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Connect on LinkedInFATCA is why opening an ordinary bank account abroad can suddenly involve a W-9, a Social Security number and several pointed questions about your ties to the United States. The law requires many foreign banks to report accounts linked to U.S. persons—and requires some Americans abroad to report their foreign financial assets on Form 8938.
For unmarried expats, that filing requirement generally begins when those assets exceed $200,000 at year-end or $300,000 at any point during the year. The thresholds double for couples filing jointly.
At Bright!Tax, we see FATCA confused with FBAR all the time—and no wonder. The assets overlap, the thresholds are completely different and the forms don’t even go to the same place. Here’s how to work out what applies to you.
📋 Key Updates for 2026
- The headline for individual filers is no change: Form 8938 thresholds remain exactly where they were last year.
- A 2026 Treasury watchdog report revealed that the IRS is matching information from foreign banks against tax returns to find missing Forms 8938.
- Switzerland has delayed its move to reciprocal FATCA reporting again, this time until at least 2029.
FATCA basics: What it does and who it affects
When Congress passed the Hiring Incentives to Restore Employment (HIRE) Act in 2010, tucked inside was a piece of legislation called FATCA—the Foreign Account Tax Compliance Act. Its purpose was clear: make it harder for U.S. taxpayers to conceal assets and income offshore.
Today, FATCA operates through a global system of intergovernmental agreements and reporting requirements for foreign financial institutions. Depending on the country, a financial institution may report information directly to the IRS or to its local tax authority, which then exchanges it with the United States.
If you’re a U.S. citizen, green card holder or resident alien with foreign financial assets, FATCA may apply to you. Ordinary bank accounts, investment accounts and pensions can all fall within its reach—not just secret Swiss bank accounts.
Under FATCA, many foreign financial institutions must:
- Identify accounts that may be held by U.S. persons
- Report specified information about reportable U.S. accounts
- Complete the required due-diligence checks
- Register for a Global Intermediary Identification Number (GIIN) when required
The information exchanged through FATCA helps the IRS compare what financial institutions report with what taxpayers disclose on their own returns.
💡 Pro Tip:
Having a foreign bank account, mutual fund, pension or investment does not automatically mean you must file Form 8938. Your filing status, where you live, the type of asset and its value all matter.
Who has to file under FATCA?
FATCA filing requirements apply to specified individuals and certain specified domestic entities—not simply to everyone with money abroad.
Specified individuals include:
- U.S. citizens
- Green card holders
- People who meet the substantial presence test
- Nonresident aliens who elect to be treated as U.S. residents for a joint return
- Nonresident aliens who are bona fide residents of Puerto Rico or American Samoa
You generally file Form 8938 if you are a specified person, must file an annual U.S. return and hold specified foreign financial assets exceeding the applicable threshold.
The thresholds depend on your filing status and whether you qualify as living abroad:
| Filing status | Value on the final day of the tax year | Value at any point during the year |
| Unmarried or married filing separately and living abroad | More than $200,000 | More than $300,000 |
| Married filing jointly and living abroad | More than $400,000 | More than $600,000 |
| Unmarried or married filing separately and living in the U.S. | More than $50,000 | More than $75,000 |
| Married filing jointly and living in the U.S. | More than $100,000 | More than $150,000 |
To use the higher thresholds for taxpayers abroad, your tax home must be in a foreign country and you must meet either the bona fide residence test or the physical presence test.
Form 8938 is attached to your annual return. You may need to file it even when the assets produce no taxable income or you owe no U.S. tax. However, if you are not required to file an annual return, you generally do not file Form 8938 separately.
Certain domestic corporations, partnerships and trusts can also have Form 8938 obligations when they meet the definition of a specified domestic entity.
One important distinction: signature authority alone does not make an account reportable on Form 8938 if you have no financial interest in it. Signature authority can still create an FBAR requirement, so the two sets of rules must be checked separately.
What are Specified Foreign Financial Assets?
Not all foreign assets are treated the same way under FATCA.
Specified foreign financial assets can include:
- Foreign bank and brokerage accounts
- Foreign mutual funds
- Shares issued by foreign companies and held outside a financial account
- Interests in foreign partnerships and corporations
- Interests in foreign trusts and estates
- Foreign pension and deferred-compensation plans
- Certain foreign financial contracts
- Foreign life-insurance policies with cash value
The exact treatment depends on how the asset is owned and whether it is already reported on another international information return.
Directly owned foreign real estate is not reported on Form 8938. However, if you own the property through a foreign corporation, partnership or other entity, your interest in that entity may be reportable—even though the underlying property is not listed separately.
💡 Pro Tip:
Form 8938 can cover assets held outside financial accounts, while FBAR is limited to foreign financial accounts. That distinction is why one form does not replace the other.
FATCA vs. FBAR: Don’t mix them up
It’s easy to confuse what gets reported under FATCA with what belongs on the FBAR. Both involve foreign financial reporting, but the similarities end fairly quickly.
| Requirement | FATCA: Form 8938 | FBAR: FinCEN Form 114 |
| What it covers | Specified foreign financial assets | Foreign financial accounts |
| Main threshold for qualifying unmarried taxpayers abroad | More than $200,000 at year-end or $300,000 at any point | More than $10,000 across all accounts at any point |
| Where it is filed | With your annual U.S. return | Separately through FinCEN |
| Signature authority without ownership | Generally not reportable | Can be reportable |
| Directly held foreign shares | Can be reportable | Generally not reportable unless held in a foreign account |
You can be required to file one form, both forms or neither. Filing Form 8938 does not satisfy an FBAR obligation, and filing an FBAR does not satisfy Form 8938.
FATCA vs CRS: Global reporting systems compared
FATCA is not the only international system used to exchange financial-account information. The Common Reporting Standard (CRS) performs a similar role across more than 100 participating jurisdictions.
The key difference is:
- FATCA is a U.S. reporting regime that identifies accounts connected with U.S. persons, including U.S. citizens and tax residents.
- CRS generally identifies reportable accounts according to the account holder’s tax residence.
Both systems require financial institutions to collect information about customers and report certain accounts to tax authorities. Those authorities may then exchange the information with another country.
If you’re a U.S. citizen living in a CRS jurisdiction, your bank may assess you under both systems: FATCA because of your U.S. status and CRS because of your tax residence. That does not usually mean filing a separate personal CRS return, but it may mean supplying the bank with information for both classifications.
How FATCA impacts U.S. expats and dual citizens
If you’re a U.S. citizen living abroad—or even an accidental American—FATCA can feel like the tax world’s version of a clingy ex. It follows you. It asks questions. And it gets your bank involved.
For expats, dual citizens and accidental Americans, the most common practical effects include:
- Additional questions about citizenship and tax residence
- Requests for a U.S. taxpayer identification number or Form W-9
- More identity and account-ownership checks
- Restrictions on certain investments or financial services
- In some cases, difficulty opening or retaining a foreign account
FATCA intergovernmental agreements provide the legal framework that allows participating jurisdictions to exchange information while working within their domestic laws.
Financial institutions that do not meet their FATCA obligations can face 30% withholding on certain U.S.-source payments. This helps explain why some banks take a very cautious approach to customers with a U.S. connection.
Long story short: Even if you haven’t lived in the United States for decades, FATCA can still affect how you bank, invest and report your financial life.
FATCA reporting requirements: What to know
If you are required to file Form 8938, you attach it to your annual U.S. return and submit it by the same deadline, including extensions.
The form reports information such as:
- The type of account or asset
- Its maximum value during the year
- The financial institution, issuer or counterparty
- Income, gains, deductions or credits connected with the asset
- Whether the asset is also reported on another international information return
You may also have to file both Form 8938 and an FBAR. They are separate forms with separate thresholds, but some accounts appear on both.
Failure to file a complete and correct Form 8938 can result in:
- An initial penalty of $10,000
- An additional $10,000 for each 30-day period of continued noncompliance after the IRS provides notice, up to $50,000 in additional penalties
- A 40% accuracy-related penalty on certain tax underpayments involving undisclosed assets
- A 75% fraud penalty when an underpayment results from fraud
- Possible criminal penalties in serious cases
Missing Form 8938 can also keep the statute of limitations open for all or part of the relevant tax return.
💡 Pro Tip:
FATCA reporting is not simply about whether an account produced income. An asset can still belong on Form 8938 even when it generated nothing during the year.
What if you haven’t complied with FATCA?
First things first: breathe. Missing Form 8938 does not automatically mean the IRS will treat your conduct as willful, but the correct way to fix it depends on what else was missed and why.
The Streamlined Filing Compliance Procedures may be available when the failure to report foreign assets, income or tax resulted from non-willful conduct.
A Streamlined Foreign Offshore submission generally includes:
- Delinquent or amended tax returns, with the required information returns, for the most recent three years whose filing deadlines have passed
- Required delinquent FBARs for the most recent six years whose deadlines have passed
- Form 14653 certifying eligibility and explaining why the conduct was non-willful
- Payment of all tax and interest due
Eligible taxpayers who complete the foreign procedure correctly receive relief from specified penalties. The Streamlined Domestic Offshore Procedures have different eligibility requirements and generally include a 5% miscellaneous offshore penalty.
The streamlined procedures are not appropriate for willful conduct. In those cases, the current IRS voluntary disclosure practice may need to be considered with legal and tax advice.
💡 Pro Tip:
Do not file missing Forms 8938 casually before checking which correction route applies. An incomplete or badly timed submission can make the situation harder to resolve.
FATCA isn’t going anywhere—but you can stay ahead
FATCA may sound complicated, but the first question is straightforward: Do you hold specified foreign financial assets worth more than the threshold that applies to you?
From there, you need to determine which assets count, whether they appear on other international forms and whether you also have an FBAR obligation.
Bright!Tax helps Americans abroad work through FATCA, Form 8938 and overlapping foreign-account reporting without turning the process into a second career.
Get help with your FATCA filing.
Frequently Asked Questions (FAQs)
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What is FATCA?
FATCA—the Foreign Account Tax Compliance Act—is a U.S. law that requires certain U.S. taxpayers to report specified foreign financial assets and requires many foreign financial institutions to identify and report U.S.-linked accounts.
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Who needs to comply with FATCA?
U.S. citizens, green card holders, other resident aliens and certain specified persons may need to file Form 8938 when their assets exceed the applicable threshold and they are required to file an annual return. Living abroad does not remove the requirement.
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What’s the difference between FATCA and FBAR?
FATCA reporting for individuals is generally completed on Form 8938 and filed with the relevant annual return. FBAR reporting is completed separately on FinCEN Form 114. The forms cover different assets, use different thresholds and may both be required.
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What are the penalties for not filing under FATCA?
The initial penalty for failing to file Form 8938 can be $10,000. Continued failure after an IRS notice can result in up to $50,000 in additional penalties. Accuracy-related, fraud and criminal penalties may also apply in some cases.
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How do I know if my foreign assets meet the FATCA thresholds?
It depends on your filing status and whether you qualify as living abroad.
- Qualifying unmarried taxpayers and married taxpayers filing separately abroad use thresholds of more than $200,000 at year-end or $300,000 at any point during the year.
- Married couples filing jointly abroad use thresholds of more than $400,000 at year-end or $600,000 at any point during the year.
- Lower thresholds apply to taxpayers living in the United States.
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What types of accounts and assets must be reported under FATCA?
Reportable assets can include foreign bank and brokerage accounts, mutual funds, directly held foreign shares, interests in foreign entities, foreign pensions and certain life-insurance policies with cash value.
Directly owned foreign real estate is not reported, although an interest in a foreign entity that owns the property may be.
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Does every foreign bank comply with FATCA?
No. Institutions can have different classifications and obligations under FATCA, and some are exempt or treated as deemed compliant. However, many major foreign financial institutions participate through direct IRS reporting or an intergovernmental agreement.
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What should I do if I’m unsure about my FATCA obligations?
Start by listing your foreign accounts and financial assets, their highest values during the year and how each one is owned. You can then compare the total with your Form 8938 threshold and check separately whether FBAR or other international forms apply.
If you’re still unsure, Bright!Tax can help determine what you need to report and prepare the required forms.
