A foreign bank account can create more than one U.S. reporting requirement. A U.S. person may need to file an FBAR if the combined value of qualifying foreign financial accounts exceeds the applicable threshold. Form 8938 may also be required under FATCA when specified foreign financial assets meet certain thresholds. These forms serve different purposes and have different filing rules.
For taxpayers in Torrance, Los Angeles, the Bay Area, and elsewhere in the United States, foreign tax compliance expertise can help taxpayers understand which federal information returns may apply to their situation.
What Is an FBAR?
FBAR stands for Report of Foreign Bank and Financial Accounts. It is filed electronically with the Financial Crimes Enforcement Network, or FinCEN, using FinCEN Form 114. A U.S. person generally must file when they have a financial interest in, or signature or other authority over, foreign financial accounts and the combined maximum value exceeds $10,000 at any time during the calendar year. U.S. persons can include individuals and certain domestic entities, including LLCs, corporations, partnerships, trusts, and estates.
Foreign currency values must be converted into U.S. dollars under the reporting rules. An account does not need to produce taxable income to be a foreign financial account for FBAR purposes.
What Is FATCA Reporting?
FATCA is the Foreign Account Tax Compliance Act. For U.S. taxpayers, one major FATCA reporting requirement is Form 8938, Statement of Specified Foreign Financial Assets. Unlike the FBAR, Form 8938 is attached to the federal income tax return. It can also cover certain interests in foreign entities and foreign securities.
For a U.S.-resident unmarried taxpayer, Form 8938 generally applies when specified foreign financial assets exceed $50,000 on the last day of the tax year or $75,000 at any time during the year. For married taxpayers filing jointly in the United States, the thresholds are generally $100,000 and $150,000. Higher thresholds apply to certain taxpayers living abroad.
Why One Filing May Not Be Enough
FBAR and Form 8938 have different purposes, filing locations, asset coverage, and thresholds. Filing one does not automatically satisfy the other.
A taxpayer may have foreign bank accounts that require an FBAR. If that taxpayer also has specified foreign financial assets and meets the Form 8938 threshold, Form 8938 may be required too. The IRS states that taxpayers may need Form 8938, the FBAR, or both. Some assets may appear on both reports.
Reporting an account on both forms does not mean the filings are duplicates. Each form requires information under its own federal reporting rules.
U.S. Taxpayers and Foreign Assets
These federal rules apply nationwide. A taxpayer in Torrance or Los Angeles follows the same federal FBAR and FATCA requirements as a taxpayer in San Francisco, San Jose, or elsewhere in the Bay Area.
Business structures can also matter. The IRS includes domestic LLCs among U.S. persons for FBAR purposes when the applicable conditions are met. A foreign owned LLC filling tax professional can help review the LLC’s ownership structure, foreign accounts, and related federal reporting obligations. Separate information reporting rules can apply to interests in foreign entities. The required form depends on the ownership and tax facts.
Filing Dates
FBAR is due April 15 following the calendar year being reported. It has an automatic extension to October 15. The report is filed electronically through FinCEN’s BSA E-Filing System, not with the federal income tax return.
Form 8938 is filed with the applicable annual federal income tax return when its reporting requirements are met. Its deadline generally follows the return’s filing deadline, including applicable extensions.
The Main Point
FBAR and FATCA reporting are separate federal information reporting requirements. Having one filing requirement does not automatically remove another. For taxpayers and businesses with foreign accounts or assets, the required filing depends on the account type, asset value, ownership, taxpayer status, and applicable thresholds.
For taxpayers across Torrance, Los Angeles, the Bay Area, and the rest of the United States, understanding these federal reporting requirements is important when foreign accounts or assets are part of the tax picture.