FBAR & FATCA Guide 2026: FinCEN 114, Form 8938 & What US Expats Must Report

FBAR (FinCEN 114): Who Files, What's Reported, When

FBAR (Foreign Bank Account Report) is filed with the Financial Crimes Enforcement Network (FinCEN) — not the IRS. Who must file: US citizens, resident aliens (green card holders), and domestic entities (companies, trusts, estates) that have a financial interest in, or signature authority over, foreign financial accounts. Threshold: aggregate maximum value of ALL foreign financial accounts exceeds $10,000 at ANY point during the calendar year. Even a brief period where the combined balance exceeds $10,000 triggers the requirement. What to report: foreign bank accounts, foreign brokerage accounts, foreign mutual funds, foreign pension accounts held outside formal pension plans, foreign life insurance policies with a cash surrender value. Not reportable on FBAR: direct holdings of foreign stocks/bonds (these are Form 8938); real estate owned directly (not through a foreign entity). Due date: April 15 each year (automatic extension to October 15 — no form needed, extension is automatic). Filing: electronically via the BSA E-Filing system (FinCEN website). No paper option. Joint accounts: a married couple can file a joint FBAR if they have a joint account and the non-filing spouse has no separate foreign accounts.

FATCA Form 8938: The Stricter Regime for Larger Assets

FATCA (Foreign Account Tax Compliance Act) Form 8938 is filed with your US federal income tax return (Form 1040). It was enacted in 2010 to combat offshore tax evasion. Thresholds vary by filing status and residency: US residents (living in the US): Single/MFS: $50,000 on last day of year OR $75,000 at any point. MFJ: $100,000 / $150,000. Americans abroad (meeting Physical Presence Test or Bona Fide Residence): Single/MFS: $200,000 on last day OR $300,000 at any point. MFJ: $400,000 / $600,000. What to report on 8938 (broader than FBAR): foreign deposit/custodial accounts; foreign stocks and securities NOT held in a financial account; foreign partnership interests; foreign pension plans and deferred compensation plans; foreign life insurance contracts with a cash surrender value; beneficial interests in foreign trusts and estates. Critical difference from FBAR: Form 8938 reports more asset types but has higher thresholds. A US expat with $150,000 in a foreign bank account must file FBAR (over $10,000) and also Form 8938 (over $200,000 abroad threshold? — only if abroad threshold met). A US resident with $60,000 in a foreign brokerage account: must file Form 8938 (over $50,000 resident threshold) AND FBAR.

Penalties for Non-Compliance: Willful vs Non-Willful

FBAR penalties (adjusted annually for inflation): Non-willful failure to file: up to $13,627 per violation (per account per year). Willful violation: greater of $136,272 or 50% of the account balance at the time of the violation, per account per year. Criminal penalties: willful FBAR violations can result in criminal prosecution — up to 5 years imprisonment and/or $250,000 fine. FATCA Form 8938 penalties: failure to file: $10,000 penalty per form. Continued failure after IRS notice: additional $10,000 per 30-day period, up to $50,000. Underpayment attributable to undisclosed foreign financial assets: 40% penalty (vs 20% standard). Key Supreme Court ruling — Bittner v United States (2023): the Supreme Court ruled (5-4) that the non-willful FBAR penalty applies per form (i.e., per year), not per account — significantly reducing penalties for non-willful multi-account filers. Willful penalties are still calculated per account. Important: 'willful' is broadly construed — reckless disregard (signing a return without reading the foreign accounts disclosure questions) has been held to be willful by some courts.

Streamlined Compliance Procedures for Delinquent Filers

The IRS offers Streamlined Filing Compliance Procedures for US persons who are delinquent in FBAR/FATCA filings and believe their non-compliance was non-willful. Two programs: (1) Streamlined Foreign Offshore Procedures (SFOP): for Americans living outside the US who meet the non-residency test (essentially qualifying under FEIE Physical Presence or BFR test in any one of the prior 3 tax years). File 3 years of amended/delinquent returns + 6 years of FBAR + pay all taxes + pay 5% miscellaneous offshore penalty on highest aggregate foreign account balance. (2) Streamlined Domestic Offshore Procedures (SDOP): for US residents who are delinquent. Same returns/FBAR filings required + 5% miscellaneous penalty. Streamlined is NOT available if: the IRS has initiated a civil examination of any year; the taxpayer is under criminal investigation; or the non-compliance is willful. OVDP (Offshore Voluntary Disclosure Program) is closed — the IRS closed the formal OVDP in 2018. For willful non-filers: consult a US tax attorney (attorney-client privilege) before making any voluntary disclosure — the options are more complex and carry greater risk.

Foreign Pension Accounts: Reporting Complexity

Foreign pension plans are among the most commonly misreported items. How different pension types are treated: Foreign government pension / mandatory occupational pension (e.g., UK NHS pension, Canadian CPP, Australian Superannuation): FBAR: report if the plan holds individual accounts — Superannuation yes; CPP no (not an individual account); UK final salary NHS pension no. Form 8938: report the present value of defined benefit pensions or account value of defined contribution plans. Income tax: depends on the tax treaty and pension type. RRSP (Canada): reportable on FBAR if it exceeds $10,000; reportable on Form 8938; but income inside RRSP is deferred under the Canada-US DTA if a timely election is made on Form 8833. Australian Superannuation: reportable on FBAR; no US deferral treaty protection — contributions and earnings may be currently taxable in the US (Trowbridge Revenue Ruling discussion). UK registered pension: covered by the US-UK DTA Article 17 — contributions may be deductible; growth deferred; withdrawals taxed per treaty. Each country's pension plan requires individual analysis — blanket rules do not apply.