FBAR and FATCA: What Every American Expat Must Report

The $2.72 Million Wake-Up Call

In 2023, the U.S. Supreme Court cut a taxpayer's foreign-account penalty from $2.72 million to $50,000 in a single ruling. Alexandru Bittner, a dual U.S.-Romanian citizen, had failed to file FBARs for five years while holding accounts in Romania and Switzerland. The IRS calculated his non-willful penalty per *account* — 272 accounts across five years — and arrived at $2.72 million. The Supreme Court disagreed, holding in *Bittner v. United States*, 598 U.S. 85 (2023), that the $10,000 non-willful penalty applies per *report*, not per account, cutting his liability to five years times $10,000 ([Supreme Court opinion](https://www.supremecourt.gov/opinions/22pdf/21-1195_h3ci.pdf), decided February 28, 2023).

The case is a useful entry point because it shows two things at once: the penalties for getting foreign-account reporting wrong are real and can be severe, and the rules are specific enough that getting the mechanics right matters. For American expats, two overlapping but distinct federal requirements govern this reporting — the FBAR and FATCA's Form 8938 — and confusing one for the other is one of the most common compliance mistakes expats make.

The $10,000 Trip Wire: FBAR Basics

The Report of Foreign Bank and Financial Accounts (FBAR) is not a tax form. It's filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, under the Bank Secrecy Act — not with the IRS ([FinCEN, Report Foreign Bank and Financial Accounts](https://www.fincen.gov/report-foreign-bank-and-financial-accounts)).

Any U.S. person — citizen, green card holder, or resident — must file an FBAR if the aggregate value of their foreign financial accounts exceeded $10,000 at any point during the calendar year, even for a single day ([IRS, Report of Foreign Bank and Financial Accounts](https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar)). That threshold is aggregate across every account, not per account: a checking account with $6,000 and a savings account with $5,000 in a different country both count toward the same $10,000 line.

Key mechanics:

• **Form**: FinCEN Form 114, filed electronically through the BSA E-Filing System. Individuals can file without registering for an account; paper filing requires prior approval from FinCEN ([FinCEN, How Do I File the FBAR](https://www.fincen.gov/how-do-i-file-fbar)).
• **Deadline**: April 15, with an automatic extension to October 15 — no separate extension request needed.
• **Covered accounts**: foreign bank accounts, brokerage accounts, mutual funds, and accounts over which you have signature authority even if you don't own them (for example, a company account you can sign checks on). Certain accounts are excluded, including most U.S.-based retirement accounts and correspondent accounts held by financial institutions.
• **Joint accounts**: both account holders must each file if the aggregate threshold is met, even if the account is a joint account with a non-U.S.-person spouse.

Form 8938: FATCA's Reporting Requirement

The Foreign Account Tax Compliance Act (FATCA) created a second, separate reporting obligation: Form 8938, Statement of Specified Foreign Financial Assets, filed with your annual Form 1040 ([IRS, Summary of FATCA Reporting for U.S. Taxpayers](https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers)).

Unlike the FBAR's flat $10,000 threshold, Form 8938 thresholds depend on filing status and where you live:

| Filing status | Living in the U.S. | Living abroad (bona fide/physical presence test met) | |---|---|---| | Single or married filing separately | $50,000 year-end / $75,000 any time | $200,000 year-end / $300,000 any time | | Married filing jointly | $100,000 year-end / $150,000 any time | $400,000 year-end / $600,000 any time |

To qualify for the higher "living abroad" thresholds, you generally need to be a U.S. citizen or resident who was physically present in a foreign country for at least 330 days during the tax year, or who meets the bona fide residence test.

Form 8938 also reaches further than the FBAR. It covers not just financial accounts but "specified foreign financial assets" held outside an account — foreign stock or securities certificates held directly, interests in foreign entities, and financial instruments or contracts with a non-U.S. counterparty ([IRS, Comparison of Form 8938 and FBAR Requirements](https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements)).

FBAR vs. FATCA: Filing One Doesn't Excuse the Other

The IRS is explicit that these are two separate filings with two separate thresholds, and meeting one obligation does not satisfy the other:

| | FBAR (FinCEN Form 114) | FATCA (Form 8938) | |---|---|---| | Filed with | FinCEN (Treasury) | IRS, attached to Form 1040 | | Threshold | $10,000 aggregate, any time in the year | $50,000–$600,000 depending on status/residency | | What's covered | Foreign accounts (bank, brokerage, mutual funds), signature authority | Accounts plus directly held foreign securities, entity interests, contracts |

| Due date | April 15, auto-extended to October 15 | With your tax return (including extensions) |

An expat with a single $15,000 foreign checking account and no other assets, for example, must file an FBAR (over the $10,000 threshold) but not Form 8938 (under the $200,000 single/abroad threshold). An expat with $250,000 spread across a foreign brokerage account and directly held foreign stock certificates would owe both.

The Cost of Getting It Wrong

**FBAR penalties** come in two tiers. Non-willful violations — failing to file out of negligence or misunderstanding — carry a penalty currently capped at $16,536 per violation, an inflation-adjusted figure under the statutory $10,000 base ([Federal Register, FinCEN Inflation Adjustment of Civil Monetary Penalties](https://www.federalregister.gov/documents/2025/01/17/2025-01374/financial-crimes-enforcement-network-inflation-adjustment-of-civil-monetary-penalties), effective January 17, 2025; the 2026 adjustment was not issued because a lapse in government data collection during the October 2025 shutdown prevented the required inflation calculation, so 2025 amounts remain in effect). As *Bittner* established, this penalty applies per report (i.e., per year), not per account. Willful violations are far more severe: up to the greater of $165,353 or 50% of the account balance, per violation, and can also carry criminal penalties.

**FATCA penalties** are separate and stack on top. Failing to file Form 8938 triggers a $10,000 penalty, plus an additional $10,000 for each 30-day period of continued non-filing after the IRS sends a notice, up to a maximum additional penalty of $50,000. On top of that, a 40% penalty applies to any underpayment of tax attributable to an undisclosed specified foreign financial asset, and the statute of limitations extends to six years if omitted income from foreign financial assets exceeds $5,000 ([IRS, Summary of FATCA Reporting for U.S. Taxpayers](https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers)).

Catching Up Without Criminal Exposure

Expats who discover they've missed years of FBAR or FATCA filings — a common scenario for people who moved abroad without realizing these rules applied to them — have a formal path back into compliance: the IRS Streamlined Filing Compliance Procedures. Eligibility requires certifying, under penalty of perjury, that the failure to report resulted from non-willful conduct — negligence, inadvertence, mistake, or a good-faith misunderstanding of the requirements — and that you are not currently under IRS civil examination or criminal investigation ([IRS, Streamlined Filing Compliance Procedures](https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures)).

The program splits by residency:

• **Streamlined Foreign Offshore Procedures** (for those living outside the U.S. and meeting the non-residency test): no miscellaneous offshore penalty.
• **Streamlined Domestic Offshore Procedures** (for those living in the U.S.): a 5% miscellaneous offshore penalty applies, based on the highest aggregate value of the unreported foreign assets.

Both require filing amended or delinquent tax returns for the most recent three years and FBARs for the most recent six years. Filing forward without going through an approved procedure — sometimes called a "quiet disclosure" — carries its own risk, since the IRS treats it differently from a certified streamlined submission.

Why Your Foreign Bank Already Knows

FATCA isn't just a taxpayer disclosure rule — it also requires foreign financial institutions to report U.S. account holders directly to the IRS, or face a 30% withholding tax on certain U.S.-source payments. This is why many expats find their local bank asking for a W-9 or a U.S. citizenship declaration, and why some foreign banks decline to open accounts for U.S. persons at all: the institutional reporting burden makes small accounts unprofitable for them to service. Practically, this means the IRS frequently already has account data before an expat files anything — a mismatch between what your bank reports and what you file is a common audit trigger.

Action Items

• **Add up every foreign account balance for the year, in USD, at its highest point.** If the total exceeds $10,000 even briefly, an FBAR is required regardless of source of funds or whether any tax is owed.
• **Check your Form 8938 threshold based on your filing status and physical presence abroad**, not just your account balances — directly held foreign securities and entity interests count even without a financial account.
• **File the FBAR through FinCEN's BSA E-Filing System by April 15** (automatic extension to October 15); file Form 8938 with your Form 1040 by your tax return's due date, including extensions.
• **If you're behind on either filing, evaluate the Streamlined Filing Compliance Procedures before filing forward** — a quiet disclosure can foreclose the penalty relief the streamlined program offers.
• **Don't assume no tax owed means no filing required.** Both FBAR and Form 8938 are informational reports tied to account value, not tax liability.

Next Steps

FBAR and FATCA are enforced by different agencies, triggered by different thresholds, and penalized on different scales — treating them as one requirement is the mistake that turns a paperwork gap into a five- or six-figure exposure. Before your next filing deadline, pull account statements for every foreign account you hold or have signature authority over, total the balances at their peak for the year, and compare that figure against both the $10,000 FBAR line and your applicable Form 8938 threshold. If you find you've missed prior years, consult a tax professional experienced in offshore disclosure before filing anything — which procedure you use determines whether you pay 0%, 5%, or face penalties running into the tens of thousands.