for a confidential consultation.

• FBAR (FinCEN 114) is required if your foreign accounts exceeded $10,000 aggregate at any point during the year — filed with FinCEN, not the IRS.
• Form 8938 is required at higher thresholds and covers a broader range of foreign assets — filed with your tax return.
• Filing one does not satisfy the other. Both may be required simultaneously.
• Foreign pension plans may trigger additional forms beyond FBAR and FATCA.
• The Streamlined Filing Compliance Procedures offer a penalty-reduced path to catching up — but only before the IRS contacts you.
• Willful non-compliance carries penalties that can exceed the account balance itself.

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Living abroad or holding foreign accounts? Contact Autarky Tax and Accounting for a consultation with a former IRS agent who specializes in international tax compliance.