Specialized Returns for Individuals · International information reporting

Distinctions between FBAR and Form 8938 requirements

Verification 2026 Verified
tax year · reviewed 2026-08-21 · Draft for I. Ohu review

Practitioners describe these two as overlapping, which understates the problem. They overlap on the common case — a bank account abroad, owned outright, worth a lot — and diverge on almost everything around it. Six things differ, and only one of them is the number everybody remembers. The two forms disagree about who has to file, about what counts as a covered thing, about what it means to have an interest in one, about how the threshold is shaped, about how to value what is reported, and about where the filing goes. On one point they disagree about the geography of the United States itself.

The rule

Who files. Form 8938: specified individuals — United States citizens, resident aliens and certain non-resident aliens — and specified domestic entities, being certain domestic corporations, partnerships and trusts^TY2026 The FBAR: United States persons, including citizens, resident aliens, trusts, estates and domestic entities, with an interest in foreign financial accounts meeting the threshold^TY2026

Where the United States ends. United States territories are outside the United States for Form 8938 but inside it for the FBAR — resident aliens of the territories and territory entities are subject to FBAR reporting, which is the one place the two regimes disagree about what the country is^TY2026

What is covered. Form 8938 reaches assets: any financial account within IRC § 1471(d)(2) maintained by a foreign financial institution, plus three categories held outside such an account — stock or a security issued by a non-United States person, a financial instrument or contract held for investment with a non-United States issuer or counterparty, and any interest in a foreign entity (IRC § 6038D(b))^TY2026 The FBAR reaches accounts: a financial interest in, or signature or other authority over, at least one financial account located outside the United States — and generally an account at a financial institution located outside the United States is a foreign financial account, whether or not it produced taxable income^TY2026 From that flow the branch rule — an account at a foreign branch of a United States institution is reportable on the FBAR but not on Form 8938; an account at a United States branch of a foreign institution is reportable on neither — location of the branch decides the FBAR, and the status of the institution decides Form 8938^TY2026 — and the treatment of things that are not accounts at all: foreign stock or securities held outside an account, foreign partnership interests, and foreign hedge and private equity funds are Form 8938 assets and are not FBAR accounts — the FBAR reaches accounts, Form 8938 reaches assets^TY2026

What an interest is. an interest arises for Form 8938 where any income, gain, loss, deduction, credit, gross proceeds or distribution from the asset would be required to be reflected on the income tax return; for the FBAR it arises from being owner of record or holder of legal title, from that person being the filer's agent, from a sufficient interest in the entity that holds title, or from signature authority^TY2026 Which is why signature authority over an account, without any interest in it, is reportable on the FBAR subject to exceptions but is not a Form 8938 asset unless the filer otherwise has an interest — which is why an employee with authority over a company account can have an FBAR obligation and no tax reporting at all^TY2026

How the thresholds are shaped. Form 8938 uses four threshold pairs varying by filing status and residence, each with a last-day figure and an any-time figure; the FBAR uses one cumulative figure with no last-day test and no variation for status or residence^TY2026

How value is measured. Form 8938: the maximum value of each specified foreign financial asset, at fair market value in United States dollars in accordance with the Form 8938 instructions, converted at the end-of-taxable-year exchange rate^TY2026 The FBAR: the maximum value of each account during the year, taken from periodic account statements in the currency of the account and converted at the end-of-calendar-year exchange rate — the maximum balance, not the closing balance^TY2026

When and where. Form 8938: attached to the annual income tax return and due on the date of that return, including any applicable extensions — it is not a standalone filing (IRC § 6038D(a); IRS Form 8938 and FBAR comparison)^TY2026 The FBAR: received by 15 April following the calendar year reported, with an automatic 6-month extension to 15 October that need not be requested — filed electronically through FinCEN's BSA E-Filing System and never with a federal tax return^TY2026

And the rule that governs all of it. neither filing satisfies the other — the same account can be reportable on both, on one, or on neither, and the two are administered by different agencies under different titles of the United States Code^TY2026

Current figures

Axis	Form 8938	FBAR
Who files	specified individuals — United States citizens, resident aliens and certain non-resident aliens — and specified domestic entities, being certain domestic corporations, partnerships and trusts^TY2026	United States persons, including citizens, resident aliens, trusts, estates and domestic entities, with an interest in foreign financial accounts meeting the threshold^TY2026
Territories	Outside the United States	United States territories are outside the United States for Form 8938 but inside it for the FBAR — resident aliens of the territories and territory entities are subject to FBAR reporting, which is the one place the two regimes disagree about what the country is^TY2026
What is covered	any financial account within IRC § 1471(d)(2) maintained by a foreign financial institution, plus three categories held outside such an account — stock or a security issued by a non-United States person, a financial instrument or contract held for investment with a non-United States issuer or counterparty, and any interest in a foreign entity (IRC § 6038D(b))^TY2026	a financial interest in, or signature or other authority over, at least one financial account located outside the United States — and generally an account at a financial institution located outside the United States is a foreign financial account, whether or not it produced taxable income^TY2026
Branch rule	an account at a foreign branch of a United States institution is reportable on the FBAR but not on Form 8938; an account at a United States branch of a foreign institution is reportable on neither — location of the branch decides the FBAR, and the status of the institution decides Form 8938^TY2026	—
Non-account assets	foreign stock or securities held outside an account, foreign partnership interests, and foreign hedge and private equity funds are Form 8938 assets and are not FBAR accounts — the FBAR reaches accounts, Form 8938 reaches assets^TY2026	—
Signature authority	signature authority over an account, without any interest in it, is reportable on the FBAR subject to exceptions but is not a Form 8938 asset unless the filer otherwise has an interest — which is why an employee with authority over a company account can have an FBAR obligation and no tax reporting at all^TY2026	—
Interest test	an interest arises for Form 8938 where any income, gain, loss, deduction, credit, gross proceeds or distribution from the asset would be required to be reflected on the income tax return; for the FBAR it arises from being owner of record or holder of legal title, from that person being the filer's agent, from a sufficient interest in the entity that holds title, or from signature authority^TY2026	—
Threshold shape	Form 8938 uses four threshold pairs varying by filing status and residence, each with a last-day figure and an any-time figure; the FBAR uses one cumulative figure with no last-day test and no variation for status or residence^TY2026	an aggregate value greater than $10,000 at any time during the calendar year^TY2026
Valuation	the maximum value of each specified foreign financial asset, at fair market value in United States dollars in accordance with the Form 8938 instructions, converted at the end-of-taxable-year exchange rate^TY2026	the maximum value of each account during the year, taken from periodic account statements in the currency of the account and converted at the end-of-calendar-year exchange rate — the maximum balance, not the closing balance^TY2026
Timing	attached to the annual income tax return and due on the date of that return, including any applicable extensions — it is not a standalone filing (IRC § 6038D(a); IRS Form 8938 and FBAR comparison)^TY2026	received by 15 April following the calendar year reported, with an automatic 6-month extension to 15 October that need not be requested — filed electronically through FinCEN's BSA E-Filing System and never with a federal tax return^TY2026
Penalty	$10,000 for the failure, and where it continues more than 90 days after the Secretary mails notice, a further $10,000 for each 30-day period or fraction of one after that 90-day period expires — the additional penalty capped at $50,000, so $60,000 is the maximum (IRC § 6038D(d))^TY2026	the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, and the reasonable cause exception does not apply (31 U.S.C. § 5321(a)(5)(C), (D))^TY2026
Substitution	neither filing satisfies the other — the same account can be reportable on both, on one, or on neither, and the two are administered by different agencies under different titles of the United States Code^TY2026	—

How it works in practice

Run both analyses, always (IRC § 6038D(b) for one, 31 U.S.C. § 5314 for the other). The efficient instinct — work out the foreign position once and apply it to both forms — is the source of most errors in this area. Take the client’s holdings and pass them through two independent filters.

The four cases are all live. Some things are on both forms (a foreign bank account owned outright). Some are on Form 8938 only (foreign shares held outside an account, partnership interests, hedge fund interests). Some are on the FBAR only (an account at a foreign branch of a domestic bank, signature authority over someone else’s account). And some are on neither (real estate, currency, metals and personal property held directly). Knowing which quadrant a holding falls in is the entire skill.

The interest tests are genuinely different. Form 8938 asks whether the asset would produce something reportable on the income tax return. The FBAR asks about record ownership, legal title, agency, sufficient interest in a title-holding entity, or signature authority. A client can have an FBAR interest in an account whose income is not theirs, and a Form 8938 interest in an asset they do not legally own.

The territories point catches people who move. A resident alien of a United States territory is subject to FBAR reporting; for Form 8938 the territories are outside the United States, which affects which residence threshold pair applies. It is the one place where “the United States” means two different things on the same client’s file.

Diary two dates. The FBAR sits on the calendar year with its own automatic extension; Form 8938 rides the income tax return and its extensions. A client on a fiscal year, or one who extends the return, has two different deadlines in the same season.

Say the substitution rule out loud to the client. People who have filed one for years and then learn of the other assume the first covered them. It never did, and the penalty regimes are separate too.

Four holdings, four answers

A client holds: a savings account at a bank in Chile; shares in a Chilean company registered in his own name with no broker; an account at the Santiago branch of a United States bank; and signature authority over his employer’s Chilean payroll account.

The savings account is on both forms. The registered shares are on Form 8938 only — a security issued by a non-United States person, held outside an account. The Santiago branch account is on the FBAR only — the branch is abroad, but the institution is not a foreign financial institution. The payroll account is on the FBAR only, as signature authority. One client, one country, and each of the four quadrants occupied.

The account whose income was not hers

A client is named on her elderly father’s account in Canada so she can manage his affairs. The interest is reported on his return, not hers, and she takes nothing from it.

She has an FBAR obligation. The FBAR interest test reaches an owner of record or holder of legal title regardless of whose income it is, and would reach her on signature authority in any event. She has no Form 8938 obligation: nothing from the account is required to be reflected on her income tax return, which is the Form 8938 test. Two forms, two questions, one answer each — and they differ.

The move to San Juan

A client relocates to Puerto Rico and continues to hold accounts in Spain.

For the FBAR nothing changes: a resident of a United States territory is a United States person subject to reporting, and the territory is part of the United States for this purpose. For Form 8938 the territories are outside the United States, so she is now a specified individual living outside it, and the threshold pair that applies to her jumps fourfold. The same relocation makes one form no easier and the other much easier.

Twenty years of the wrong form

A client has filed an FBAR faithfully every year since 2004 for an account in Australia that has grown to $460,000. He has never filed Form 8938 and believes the FBAR covered his obligations.

It never did. The account is also a specified foreign financial asset and, at that value, over the threshold for every filing status. Each unfiled Form 8938 carries its own penalty, and — the more serious consequence — IRC § 6501(c)(8) has kept the assessment period open for every year in which the form was required. His diligence on one form has done nothing to close the years on the other.

Assuming one filing covers the other. It does not, and never has.

Applying the Form 8938 residence thresholds to a territory resident wrongly. The territories are outside the United States for Form 8938 and inside it for the FBAR.

Using the FBAR interest test for Form 8938. Signature authority is not a Form 8938 interest; the Form 8938 test asks what the income tax return must reflect.

Assuming both forms use a last-day test. Only Form 8938 does. The FBAR has a single any-time aggregate figure.

Expecting the same deadline. Form 8938 follows the return and its extensions; the FBAR is due 15 April with its own automatic extension to 15 October.

Filing the FBAR with the return. It goes to FinCEN electronically and never with a tax return.

Treating the penalties as one exposure. They are separate regimes in separate titles, administered differently, and both can apply to the same account.

How this has changed

The divergence is an accident of history rather than a design. The FBAR is a 1970 Bank Secrecy Act report aimed at money movement, administered by FinCEN, with concepts — signature authority, financial interest through a majority-owned entity — drawn from anti-money-laundering practice. Form 8938 is a 2010 tax provision aimed at unreported income (IRC § 6038D), administered by the Service, with concepts drawn from the FATCA withholding rules, which is why it follows the status of the institution rather than its location.

Nothing has been done to reconcile them. Proposals to merge the two filings have been made repeatedly and none has been enacted; Pub. L. 119-21 did not touch either regime. The practical consequence is that the Service’s comparison table, rather than either statute, is the working authority — and that the table is worth re-reading each year rather than remembered, because several of its rows resolve in ways neither statute predicts.

What has changed is the cost of getting it wrong. Automatic exchange of information means the Service now receives account data directly from foreign institutions, so the historic pattern — a client who filed one form for years and no one noticed the other was missing — resolves far more often, and resolves against the client.

Exam focus

Expect a matrix question: a list of holdings, and which form each goes on. Work the two filters separately — account and location for the FBAR, asset and institution status for Form 8938.

The four highest-yield discriminators are the branch rule in both directions, signature authority (FBAR only), non-account foreign securities and partnership interests (Form 8938 only), and the fact that neither reaches directly held real estate, currency, metals or personal property.

Know that only Form 8938 has a last-day test and residence-based thresholds, that only the FBAR treats the territories as part of the United States, and that filing one has never satisfied the other.

Check yourself

1. Which form reaches signature authority over an account in which the filer has no interest?

Answer: The FBAR only, subject to the exceptions for certain officers and employees. Signature authority is not an interest in a specified foreign financial asset for Form 8938.

2. A specified individual holds an account at the London branch of a United States bank. Which form reaches it?

Answer: The FBAR only. The account is located outside the United States, but the institution maintaining it is not a foreign financial institution.

3. Are United States territories part of the United States for these purposes?

Answer: They differ. For Form 8938 the territories are outside the United States; for the FBAR resident aliens of the territories and territory entities are subject to reporting.

4. A client’s foreign accounts peaked at $60,000 in June and stood at $48,000 on the last day of the year. She is unmarried and lives in the United States, and has no other foreign assets. What must she file?

Answer: The FBAR only. The aggregate exceeded $10,000 at a time during the year, so the FBAR is required. For Form 8938 the thresholds for an unmarried specified individual living in the United States are more than $50,000 on the last day of the year or more than $75,000 at any time during it, and neither is met — $48,000 on the last day and $60,000 at the peak.

5. Does filing an FBAR satisfy the Form 8938 requirement?

Answer: No. The two are separate regimes under different titles of the United States Code, administered by different agencies, with separate penalties; neither filing substitutes for the other.

Change log

2026-08-21Initial draft. Compares the two regimes across the six axes on which they differ — who files, what is covered, what an interest is, the threshold structure, valuation and timing, and where the filing goes — including the territories point on which they define the United States differently, and the rule that neither filing substitutes for the other.