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FBAR versus FATCA Form 8938: Reporting Overseas Assets

December 19, 2013

There are many similarities between the Foreign Bank and Financial Accounts Report (FBAR) and IRS Form 8938 (required under the Foreign Account Tax Compliance Act, or FATCA), which has caused some confusion among taxpayers. There is certain information that needs to be reported on both FBAR and Form 8938, but Form 8938 requires information that is not included in an FBAR such as details on other foregin financial assets and income.

If you have a financial account at a foreign branch of a U.S. financial institution, you are not required to file FATCA Form 8938, but are required to file an FBAR. If the financial account is held by a FII, then you are required to file both Form 8938 and an FBAR.

Who is Required to File: Resident aliens of U.S. territories and U.S. territory entities are required to file FBAR, but not Form 8938. Filing Form 8938 is mandatory for those U.S citizens, resident aliens, and certain non-resident aliens that have an interest in certain foreign financial assets and meet the reporting threshold set by the IRS.

Filing Threshold: The filing threshold for FBAR is $10,000. If the value of your assets during a calendar year reaches $10,000 at any time, you are required to file an FBAR. On the other hand, for Form 8938, the amount of foreign assets for a tax year must be $50,000 on the last day of the tax year or reach $75,000 at any time during the tax year. These thresholds are for those filing separately. Married filing jointly and individuals living abroad have a higher filing threshold.

What Must Be Reported: For FBAR, you need to report if you have sufficient interest in a financial entity and/or have the authority to control the assets. For FATCA Form 8938, you must report if you have any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the account or assets that need to be reported on your tax return.

For FBAR, you need to report the maximum value of financial accounts maintained by a financial institution that is located overseas. For Form 8938, you need to report the maximum value of certain specified foreign financial assets. These include financial accounts in FIIs and certain other foreign non-account investment assets.

How to Report: You can file FBAR electronically using the BSA E-Filing System. An FBAR is never filed with a tax return. Form 8938, on the other hand, is always filed with the income tax return.

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