FinCen 114 vs. FBAR vs. Form 8938: Differences & When to Use Them

Reading Time: 5 minutes

U.S taxpayers are required to report and pay taxes on their worldwide income.

If you are a U.S. expat and living/working abroad, FBAR, FinCEN 114, and form 8938 will constantly circulate around your ears.

The U.S. government uses these forms to force taxpayers to declare their interests in overseas bank accounts.

These forms require taxpayers to disclose foreign accounts and foreign assets. However, taxpayers often get confused by these terms being used interchangeably.

To solve this confusion, we have explained the differences among FBAR, FinCEN 114, and form 8938 in the coming section of the article.

FBAR Vs Form 8938

The FBAR is referred to as Foreign Bank and Financial Accounts Reporting, which has been around since 1970.

It was developed by FinCEN (Financial Crimes Enforcement Network), but since 2003, it has been administered by IRS.

The FBAR is formerly a report of the foreign bank accounts, and you do it by filing FinCEN Form 114 yearly if you qualify.

However, form 8938 (FATCA) is different and more complex than FBAR.

It was formed in 2010 in response to the detection of the extensive use of undisclosed foreign bank accounts by U.S taxpayers, and Congress presented the Foreign Account Tax Compliance Act (FATCA).

It requires more deep reporting, including charges and the assets beyond it, such as stock ownership.

Similarities Between FBAR and Form 8938:

The FBAR and Form 8938 share many similarities despite the distinctions:

  • The FBAR and Form 8938 employ the same valuation principles.
  • The taxpayer must specify the “maximum” value in each reported overseas account for the calendar year based on periodic declarations in both the FBAR and Form 8938.
  • Both forms demand that the maximum value is recorded in U.S. dollars and that those values should be converted to U.S. dollars using end-of-year calendar exchange rates.
  • The value attributed to reported overseas accounts should be equal on both forms.

Differences Between FinCEN114 and FBAR

FinCEN is simply the Treasury Department’s Financial Crimes Enforcement Network, and it is the organization that enforces FBAR compliance.

It is commonly known as an FBAR. Fincen is a form, and when we file, we say it is Fbar.

There is no difference between FinCEN and FBAR. Fincen114 is a form, and filling this form is a reporting process known as FBAR.

Differences Between FBAR and Form 8938

Differences Between FBAR and Form 8938

Reporting Thresholds:

Americans owning foreign accounts should be mindful that Form 8938 and the FBAR differ in various respects.

The following reporting thresholds are the primary.

For a U.S. citizen who has foreign financial accounts with a combined high balance of $10,000 or more during the tax year, he must file FBAR.

Contrarily, the economic thresholds for Form 8938 vary depending on the taxpayer’s location and tax filing status.

If an unmarried taxpayer’s specified overseas assets aggregate more than $50,000 on the last day of the tax year or more than $75,000 at any point during the tax year, she must submit Form 8938.

For an unmarried taxpayer residing outside of the US, those thresholds rise to $200,000 and $300,000.

If the given foreign assets of a married taxpayer living in the United States and reporting a mutual tax return total more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year (but only $50,000 and $75,000, respectively, if filing completely separate tax returns), the taxpayer is required to file Form 8938.

The Form 8938 reporting threshold is $400,000 in specified foreign assets on the last day of the tax year or more than $600,000 at any period during the tax year for married taxpayers filing joint tax returns and living outside the United States (but only $200,000 and $300,000, respectively, if filing separately).

Foreign Interest Differences

The kind of interest in a foreign account that necessitates filing a Form 8938 is distinct from the type of interest that requires filing an FBAR.

Ownership interest in a statement, power of attorney over an account, or even merely signing authority are all adequate justifications for reporting an account for FBAR reasons.

A person’s FBAR must also immediately record any overseas version with an indirect but significant beneficial ownership interest (for instance, a stake larger than 50% in the company that directly owns the foreign account).

Contrarily, only overseas accounts in which the taxpayer has a direct ownership interest must be reported for Form 8938.

Form 8938 is not required to be filled out for accounts where the taxpayer only has the power of attorney or signing authority.

Additionally, Form 8938 is not required to be filled out if the taxpayer has an indirect interest in the accounts (e.g., an entity).

Filing Deadlines & Procedures

Both FBAR and form 8938 have different deadlines.

The FBAR is to be submitted by April 15 (a 6-month automatic extension on Oct 15), while Form 8938 is attached to the annual return and is presented on the return date, including any applicable attachments.

FBAR is not filed with a federal tax return, and it is filed electronically through FinCEN, while Form 8938 is filed with the income tax return according to instructions for filing the return.

Penalties Differences

Both the FBAR and Form 8938 have different penalties.

The penalties for filing Form 8938 late or not at all can still be severe. They are not as severe as those for the FBAR.

This depends on how long the non-compliance has continued.

According to the IRS, if you submit the proper Form 8938 late or underreport your tax on a designated foreign financial asset that you failed to disclose, you may be liable for penalties.

If you fail to file an FBAR timely or non-wilfully, a $10,000 fine is applied.

If wilfully, the amount is more significant than $10,000 or 50 percent of account balances; even criminal penalties may be charged too.

Contrarily, for the failure to file Form 8938, up to $10,000 is set for the failure to disclose and then again, an additional $10,000 for every 30 days of non-filling after IRS notice of failure to disclose.

The maximum penalty is still $60,000. Criminal penalties can also be applied.

Purpose Differences

There are significant discrepancies between what counts as a “foreign” account for the FBAR and Form 8938.

An account located in a U.S. territory or possession is considered a U.S. account for FBAR reporting requirements and is not required.

However, an account in a U.S. territory or possession is regarded as a foreign account for Form 8938 and must be declared.

A financial account held at a foreign branch of a U.S. financial institution is another instance of how the two differ (e.g., a Chase account at a branch in London).

Such an account is deemed foreign for FBAR reasons and is subject to reporting.

However, Form 8938 does not regard a similar account as foreign, and it does not need to be informed on that form.

Get Help to File your Taxes

If these terms may appear complex to understand, consult us today and we’d be happy to help.

Our tax professionals have spent years understanding different tax conditions and challenges. We would love to save your money and time.

Facebook
Twitter
LinkedIn
Sign Up For Our Weekly Newsletter
*Email
AKIF CPA
5.0
Based on 107 reviews
powered by Google
Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need it.read more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive... experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable future.read more
Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend them.read more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most... humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah H.read more
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their guidance.read more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a smile.read more
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend them.read more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF CPA.read more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and affordable.read more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly recommended.read more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my situation.read more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad Akif.read more
See All Reviews
js_loader
Archives

Crypto Tax & Accounting Newsletter Signup

*Email

Cross-Border Tax Newsletter Signup

*Email