When it comes to reporting foreign financial accounts as a US taxpayer abroad, there are two main forms to consider: FBAR and Form 8938. While they share many similarities, there are key differences between these two forms that can make a big difference in your reporting obligations and potential penalties for non-compliance.
In this blog post, we’ll provide a side-by-side comparison of FBAR and Form 8938 to help you understand the similarities and differences between the two forms, and make an informed decision about which one to use for reporting your foreign accounts. Let’s dive in!
What is the difference between Form 8938 and FBAR?
Form 8938 Vs. FBAR
Who must file? Specified individuals (US citizens, resident aliens, and certain non-resident aliens) and domestic entities that have an interest in specified foreign financial assets and meet the reporting threshold. US persons (US citizens, resident aliens, trusts, and estates) that have an interest in foreign financial accounts and meet the reporting threshold.
Does it include US territories? No, it doesn’t include US territories(Puerto Rico, American Samoa, Guam, The United States Virgin Islands, and The Northern Mariana Islands) Yes, resident aliens of US territories and US territory entities are subject to FBAR reporting.
What’s the reporting threshold?
Reporting thresholds vary by residency and filing status (Refer to the section above that covers FATCA reporting requirements). The aggregate value of all foreign financial accounts exceeds $10,000.
What is reported?
The maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets. The maximum value of financial accounts maintained by a financial institution physically located in a foreign country.
How are maximum account or asset values determined and reported?
Fair market value in US dollars in accord with the Form 8938 instructions for each account and asset reported; convert to US dollars using the end of the taxable year exchange rate and report in US dollars. Use periodic account statements to determine the maximum value in the currency of the account; convert to US dollars using the end of the calendar year exchange rate and report in US dollars.