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With over 800 different IRS forms and schedules, it’s easy to feel overwhelmed. Of course, you don’t need to be an expert on all of them — but it is a good idea to familiarize yourself with the most relevant ones to you.
As a US expat, two essential forms to be aware of are Form 8938 and FinCEN Form 114. They’re two of the most common disclosures for US expats — and failing to file them when required can lead to hefty fines.
While both forms deal with foreign financial assets, they have unique purposes, reporting thresholds, and instructions. Below, we’ll walk through these two forms, including what they are, who must file them, how to do so, and more.
Form 8938
What is Form 8938?
Form 8938 — aka the Statement of Specified Foreign Financial Assets — is a report in which taxpayers disclose their foreign financial assets. These assets may include foreign:
- Bank accounts
- Investment accounts
- Mutual funds
- Stocks & bonds (held outside of a financial account)
- Pension funds
- Business in which you hold ownership (e.g. corporation, partnership)
- Trusts
- Real estate — only if held in a foreign company
Form 8938 was introduced by the 2010 Foreign Account Tax Compliance Act (FATCA). FATCA was passed to help give the US government increased visibility into Americans’ foreign financial holdings and prevent offshore tax evasion. Under FATCA, foreign financial institutions must share American clients’ information with the US government.
Who must file Form 8938?
At this point, you might be wondering: When is Form 8938 required?
Anyone whose foreign financial assets exceed a certain threshold must file Form 8938. The exact threshold depends on your circumstances, however:
- Married expats filing jointly: Over $400,000 on the last day of the tax year or over $600,000 at any point during the tax year
- All other expats: Over $200,000 on the last day of the tax year or over $300,000 at any point during the tax year
Americans who live within the US are subject to Form 8938 as well, but the threshold is significantly lower: $50,000 on the last day of the tax year, or $75,000 at any point during the tax year. The threshold for married couples filing jointly from within the US is double: $100,000 on the last day of the tax year, or $150,000 at any point during the tax year.
How to file Form 8938
You can file Form 8938 online alongside your tax return if you qualify for IRS Free File or by using tax software. Keep in mind, though, that not all tax software allows expats to file tax returns from abroad. You can also complete, print, and mail the PDF along with the rest of your tax return.
Form 8938 includes six different parts:
- Part I – Foreign Deposit & Custodial Accounts Summary: Share how many deposit/custodial accounts you hold, the value of each, and whether you closed any during the tax year
- Part II – Other Foreign Assets Summary: Enter the number of foreign assets you hold, their maximum value, and whether you acquired or sold any during the tax year
- Part III – Summary of Tax Items Attributable to Specified Foreign Financial Assets: Summarize the tax implications of your different foreign assets, including:
- Income you’ve received from them (interest, dividends, royalties, or other income)
- Gains/losses from selling or disposing of them
- Deductions and claims you’re claiming against them
- Part IV – Excepted Specified Foreign Financial Assets: Indicate whether you’ve filled out any of the following forms — and if so, how many:
- Form 3520: For owners, beneficiaries, and responsible parties of a foreign trust as well as those who have received gifts from foreign individuals, estates, corporations, and partnerships
- Form 3520-A: For foreign trusts with at least one US owner
- Form 8621: For reporting financial interest in Passive Foreign Investment Companies (PFICs)
- Form 8865: For Americans with a financial interest in foreign partnerships
- Form 5471: For Americans with a share in foreign corporations
- Part V – Detailed Information for Each Foreign Deposit And Custodial Account Included in the Part I Summary: Share additional details on any foreign deposit and custodial accounts you hold, including:
- Account type
- Account number
- Maximum account value
- Original currency
- Name & address of the financial institution that maintains the account
- Etc.
- Part VI – Detailed Information for Each “Other Foreign Asset” Included in the Part II Summary: Share additional details on any other foreign financial assets you hold, including:
- Description
- Identifying number
- Date acquired/disposed of, if done during the tax year
- Maximum value
- Original currency
This form can get a bit tricky, but accuracy is critical — so if you’re unsure about anything, don’t hesitate to contact a tax professional.
Note: When entering maximum account value, you’ll need to convert the original currency into US Dollars using a reliable source like Wise.
FinCEN Form 114
What is FinCen Form 114?
While Form 8938 is for reporting foreign assets, FinCEN Form 114 — aka the Foreign Bank Account Report, or FBAR — is for reporting more specifically the contents of foreign financial accounts.
The FBAR requirement was created by the 1970 Bank Secrecy Act (BSA). The BSA aimed to identify and deter money laundering through increased reporting and record-keeping requirements for taxpayers and financial institutions.
Who must file FinCen Form 114?
FinCEN Form 114 is mandatory for all Americans with foreign financial accounts whose cumulative holdings exceed $10,000. A foreign financial account refers to any foreign account with a cash balance. This includes foreign bank accounts, brokerage accounts, and often, pensions and retirement plans.
This doesn’t just apply to account owners, either. Anyone with signatory authority, direct or indirect control, or any other type of financial interest in a foreign account must also file FinCEN 114.
How to file FinCEN Form 114
You won’t file an FBAR with the IRS, but rather with the Financial Crimes Enforcement Network (aka FinCEN), a department of the US Treasury. You can do this through their BSA E-Filing System, either by completing and submitting a PDF or filling out an online form.
The PDF is generally a better choice if you want to take your time and save your progress. If you want to complete and submit the FBAR in one fell swoop, the online form may be a better fit.
FinCEN Form 114 consists of five sections:
- Part I – Filer Information: Enter basic details like your name, filing status, taxpayer identification number (usually your SSN), and address
- Part II – Information on Financial Account(s) Owned Separately: Enter details for any financial accounts you own individually (e.g. maximum value, type of account, financial institution name, account number, address)
- Part III – Information on Financial Account(s) Owned Jointly: Enter details for any financial accounts you own jointly and share details on the principal owner you co-own the account with
- Part IV – Information on Financial Account(s) Where Filer has Signature or Other Authority But No financial Interest in the Account(s): Enter details for any financial accounts you have authority over but no financial interest in and share details on the account’s owner
- Part V – Information on Financial Account(s) Where Filer is Filing a Consolidated Report: Enter details for any financial accounts where you or an entity you’re affiliated with (e.g. a subsidiary) own at least 50% and share details on the account’s owner
Form 8938 vs. FinCEN Form 114
Here’s a table that compares and contrasts Form 8938 and FinCEN Form 114:
| Form 8938 | FinCEN Form 114 | |
| Also known as | Statement of Specified Foreign Assets | Foreign Bank Account Report (FBAR) |
| For reporting | Foreign financial assets | Foreign financial accounts |
| Expat reporting threshold | Over $200,000 on the last day of — or over $300,000 at any point during — the tax year (Note: threshold doubles for married couples filing jointly) | Over $10,000 across foreign financial accounts |
| Mandated by | The Foreign Account Tax Compliance Act (FATCA) | The Bank Secrecy Act (BSA) |
| Number of sections | 6 | 5 |
| How to file | Online (i.e. through IRS Free File or certain tax software) or by mail | Online form or PDF |
Deadline & penalties for non-compliance
The deadline for FinCEN Form 114 is the same as the regular tax deadline: April 15th. That said, if you don’t file the FBAR by then, you’ll receive an automatic extension to October 15th. The 8938 on the other hand, follows the same deadline as your tax return— most often June 15th for those abroad. While there’s technically no penalty for filing either of these forms late, there are penalties for failing to file them.
If the IRS notices you haven’t filed Form 8938, they can fine you up to $10,000 per missed report. If you fail to file even after being notified by the IRS, you may be fined an additional $10,000 per month (up to $50,000).
Non-willful (i.e. unintentional) failures to file FBAR incur the same penalties as mentioned above. Willful failures to file the FBAR, however, carry a higher penalty: $100,000 or 50% of the account at the time of the violation — whichever is greater.
In a worst-case scenario, you could even face criminal charges for repeatedly failing to file these reports.
If you’re just realizing you failed to file one or both of these reports in the past, though, don’t panic. The IRS offers a couple of amnesty programs that can help you catch up penalty-free:
- Delinquent FBAR Submission Procedures: For those who have fallen behind on their FBAR obligations
- Streamlined Compliance Filing Procedures: For those who have fallen behind on Form 8938 or other tax and reporting obligations
The easy way to stay compliant
FinCEN Form 114 and Form 8938 are essential for expats with foreign assets and foreign financial accounts exceeding certain thresholds. Filing these forms gives the US government visibility into expats’ finances to help deter financial crimes like money laundering and offshore tax evasion.
Although the vast majority of Americans living abroad who are subject to this filing requirement are simply using their foreign assets for everyday living, penalties for non-compliance are steep — even when violations are completely unintentional.
Resources:
- IRS tax forms
- Basic questions and answers on Form 8938
- Foreign Account Tax Compliance Act (FATCA): Definition and Rules
- Do I need to file Form 8938, Statement of Specified Foreign Financial Assets?
- How We Got Here: an FBAR Timeline
- Report Foreign Bank and Financial Accounts
- § 1010.821 Penalty adjustment and table
