🏦 FBAR and Form 8938: Key Rules
US TAX CISPreviously, we covered the reporting requirements for FBAR and Form 8938 in detail. Today, here's a quick overview of the key rules every owner of foreign assets should know.
📌 FBAR
FBAR is a separate report filed with FinCEN, not the IRS.
A filing requirement arises if the aggregate maximum balance of all foreign financial accounts exceeded $10,000 on any single day during the calendar year.
When determining whether the threshold is met, you must take into account not only your personal and jointly owned foreign accounts, but also accounts over which you have signature authority, such as accounts held by foreign companies.
In most cases, this includes foreign bank and brokerage accounts.
📅 FBAR must be filed electronically. The regular due date is April 15, with an automatic extension to October 15.
📌 Form 8938
Form 8938 is filed with your U.S. income tax return and submitted to the IRS as part of your tax filing.
Unlike FBAR, Form 8938 covers a much broader range of foreign financial assets and applies only if the applicable reporting threshold is exceeded. These thresholds vary depending on your filing status and whether you live in the United States or abroad, ranging from $50,000 to $600,000.
Depending on your circumstances, Form 8938 may include:
• foreign bank and brokerage accounts;
• interests in foreign corporations that are not reported on Form 5471 (for example, ownership interests below 50%);
• loans made to foreign individuals or entities;
• certain foreign investment and insurance products;
• other specified foreign financial assets.
📅 Form 8938 is due on the same date as your U.S. income tax return.
⚠️ FBAR and Form 8938 do not replace each other. Although both forms may require reporting foreign financial accounts, they have different filing thresholds, reporting requirements, and categories of assets that must be disclosed.
📍 Key Takeaway
FBAR is primarily focused on reporting foreign financial accounts, while Form 8938 covers a much broader range of foreign financial assets.
As a result, many taxpayers are required to file both forms.
In our next post, we'll discuss reporting requirements for foreign corporations.
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