Preliminary Work and Taxpayer Data · Preliminary work to prepare tax returns
Foreign account and asset reporting
tax year · reviewed 2026-08-19 · I. Ohu
The rule
There are two foreign reporting regimes and they are not variants of each other. They rest on different statutes, are filed in different places, use different thresholds, and reach different people. A client can be caught by one, the other, both or neither, and the preparer’s first job is to run both tests rather than one.
The FBAR — FinCEN Form 114. Its authority is not the Internal Revenue Code at all. Under 31 U.S.C. § 5314 the Secretary of the Treasury requires a resident or citizen of the United States, or a person in and doing business in the United States, to keep records and file reports when they make a transaction or maintain a relation with a foreign financial agency. The implementing regulation, 31 C.F.R. § 1010.350(a), requires each United States person having a financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country to report that relationship for each year in which it exists.
“United States person” is defined for this purpose in § 1010.350(b) and includes a citizen, a resident — being a resident alien under IRC § 7701(b) but using the Bank Secrecy Act’s own definition of “United States” — and an entity created or organised under the laws of the United States, a State, the District of Columbia, the Territories and Insular Possessions, or the Indian Tribes.
The filing trigger is an aggregate value of the foreign financial accounts exceeding $10,000 at any time during the calendar year reportedTY2026. The report is due April 15 following the calendar year reported, with an automatic extension to October 15 that need not be requestedTY2026, is filed electronically through FinCEN’s BSA E-Filing System, and — this is the point most often missed — is not filed with the federal tax return.
Form 8938 — specified foreign financial assets. This one is in the Code. An individual holding any interest in a specified foreign financial asset must attach the required information to their income tax return where the aggregate value of all such assets exceeds the threshold (IRC § 6038D(a)). Section 6038D(b) defines the asset class: any financial account maintained by a foreign financial institution, and — where not held in an account maintained by a financial institution — any stock or security issued by a non-United States person, any financial instrument or contract held for investment with a non-United States issuer or counterparty, and any interest in a foreign entity.
The thresholds are four, not one, and Reg. § 1.6038D-2(a) sets each as a pair of tests measured on different dates.
Current figures
| Regime | Threshold |
|---|---|
| FBAR | an aggregate value of the foreign financial accounts exceeding $10,000 at any time during the calendar year reportedTY2026 |
| FBAR due date | April 15 following the calendar year reported, with an automatic extension to October 15 that need not be requestedTY2026 |
| Form 8938 — unmarried, living in the United States | exceeding $50,000 on the last day of the taxable year, or $75,000 at any time during the yearTY2026 |
| Form 8938 — married filing jointly, living in the United States | exceeding $100,000 on the last day of the taxable year, or $150,000 at any time during the yearTY2026 |
| Form 8938 — living abroad | exceeding $200,000 on the last day of the taxable year, or $300,000 at any time during the year, for a specified individual who is a qualified individual under IRC § 911(d)(1)TY2026 |
| Form 8938 — married filing jointly, living abroad | exceeding $400,000 on the last day of the taxable year, or $600,000 at any time during the yearTY2026 |
| Section 6038D penalty | $10,000, plus $10,000 for each 30-day period or fraction of one during which the failure continues more than 90 days after the Secretary mails notice, to a maximum continuation penalty of $50,000TY2026 |
| Accounts the IRS lists as not FBAR-reportable | 7 categories the IRS lists as not reportable — correspondent or Nostro accounts, accounts owned by a governmental entity, accounts owned by an international financial institution, accounts maintained on a U.S. military banking facility, accounts held in an IRA of which the person is owner or beneficiary, accounts held in a retirement plan of which the person is participant or beneficiary, and accounts held in a trust of which the person is a beneficiary where a U.S. person files an FBAR reporting themTY2026 |
How it works in practice
Signature authority alone triggers the FBAR. A client who has authority over an employer’s foreign account, or over a relative’s, has an FBAR obligation even with no beneficial interest and no income. Form 8938 has no equivalent — it reaches assets in which the individual holds an interest. This is the single largest practical difference between the two and it catches corporate officers, treasurers of foreign charities and adult children on a parent’s account.
The two thresholds are measured differently. The FBAR tests aggregate value at any time during the year, so a single day above the line is enough and an account emptied in December still counts. Form 8938 tests two things — value on the last day of the year and the highest value at any time during it — and either can trigger the filing. Running one test and assuming it answers both is the usual error.
Whether the account produced income is irrelevant. The IRS states it directly for the FBAR: whether the account produced taxable income has no effect on whether it is a foreign financial account for FBAR purposes. A dormant account over the threshold is reportable.
The exclusions are worth knowing because clients volunteer them as reasons not to file. The IRS lists the categories in the figures table — correspondent and Nostro accounts, government and international-institution accounts, accounts on a United States military banking facility, and accounts held inside an IRA or a retirement plan of which the person is owner, beneficiary or participant. That last pair is the one clients most often have.
Joint spousal accounts have a specific exception. No FBAR is required from a spouse where all their foreign accounts are jointly owned with the other spouse, the non-filing spouse has completed and signed FinCEN Form 114a authorising the filing, and the filing spouse reports the jointly owned accounts on a timely filed signed FBAR. The IRS notes that income tax filing status has no bearing on this exception.
Both regimes can apply to the same account. There is no coordination that lets one filing satisfy the other. A client with a single foreign brokerage account worth 120,000 dollars files an FBAR with FinCEN and attaches Form 8938 to the return, reporting the same asset twice to two agencies.
The § 6038D penalty escalates on notice. It begins at the base amount, and where the failure continues more than ninety days after the Secretary mails notice, it accrues per thirty-day period up to the stated ceiling. The FBAR penalty regime is separate, sits in Title 31, and is materially harsher for wilful failures.
Signature authority and nothing else
Thaddeus Okonjo-Vasquez is the treasurer of a small charity that maintains an account in Ireland. He has signing authority, no beneficial interest, and receives nothing from it. The balance runs around 90,000 euros. He also has no foreign assets of his own.
He has an FBAR obligation and no Form 8938 obligation. Regulation § 1010.350(a) reaches a United States person with signature or other authority over a foreign financial account, whether or not they have a financial interest in it. Section 6038D reaches assets in which the individual holds an interest, and he holds none. So he files FinCEN Form 114 and attaches nothing to his return. Running only the Form 8938 test would have produced a confident and wrong conclusion that he had no obligation at all.
The account emptied in November
Rosalind Fitzwilliam-Adeyemi held about 46,000 dollars in a foreign account, transferred the whole balance home in November, and ended the year with a zero balance. She has no other foreign assets.
She must file the FBAR: the test is aggregate value at any time during the calendar year, and the account exceeded the threshold for most of it. She need not file Form 8938: the last-day value is zero and the highest value during the year, 46,000 dollars, is below the any-time threshold for an unmarried individual living in the United States. This is the clean case where one regime applies and the other does not, and it is only visible if both tests are run against the year’s high-water mark as well as the closing balance.
The regulation that states the wrong date
A practitioner researching the FBAR deadline reads 31 C.F.R. § 1010.306(c) and finds that reports required by § 1010.350 “shall be filed with FinCEN on or before June 30 of each calendar year.” He diarises 30 June.
The regulation has not been updated. Congress changed the FBAR due date in 2015, and the IRS states the current position plainly: the report is due 15 April following the calendar year reported, with an automatic extension to 15 October that need not be requested. The June date in the regulation is superseded. In this instance the automatic extension means a 30 June filing would still land inside the extended period — but that is luck rather than compliance, and the practitioner who relies on the regulation for the deadline will be wrong about it in every conversation with a client. Confirm dates against the IRS and FinCEN pages, not against Title 31.
How this has changed
The FBAR is the older regime by decades — it descends from the Bank Secrecy Act of 1970 — and Form 8938 arrived with the Foreign Account Tax Compliance Act in the Hiring Incentives to Restore Employment Act of 2010, which added IRC § 6038D. That is why the two overlap without coordinating: they were built forty years apart for different purposes, one for financial-crime enforcement and one for tax compliance.
Two changes matter for current practice. The due date moved in 2015: the FBAR was historically due 30 June with no extension available, and legislation aligned it with the income tax return at 15 April and added an automatic six-month extension. 31 C.F.R. § 1010.306(c) has not been amended to match and still states 30 June — a stale regulation on a point where the date is the whole question. The authoritative statement of the current deadline is on the IRS and FinCEN pages.
The regulation carries other artefacts of its age: § 1010.350(a) still names the form as “TD-F 90-22.1, or any successor form,” which has been FinCEN Form 114 since electronic filing became mandatory. This is the same pattern seen elsewhere in the older regulations — Reg. § 301.7701(b)-1 still naming the INS, Reg. § 601.106 still naming district directors. Read past the obsolete designations; the substantive rules are live.
Exam focus
Know that these are two separate regimes and be able to distinguish them on four axes: authority (Title 31 versus the Internal Revenue Code), where filed (FinCEN versus attached to the return), threshold, and who is caught. Know that signature authority alone triggers the FBAR. Know the FBAR threshold and that it is measured at any time during the year. Know that Form 8938 has four threshold pairs varying by filing status and residence abroad, and that each pair has a last-day test and an any-time test. Know the current FBAR due date and its automatic extension.
Check yourself
1. A United States person has signature authority over a foreign account belonging to their employer, with no financial interest in it. What must they file?
A. Neither the FBAR nor Form 8938 B. The FBAR only C. Form 8938 only D. Both
Answer: B. The FBAR reaches signature or other authority over an account; § 6038D reaches an interest in an asset.
2. When is the FBAR due?
A. 30 June, with no extension available B. 15 April, with an automatic extension to 15 October that need not be requested C. With the income tax return, including any extension D. 31 December of the year reported
Answer: B. The regulation at 31 C.F.R. § 1010.306(c) still states 30 June and is superseded.
3. An unmarried taxpayer living in the United States held foreign assets worth $72,000 in July and $8,000 on 31 December. Is Form 8938 required?
A. No; the last-day value is below the threshold B. Yes; the any-time value exceeds $75,000 C. No; the any-time value is below $75,000 and the last-day value is below $50,000 D. Yes; any foreign asset must be reported
Answer: C. Both tests are below their thresholds — $72,000 does not exceed $75,000, and $8,000 does not exceed $50,000.
4. Which is not reportable on an FBAR?
A. A foreign brokerage account producing no income B. A foreign account emptied before year end C. An account held in an IRA of which the taxpayer is the owner D. A foreign account over which the taxpayer has only signature authority
Answer: C. Accounts held in an IRA or a retirement plan of which the person is owner, beneficiary or participant are among the categories the IRS lists as not reportable.
5. Where is the FBAR filed?
A. Attached to the federal income tax return B. With the IRS service centre for the taxpayer’s district C. Electronically with FinCEN through the BSA E-Filing System D. With the Department of State
Answer: C. It is not filed with the tax return.
Change log
- Initial draft. Records that 31 C.F.R. § 1010.306(c) still states a 30 June FBAR due date superseded in 2015.
Related topics
- Residency status and/or citizenship (e.g., citizen, visas, green cards, resident alien or non-resident alien, ITIN) 1.1.1.c
- Additional required returns filed and taxes paid (e.g., employment, gifts, international information returns, and other information returns) 1.1.1.m
- Filing requirements and due date 1.1.1.d
- Special filing requirements (e.g. foreign income, presidentially declared disaster areas, Form 1040-NR, injured spouse) 1.1.1.n
- Sources of all worldwide taxable and nontaxable income (e.g., interest, wages, business, sales of property, dividends, rental income, flow- through entities, alimony received) 1.1.1.f
- Tax treatment of a U.S. citizen/resident with foreign income (e.g., tax treaties, Form 2555, Form 3520 and Form 5471) 1.2.1.g