FBAR Form 114 vs. IRS Form 8938 and Missed Filing Remedies

It’s Crucial to Understand the filing requirements for FBAR Form 114 and IRS Form 8938, as well as what to do if you miss a filing.

Don’t take the risk of not filing your annual FBAR Form 114 or IRS Form 8938 if you are required to do so. If you have foreign assets you need to understand these requirements, and what to do if you miss one.

FBAR – FinCEN Form 114

• Threshold: Must file if the aggregate value of all foreign financial accounts exceeds $10,000 (USD equivalent) at any point during the calendar year.
• Who files: All U.S. persons (citizens, residents, certain entities).
• Where filed: Electronically with FinCEN via the BSA E-Filing System — not with the IRS.
• Trigger: Account balance alone, not whether you sold assets or recognized income.
• Deadline: April 15 each year, with an automatic extension to October 15.
• Scope: Limited to foreign financial accounts (bank, brokerage, mutual funds, pensions, etc.). Direct ownership of foreign stocks, bonds, or partnership interests outside of an account is not reported on FBAR.
• Example: A Swiss brokerage account holding stocks must be reported (the account is the reportable item). A physical stock certificate for a German company kept at home is not reported on FBAR.

Form 8938 – IRS Form (Statement of Specified Foreign Financial Assets)

• Thresholds:
  • Single/HOH, U.S. resident: > $50,000 at year-end or > $75,000 at any time.
  • Married Filing Joint, U.S. residents: > $100,000 at year-end or > $150,000 at any time.
  • Higher thresholds apply for taxpayers living abroad.
• Who files: Specified individuals (and some entities) with certain foreign financial assets.
• Where filed: With the IRS, attached to Form 1040.
• Scope: Broader than FBAR. Includes:
  • Assets held in foreign accounts (overlaps with FBAR), and
  • Direct ownership of specified foreign financial assets even if no account exists.
• Examples:
  • Directly held foreign stocks (not in an account).
  • Ownership in a foreign partnership or corporation.
  • Foreign-issued bonds or notes held directly.
  • Interests in a foreign trust or estate.

Key Distinctions

• FBAR (Form 114): $10,000 threshold, filed with FinCEN, triggered by balances at any time, limited to accounts.
• Form 8938: Higher thresholds, filed with IRS as part of the tax return, includes both accounts and directly held foreign assets.
• Overlap: Many taxpayers must file both. One does not replace the other.
• Income reporting: Reporting obligations are about asset/account values, not sales or gains. Income still must be reported on the 1040 regardless of FBAR/8938 status.

Misconception: Reporting Only on Sale/Gain Recognition

• FBAR reporting has nothing to do with whether you sell or recognize gains.
• The filing requirement is triggered solely by account balances: if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the year, you must file.
• Even if the account produces no income (e.g., dormant account, no sales, no gains), the FBAR requirement still applies.
• Same for Form 8938 — it’s based on the existence and value of assets, not whether they produced taxable income.
• IRS/FinCEN are interested in disclosure of foreign assets, not just income.

Consequences of Missing an FBAR Filing

FBAR penalties are among the harshest in tax law:

• Non-willful violations: Up to $10,000 per violation, per year.
• Willful violations: Greater of $100,000 or 50% of the account balance.
• Criminal penalties: Possible if intent to conceal is proven.
• Penalties can apply even if no tax was owed on the income.

Remedies if You Missed Filing

1. Delinquent FBAR Submission Procedures

• Due to the statute of limitations, FinCEN requires reporting for a minimum of the last 6 years (2019-2024) to be considered compliant.
• If no foreign income was omitted from your 1040 and you are not under IRS/FinCEN investigation, you can file the missing FBARs via the BSA E-Filing system with an explanation.
• Penalties are often waived if the IRS finds the failure was non-willful and promptly corrected.

2. Streamlined Filing Compliance Procedures

• For taxpayers who failed to file FBARs and failed to report foreign income.
• Requires filing 3 years of amended returns and 6 years of FBARs.
• Penalty: Usually 5% of the highest aggregate balance, much less than standard FBAR penalties.

3. Voluntary Disclosure Program (VDP)

• For willful or high-risk cases.
• Involves higher penalties, but provides protection from criminal prosecution.

Practical Guidance

• Do not wait until there is a sale — file FBAR annually if balance thresholds are met.
• If years were missed, act quickly:
  • Determine if income was also unreported (important for selecting the right remedy).
  • File back years before IRS contact — voluntary correction improves outcomes.
• Document taxpayer’s intent and cooperation, as this is critical for penalty relief.

Bottom Line:

Missed years? Correct up to 6 years back promptly using the appropriate IRS/FinCEN program. legal status and your financial future.

FBAR threshold: $10,000 aggregate at any time → file with FinCEN.

Form 8938 threshold: $50k/$100k+ depending on status → file with IRS.

Both may apply. Reporting obligations are about values, not gains.

Work With a Trusted Atlanta Tax Professional

Whether you need help catching up on missed filings or want to make sure you’re fully compliant going forward, our team is here to guide you. We’ve helped many clients just like you stay compliant and avoid trouble with both the IRS and immigration authorities. For tax resolution services Atlanta, contact EAS!

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