FATCA Compliance for US Expats 2026: Complete Guide

The Foreign Account Tax Compliance Act (FATCA) revolutionized international tax enforcement. Foreign banks now report US account holders directly to the IRS, and US persons must disclose foreign assets on their tax returns.

This guide explains FATCA obligations for US expats, thresholds, and how to stay compliant.

What FATCA Requires

Two Components

1. Bank Reporting: Foreign financial institutions report US account holders to IRS
2. Individual Reporting: US persons file Form 8938 with tax return

Who Must Comply

• US citizens (including dual citizens)
• US permanent residents (green card holders)
• US tax residents
• Living anywhere in the world

What Gets Reported by Banks

Foreign banks report to IRS:

• Account holder name, address, TIN (SSN)
• Account number
• Account balance/value
• Gross interest, dividends, other income
• Gross proceeds from sales

What You Must Report (Form 8938)

• Foreign financial accounts
• Foreign stocks and securities not in US account
• Foreign partnership/trust interests
• Foreign-issued insurance or annuity contracts
• Foreign hedge funds or private equity

Form 8938 Thresholds

Living Abroad Thresholds

Living in US Thresholds (for comparison)

Qualifying as "Abroad"

Higher thresholds apply if you:

• Have tax home in foreign country, AND
• Meet Physical Presence Test (330 days abroad), OR
• Are bona fide resident of foreign country

Same tests as FEIE qualification.

FBAR vs Form 8938

Key Differences

Many Expats File Both

The forms overlap but aren't identical. If you have:

• Foreign accounts >$10,000: FBAR required
• Foreign assets >$200,000/$400,000: Form 8938 required
• Both thresholds exceeded: File both

Example

UK bank account with £150,000 (~$190,000):

• FBAR: Required (over $10,000)
• Form 8938: Not required for single abroad ($200,000 threshold)

If account reaches $210,000, both required.

Penalties and Enforcement

Form 8938 Penalties

• Failure to file: $10,000 per violation
• Continued failure: Additional $10,000 per 30 days (max $50,000)
• Underpayment: 40% penalty on tax underpayment from unreported assets
• Fraud: 75% penalty

FBAR Penalties

• Non-willful: Up to $10,000 per account per year
• Willful: Greater of $100,000 or 50% of account balance
• Criminal: Up to $500,000 fine and 10 years imprisonment

How IRS Catches Non-Compliance

• FATCA reporting: Banks in 150+ countries report automatically
• John Doe summons: IRS obtains data from US banks with foreign transfers
• Whistleblowers: Financial incentives for reporting
• Data leaks: Panama Papers, Paradise Papers, etc.

Voluntary Disclosure Programs

• Streamlined Compliance: For non-willful, certify + file 3 years returns + 6 years FBARs
• Delinquent FBAR: Late FBARs without other issues
• Voluntary Disclosure: For willful non-compliance (more complex)

Country-Specific Issues

Countries Reporting to IRS

150+ countries have FATCA agreements. Major jurisdictions:

• UK: Full reporting (Model 1 IGA)
• Germany: Full reporting (Model 1 IGA)
• France: Full reporting (Model 1 IGA)
• Switzerland: Full reporting (Model 2 IGA)
• Singapore: Full reporting (Model 1 IGA)
• UAE: Full reporting (Model 1 IGA)
• Hong Kong: Full reporting (Model 2 IGA)

Banking Difficulties for US Persons

Some foreign banks refuse US customers due to FATCA compliance burden:

• Problem countries: Germany, France (some banks)
• Solutions: US-friendly banks (HSBC Expat, Citibank International)
• Alternative: Keep accounts at US banks with international services

Pensions and FATCA

• Foreign pension accounts often reportable
• UK pension: Usually report balance
• Canadian RRSP: Reportable, treaty protections
• Australian Super: Reportable

Compliance Strategies

Staying Compliant

1. Know your accounts: List all foreign financial accounts and assets
2. Track values: Record highest balance during year and year-end value
3. Convert currency: Use Treasury year-end exchange rate
4. File timely: Both FBAR (Oct 15) and Form 8938 (with return)
5. Keep records: 6 years minimum

What Counts as "Foreign"

• Foreign account: Account at institution outside US
• US account with foreign assets: Not foreign (the account location matters)
• US brokerage holding foreign stocks: Not foreign
• Account at foreign branch of US bank: Foreign

Getting Compliant If Behind

• Streamlined (most common): File 3 years returns, 6 years FBARs, certify non-willful
• Delinquent FBAR: Just file late FBARs with statement
• Quiet disclosure: Risky—IRS may treat as willful
• VDP: For willful cases (consult attorney)

Documentation Needed

• Account statements
• Year-end balances
• Income earned in accounts
• Purchase history for securities
• Currency conversion records