FBAR and Form 8938 Penalties | Kathryn Meyer Law PC

Yes, if your foreign accounts together were worth more than $10,000 at any time during the year. A U.S. person in that position must file an FBAR (FinCEN Form 114) with FinCEN, due April 15 with an automatic extension to October 15, and many people must also attach Form 8938 to their tax return. For penalties assessed on or after January 17, 2025, the maximum non-willful FBAR penalty is $16,536 per report.

The two reports overlap but are not the same, and missing one does not excuse the other. Foreign accounts and cross-border reporting are part of Kathryn Meyer's strategic tax counsel work, which includes bringing past filings into compliance.

How foreign account reporting works, step by step

List every foreign account you own or can sign on. FinCEN's rule covers a financial interest in, or signature authority over, accounts at financial institutions outside the United States: bank accounts, brokerage accounts and mutual funds, among others. Whether an account earned taxable income does not matter.
Find each account's highest value in the year. Use periodic statements to find the maximum value in the account's currency, then convert to U.S. dollars at the Treasury exchange rate for the last day of the calendar year.
Add the maximums together. If the total was more than $10,000 at any time in the calendar year, file an FBAR reporting every account, including the small ones.
File the FBAR electronically through FinCEN's BSA E-Filing System. It is not attached to your tax return. Individuals can file without registering; an attorney or CPA filing for a client must register and file as an institution.
Check Form 8938 separately. Compare your specified foreign financial assets against the threshold that fits your filing status and where you live, and attach Form 8938 to your income tax return if you are over it.
Answer the foreign account question on Schedule B and keep records of each account for five years from the FBAR due date.

FBAR and Form 8938 side by side

The IRS publishes a comparison chart because people often assume one form covers both duties. It does not: the IRS says the Form 8938 requirement "does not replace or otherwise affect" the obligation to file an FBAR.

Question	FBAR (FinCEN Form 114)	Form 8938
Who files	U.S. persons: citizens, residents, and domestic entities, trusts and estates	Specified individuals (citizens, resident aliens, certain nonresident aliens) and certain domestic entities, only if a tax return is required
Threshold	Aggregate value of foreign financial accounts over $10,000 at any time in the calendar year	Living in the U.S.: over $50,000 at year end or $75,000 at any time (unmarried or married filing separately); over $100,000 or $150,000 (joint return)
Threshold if you live abroad	Same $10,000	Over $200,000 at year end or $300,000 at any time; over $400,000 or $600,000 for a joint return
Where it goes	FinCEN, electronically, through the BSA E-Filing System	Attached to the income tax return
Due date	April 15, with an automatic extension to October 15	The due date of the return, including extensions
Signature authority only	Reportable, subject to exceptions	Not reportable unless you also have an interest
Foreign stock held outside an account, foreign partnership interests	Not reportable	Reportable
Account at a foreign branch of a U.S. bank	Reportable	Not reportable
Main civil penalty	Non-willful: up to $16,536 per report (penalties assessed on or after Jan. 17, 2025); willful: up to the greater of $165,353 or 50% of the account balance	$10,000, plus $10,000 for each 30 days after an IRS notice, up to $50,000 more

Some accounts are outside the FBAR entirely, according to the IRS: accounts held in an IRA or a retirement plan you participate in, accounts of governmental entities and international financial institutions, and accounts on a U.S. military banking facility. A spouse can also skip a separate FBAR for jointly owned accounts if both sign FinCEN Form 114a and the other spouse reports the accounts on a timely FBAR. Your income tax filing status has no effect on that exception.

What the penalties are, and why Bittner matters

The penalties come from 31 U.S.C. 5321(a)(5). For a non-willful violation the statute sets a $10,000 maximum, and FinCEN's inflation table in 31 CFR 1010.821 raises it to $16,536 for penalties assessed on or after January 17, 2025. As of the eCFR text current through October 1, 2026, that is the most recent adjustment. No non-willful penalty applies if the violation was due to reasonable cause and the balance was properly reported.

In Bittner v. United States (2023), the Supreme Court held that the non-willful penalty "accrues on a per-report, not a per-account, basis." Mr. Bittner's late reports for five years covered 272 accounts, and the government had sought $2.72 million by counting each account. Under the Court's reading, a single late report listing ten accounts carries one maximum penalty, not ten.

Willful violations are different. The maximum is the greater of $100,000, adjusted to $165,353, or 50 percent of the balance in the account at the time of the violation, and the reasonable cause exception does not apply. The Court noted that for this category the statute "does tailor penalties to accounts." The statute gives the government six years to assess an FBAR penalty (31 U.S.C. 5321(b)(1)). When the facts suggest a deliberate choice, the questions turn quickly to warning signs that a civil matter could turn criminal.

Form 8938 carries its own penalties under IRC 6038D: $10,000 for failing to file, and if the failure continues more than 90 days after the IRS mails a notice, $10,000 more for each 30-day period, up to $50,000. Reasonable cause applies, but the statute says a foreign country's penalty for disclosure is not reasonable cause. An underpayment tied to an undisclosed foreign asset can draw a 40 percent accuracy-related penalty. The Form 8938 instructions add that the assessment period for the return may stay open until three years after the form is filed, and becomes six years if more than $5,000 of income from foreign assets is omitted; how far back the IRS can audit explains these periods.

What changes the answer

Where you live. The Form 8938 thresholds are four times higher for people who meet the IRS's presence-abroad test (Form 8938 instructions). The FBAR threshold stays at $10,000 wherever you live (FinCEN).
Joint or separate return. Joint filers use the $100,000 and $150,000 thresholds for Form 8938, and penalties for a joint Form 8938 apply as if the spouses were one person (Form 8938 instructions).
Signature authority without ownership. An employee who can sign on an employer's foreign account may have an FBAR duty but no Form 8938 duty (IRS comparison chart). FinCEN has repeatedly extended the FBAR due date for certain employees with signature authority only (IRS FBAR page).
Willful or non-willful. The maximum rises from $16,536 per report to at least $165,353, and for a failure to report an account it can reach half that account's balance (31 U.S.C. 5321(a)(5); 31 CFR 1010.821; Bittner).
Reporting on another form. A specified individual who reports assets on a timely Form 3520, 5471, 8621 or 8865 completes only Part IV of Form 8938 for those assets, but still counts them toward the threshold (Form 8938 instructions). Large gifts from abroad have their own form, covered in whether you have to report a gift or inheritance from abroad.
Natural disasters. FinCEN sometimes extends the FBAR deadline further for people in disaster areas (FinCEN FBAR page).

For example: two small accounts that add up

For example, imagine a single woman living in Virginia who keeps a savings account in Portugal that peaked at $6,000 and a checking account there that peaked at $5,500 in the same year. Neither account alone is over $10,000, but together they reached $11,500, so she must file an FBAR listing both accounts. Her foreign assets never came close to $50,000 at year end or $75,000 during the year, so she does not need Form 8938. Suppose she learns of the rule after missing three years of FBARs, and her failure was not willful. Under Bittner, the maximum non-willful penalty is counted per report: three reports at $16,536 each is $49,608, rather than $99,216 if each of her two accounts were counted every year. That is a ceiling, not a bill. If she qualifies, the streamlined procedures or a reasonable cause explanation may lead to a far smaller result or none. This is a hypothetical, not a real case.

Common mistakes with foreign accounts

Looking at each account alone. The $10,000 test is the aggregate of all accounts, and once it is met every account is reported, even one with a few hundred dollars.
Using the year-end balance. The FBAR asks for the maximum value during the year, so a balance that briefly spiked counts.
Assuming Form 8938 replaces the FBAR, or the reverse. The IRS says the two duties are separate, with different thresholds, forms and filing places.
Checking "No" on Schedule B. The Schedule B instructions say to check "Yes" for a foreign account interest or signature authority even if no FBAR is required.
Forgetting accounts you only sign on. An elderly parent's account abroad where you were added as a signer can create an FBAR duty for you.
Filing quietly without a plan. Returns that do not follow a compliance option's instructions are processed in the normal course, and the IRS says penalties already assessed on earlier "quiet disclosures" are not abated under the streamlined procedures.

What to do this week

List every foreign account, including joint accounts and accounts where you only have signature authority.
Pull statements and find each account's highest balance for each year you are unsure about.
If your 2025 FBAR is not filed, note that the automatic extension runs to October 15, 2026.
Check whether your foreign assets cross the Form 8938 threshold for your filing status and residence.
For past years, decide which route fits before filing anything; the options start with the IRS streamlined procedures for missed foreign reporting.
If someone will deal with the IRS for you on FBAR matters, sign a power of attorney; how a tax attorney represents you before the IRS explains Form 2848.

Frequently asked questions

Do I owe tax just because I have a foreign account?

No. The FBAR is an information report, and whether an account produced taxable income has no effect on whether it is reportable. Any interest or gains the account earns are still taxed on your return in the normal way.

Is cryptocurrency held abroad reportable on an FBAR?

Not by itself, for now. FinCEN Notice 2020-2 says a foreign account holding only virtual currency is not reportable on the FBAR, unless it also holds other reportable assets, and that FinCEN intends to change the regulation; as of October 2026 the regulation has not been amended. Income from digital assets is still taxable, and what the IRS already knows is covered in whether the IRS can audit your cryptocurrency.

I filed my FBARs late but no one contacted me. What now?

The IRS says that if it has not contacted you and you are not under civil or criminal investigation, you should file late FBARs as soon as possible and explain the reason for filing late. If you are using a compliance option such as the streamlined procedures, follow that option's instructions instead.

What if my failure might have been willful?

The streamlined procedures require a certification that the conduct was not willful, so they are the wrong tool if that is not true. The IRS points people with willfulness concerns to the Criminal Investigation Voluntary Disclosure Practice, explained in amended return or voluntary disclosure.

Can an FBAR penalty be reduced?

The statute excuses non-willful violations due to reasonable cause where the balance was properly reported, and the IRS says assertion of penalties depends on facts and circumstances. The general approach to reasonable cause is in whether IRS penalties can be removed.

Does my spouse have to file a separate FBAR for our joint account?

Not if all of that spouse's foreign accounts are jointly owned with you, both of you sign FinCEN Form 114a, and you report the accounts on a timely FBAR. Otherwise, each spouse files.

Getting foreign reporting right

Foreign account rules catch careful people, often because no one told them the rules existed. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel and can help you sort out what was required, what was missed and which route fits. To discuss your situation, contact the firm or call (571) 560-8674.

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