FBAR & FATCA: A Plain-English Guide for Global Professionals

The U.S. government uses two primary tools to track foreign financial accounts held by American taxpayers: the Foreign Bank Account Report (FBAR) and the Foreign Account Tax Compliance Act (FATCA). They overlap in purpose but differ in thresholds, forms, and consequences.

Both are aimed at preventing offshore tax evasion, and both apply to U.S. persons — citizens, green card holders, and most individuals who meet the "substantial presence test" for tax residency — regardless of where they live.

What triggers it: You must file an FBAR if the aggregate value of all your foreign financial accounts exceeded $10,000 at any point during the calendar year. This is a low bar — a single savings account abroad with $11,000 at its peak triggers the requirement.

What it covers: Bank accounts, brokerage accounts, mutual funds, and certain other financial accounts held at foreign institutions. It does not cover foreign real estate held directly (though rental income must still be reported on your tax return).

How to file: Electronically with FinCEN (not the IRS) by April 15, with an automatic extension to October 15. The FBAR is separate from your tax return.

Penalties: This is where it gets serious. Willful failure to file can result in penalties of the greater of $150,000 or 50% of the account balance — per year. Non-willful failures carry penalties up to $15,000 per violation. The DOJ has aggressively prosecuted offshore non-compliance.

What triggers it: FATCA applies to a higher threshold than FBAR, and it varies by filing status and residency:

- Single/MFS in the U.S.: $50,000 at year-end or $75,000 at any point - MFJ in the U.S.: $100,000 at year-end or $150,000 at any point - Single living abroad: $200,000 at year-end or $300,000 at any point

What it covers: Foreign financial accounts AND other foreign assets — including foreign partnership interests, foreign hedge funds, and certain foreign insurance contracts. The scope is broader than FBAR.

How to file: Form 8938, attached to your federal tax return by the filing deadline (including extensions).

Penalties: Failure to file triggers a $10,000 penalty, rising to $50,000 after IRS notification. The IRS can also impose a 40% penalty on underpayments related to undisclosed FATCA assets.

Many people are surprised to learn that FBAR and FATCA can both apply to the same accounts — so you may need to report the same foreign bank account on both Form 8938 and FinCEN 114. This is not an error. They are separate requirements filed with different agencies (FinCEN and IRS, respectively).

Note that some foreign accounts that meet the FATCA threshold may not meet the FBAR threshold, and vice versa. This requires careful analysis of your specific holdings.

If you have missed FBAR or FATCA filings in prior years, you are not alone — and there are IRS programs designed to bring non-filers into compliance without the full weight of willful penalties.

The Streamlined Filing Compliance Procedures allow non-willful filers living in the U.S. to file amended returns and FBARs with a 5% offshore penalty (or no penalty for those living abroad). The Delinquent FBAR Submission Procedures allow filers who have no unreported income to file late FBARs without penalty.

These programs are not permanent, and the IRS's interpretation of "willfulness" has expanded significantly in recent years. If you have missed filings, the time to address them is now, before the IRS contacts you first.