Your client mentions she inherited her father's Swiss bank account, holds 12% of a UK Ltd. with her cousins, and got a $200,000 gift from her grandmother in Hong Kong. Before you touch Form 1040, you owe four different agencies four different disclosures. Miss any of them and the penalties dwarf the income tax.
FBAR predates the tax code's information reach. Treasury (FinCEN) administers FBAR under the Bank Secrecy Act to fight money laundering. Form 8938 was added by FATCA in 2010 and is administered by the IRS for tax-compliance purposes. Same accounts often, different forms always, different penalties, and different agencies. You file both when both thresholds are tripped.
A U.S, person with a financial interest in, or signature authority over, foreign financial accounts whose aggregate maximum value exceeds $10,000 at any point during the calendar year must e-file FBAR.
"U.S, person" includes citizens, resident aliens, domestic entities, and domestic trusts. Filed electronically through the BSA E-Filing System (not with Form 1040).
Common mistakes
- Confusing thresholds: $10,000 is FBAR aggregate any time. $50,000 end-of-year / $75,000 any-time is single Form 8938 in the U.S. Doubled for MFJ. Quadrupled for taxpayers abroad. Don't blur them.
- Skipping FBAR for signature authority: a controller with no economic interest in the employer's foreign account still files FBAR. Form 8938 is not required for signature-only.
- Listing foreign real estate on Form 8938: directly held foreign real estate (titled in your name) is not a specified foreign financial asset. Real estate held through a foreign entity is reported by reporting the entity interest.
Bottom line
- FBAR (FinCEN 114) files separately with Treasury when aggregate foreign financial accounts exceed $10,000 at any point in the year; due April 15 with automatic extension to October 15
- Form 8938 attaches to Form 1040 when specified foreign financial assets exceed $50,000 / $75,000 (single, year-end / any-time) or $100,000 / $150,000 (MFJ); higher thresholds for taxpayers abroad
- Form 5471 for U.S, persons who are 10%+ shareholders, officers, or directors of foreign corporations; Form 8865 for 10%+ partners in foreign partnerships
- Form 3520 for foreign gifts over $100,000 from individuals or $20,116 (2025) from foreign entities, plus foreign trust transactions; mails separately to Ogden, UT
Exam shortcut
"Aggregate exceeds $10,000 in foreign accounts" = FBAR before you read further. Then test 8938 thresholds separately. Signature authority without ownership → FBAR yes, Form 8938 no. Real estate held directly → both no. Any mention of a missing international form = statute of limitations stays open on the whole return until 3 years after late filing. The exam loves this pivot.
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Learning objectives
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