FBAR (FinCEN 114) and Form 8938: Filing Thresholds, Due Dates and Penalties for Clients With Foreign Accounts

A US person must file the Report of Foreign Bank and Financial Accounts (FBAR, FinCEN Form 114) when the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year. Form 8938 is a separate filing with the income tax return, and its thresholds are higher and depend on where the client lives and how the client files. Meeting one test does not satisfy the other. A client can owe both, one, or neither, and the penalties for each are separate.

This article sets out the two tests side by side, the dates, the penalty rules, and a documentation routine for the tax file.

Who must file the FBAR?

The rule is in 31 CFR 1010.350. A "United States person" with a financial interest in, or signature or other authority over, a foreign financial account must report it for each year the relationship exists. The definition covers citizens, resident aliens, and entities formed under federal or state law. The IRS page on the FBAR lists corporations, partnerships, LLCs, trusts and estates among the filers.

Three features of the regulation cause most of the missed filings:

• Financial interest is broader than owner of record. Under paragraph (e), a person has a financial interest in an account held by an agent or nominee for the person, and in an account held by an entity in which the person owns more than 50 percent. A trust grantor with an ownership interest, or a person with more than a 50 percent beneficial interest, is also covered.
• Signature authority alone triggers the report. Paragraph (f) defines it as authority to control the disposition of funds by direct communication with the institution. A bookkeeper or financial controller who can sign on a client's overseas account may have a filing duty even with no ownership. The regulation excepts certain officers and employees of banks and listed companies who have no financial interest.
• Account types go beyond bank accounts. Paragraph (c) reaches securities accounts and other financial accounts, such as insurance or annuity policies with a cash value and mutual funds with regular redemptions.

The regulation also sets out special rules: filers with an interest in or authority over 25 or more accounts report the number of accounts and basic information, and participants in certain retirement plans and IRAs need not report the plan or IRA accounts.

Is the $10,000 test per account or in total?

In total. The IRS comparison chart states the test as an aggregate account value above $10,000 at any time during the calendar year, and gives the cumulative effect: two accounts whose combined balance exceeds $10,000 at one moment must both be reported.

Take a client with two foreign accounts. Account A peaks at $7,000 on March 3, and on that date Account B holds $4,000. The aggregate on March 3 is $11,000, which exceeds $10,000, so both accounts go on the FBAR even though neither exceeds the threshold alone. Now change the facts: Account A holds $7,000 and Account B holds $2,500 in March, and by November Account A is down to $500 while Account B has grown to $9,000. The aggregate is $9,500 on both dates and never passes $10,000, so no FBAR is due. The test is a point-in-time aggregate, so the preparer needs peak balances with dates, not just year-end statements.

The report itself lists the maximum value of each account during the year, converted to US dollars at the calendar year-end rate. For the conversion mechanics, see the foreign currency remeasurement entries article.

What are the FBAR due date and extension?

The FBAR is due April 15 following the calendar year reported, with an automatic extension to October 15. No extension request is needed. It is filed electronically through FinCEN's BSA E-Filing System, not with the income tax return. The IRS will not accept the obsolete TD F 90-22.1 or a printed FinCEN Form 114.

What are the Form 8938 thresholds?

Form 8938 reports specified foreign financial assets and is attached to the annual return, due when the return is due including extensions. The instructions give these thresholds, and the value must be more than the amount shown:

Each test has two prongs. An unmarried client in the US with $45,000 at year-end but $80,000 at some point during the year files Form 8938, because the any-time prong is exceeded. The same client would file the FBAR as well, since $80,000 is well over $10,000.

How do the two filings differ in scope?

The IRS comparison chart highlights these differences:

• Foreign stock or securities not held in a financial account are reportable on Form 8938 but not on the FBAR.
• Indirect interests through an entity are reportable on the FBAR if the ownership exceeds 50 percent, but generally not on Form 8938.
• Signature authority alone triggers the FBAR but generally not Form 8938.
• Form 8938 values use the end-of-year exchange rate and the maximum value of each asset; the FBAR reports the maximum account value from periodic statements.

Filing Form 8938 does not replace the FBAR, and the reverse is also true.

What are the FBAR penalties?

Civil penalties come from 31 U.S.C. 5321(a)(5). For a non-willful violation, the penalty generally may not exceed $10,000, and no penalty applies when the violation was due to reasonable cause and the account was properly reported. For a willful violation, the maximum is the greater of $100,000 or 50 percent of the account balance at the time of the violation, and the reasonable cause exception does not apply. The Treasury may assess within six years under section 5321(b)(1).

Both dollar figures are adjusted for inflation each year in 31 CFR 1010.821. The table row for penalties assessed on or after January 17, 2025 shows $16,536 for the non-willful figure and $165,353 for the willful figure, and the eCFR text current to November 4, 2026 still shows that row as the latest. The IRS FBAR page tells practitioners to use 31 CFR 1010.821 for the current amounts and adds that assertion of penalties depends on facts and circumstances.

Example: a client willfully failed to report an account holding $400,000 at the time of the violation. Fifty percent of the balance is $200,000, which exceeds the $100,000 statutory floor (and the adjusted figure of $165,353), so the ceiling for that account is $200,000. For an account holding $120,000, 50 percent is $60,000, so the floor governs. Criminal penalties can also apply to willful conduct.

What are the Form 8938 penalties?

The instructions list a penalty of up to $10,000 for failure to file a complete and correct Form 8938 by the due date. If the client still has not filed 90 days after the IRS mails a notice, an additional $10,000 applies for each 30-day period or part of one, up to an additional $50,000. The instructions also describe an accuracy-related penalty of 40 percent of an underpayment attributable to a transaction involving an undisclosed specified foreign financial asset. For the general accuracy-related regime and the reasonable cause file, see section 6662 and reasonable cause documentation and first-time penalty abatement.

What belongs in the file?

1. Foreign account inventory. Institution, country, account type, owner of record, and any signature authority held by the client or by a client employee.
2. Peak balance log. Dates and amounts, so the aggregate test can be run on any day.
3. Both threshold tests. A worksheet showing the $10,000 aggregate result and the Form 8938 year-end and any-time result for the client's filing status and residence.
4. Entity review. Ownership above 50 percent in any entity holding accounts, and trusts where the client is grantor or beneficiary.
5. Filing confirmation. The FBAR e-filing acknowledgment, kept with the return.
6. Engagement letter language. State plainly that the FBAR is filed with FinCEN and is not part of the income tax return, and who in the firm prepares it.

CORAA prepares ready-to-review audit files for US CPA firms; see /us.

Sources

• Internal Revenue Service, Report of Foreign Bank and Financial Accounts (FBAR): https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar
• Internal Revenue Service, Comparison of Form 8938 and FBAR requirements: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements
• Internal Revenue Service, Instructions for Form 8938: https://www.irs.gov/instructions/i8938
• eCFR, 31 CFR 1010.350, Reports of foreign financial accounts: https://www.ecfr.gov/api/versioner/v1/full/2026-11-01/title-31.xml?part=1010&section=1010.350
• Legal Information Institute, 31 U.S.C. 5321, civil penalties: https://www.law.cornell.edu/uscode/text/31/5321
• Legal Information Institute, 31 CFR 1010.821, penalty adjustment for inflation: https://www.law.cornell.edu/cfr/text/31/1010.821

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error