Comparison of Form 8938 and FBAR Requirements

The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers obligation to file
Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts). Individuals must file each form for
which they meet the relevant reporting threshold.
Form 8938, Statement of
Specified Foreign Financial
Assets

Who Must File?

Specified individuals, which include

U.S citizens, resident aliens, and
certain non-resident aliens that have
an interest in specified foreign
financial assets and meet the
reporting threshold

U.S. persons, which include U.S.

citizens, resident aliens, trusts, estates,
and domestic entities that have an
interest in foreign financial accounts
and meet the reporting threshold

No

Yes, resident aliens of U.S territories

and U.S. territory entities are subject to
FBAR reporting

Does the United States

include U.S. territories?

Reporting Threshold
(Total Value of Assets)

$50,000 on the last day of the tax

$10,000 at any time during the calendar
year or $75,000 at any time during year
the tax year (higher threshold
amounts apply to married individuals
filing jointly and individuals living
abroad)
If any income, gains, losses,
deductions, credits, gross proceeds,
or distributions from holding or
disposing of the account or asset
are or would be required to be
reported, included, or otherwise
reflected on your income tax return

When do you have an

interest in an account or
asset?

What is Reported?

Form TD F 90-22.1, Report of Foreign

Bank and Financial Accounts (FBAR)

Financial interest: you are the owner of

record or holder of legal title; the owner
of record or holder of legal title is your
agent or representative; you have a
sufficient interest in the entity that is the
owner of record or holder of legal title.
Signature authority: you have authority
to control the disposition of the assets
in the account by direct communication
with the financial institution maintaining
the account.
See instructions for further details.

Maximum value of specified foreign Maximum value of financial accounts

financial assets, which include
maintained by a financial institution
financial accounts with foreign
physically located in a foreign country
financial institutions and certain
other foreign non-account
investment assets

Fair market value in U.S. dollars in

accord with the Form 8938
instructions for each account and
How are maximum
asset reported
account or asset values Convert to U.S. dollars using the
determined and
end of the taxable year exchange
reported?
rate and report in U.S. dollars.

Use periodic account statements to

determine the maximum value in the
currency of the account.
Convert to U.S. dollars using the end of
the calendar year exchange rate and
report in U.S. dollars.

By due date, including extension, if

any, for income tax return

Received by June 30 (no extensions of

time granted)

When Due?

Form 8938, Statement of

Specified Foreign Financial
Assets

Form TD F 90-22.1, Report of Foreign

Bank and Financial Accounts (FBAR)

File with income tax return pursuant Mail to:

to instructions for filing the return
Department of the Treasury
Post Office Box 32621
Detroit, MI 48232-0621
For express mail to:
IRS Enterprise Computing Center
ATTN: CTR Operations
Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
Certain individuals may file
electronically at BSA E-Filing System

Where to File?

Up to $10,000 for failure to disclose

and an additional $10,000 for each
30 days of non-filing after IRS notice
of a failure to disclose, for a
potential maximum penalty of
$60,000; criminal penalties may also
apply

Penalties

If non-willful, up to $10,000; if willful, up

to the greater of $100,000 or 50 percent
of account balances; criminal penalties
may also apply

Types of Foreign Assets and Whether They are Reportable

Financial (deposit and Yes
custodial) accounts held
at foreign financial
institutions

Yes

Financial account held at No

a foreign branch of a U.S.
financial institution

Yes

Financial account held at No

a U.S. branch of a foreign
financial institution

No

Foreign financial account No, unless you otherwise have an

Yes, subject to exceptions
for which you have
interest in the account as described
signature authority
above
Foreign stock or
securities held in a
financial account at a
foreign financial
institution

The account itself is subject to

reporting, but the contents of the
account do not have to be
separately reported

The account itself is subject to

reporting, but the contents of the
account do not have to be separately
reported

Foreign stock or
securities not held in a
financial account

Yes

No

Foreign partnership
interests

Yes

No

Indirect interests in
No
foreign financial assets
through an entity

Yes, if sufficient ownership or beneficial

interest (i.e., a greater than 50 percent
interest) in the entity. See instructions

Form 8938, Statement of

Specified Foreign Financial
Assets

Form TD F 90-22.1, Report of Foreign

Bank and Financial Accounts (FBAR)
for further detail.

Foreign mutual funds

Yes

Yes

Domestic mutual fund

investing in foreign
stocks and securities

No

No

Foreign accounts and Yes, as to both foreign accounts and Yes, as to foreign accounts
foreign non-account
foreign non-account investment
investment assets held assets
by foreign or domestic
grantor trust for which
you are the grantor
Foreign-issued life
insurance or annuity
contract with a cashvalue

Yes

Yes

Foreign hedge funds and Yes

foreign private equity
funds

No

Foreign real estate held No

directly

No

No, but the foreign entity itself is a

No
specified foreign financial asset and
Foreign real estate held its maximum value includes the
through a foreign entity value of the real estate
Foreign currency held
directly

No

No

Precious Metals held

directly

No

No

Personal property, held No

directly, such as art,
antiques, jewelry, cars
and other collectibles

No

Social Security- type

program benefits
provided by a foreign
government

No

No

Page Last Reviewed or Updated: 25-Feb-2013

http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

For Indian Americans, it's time to declare offshore

income, assets under FBAR
Deepa Venkatraghvan Jun 7, 2013,
If you're an Indian American and thought you were done with this year's reporting
when you filed your tax returns in April, you probably forgot about the FBAR - the
Foreign Bank and Financial Account Report. The FBAR, called Form TD TD F 90-22.1,
collects information about your foreign bank and financial accounts and you must
file it if the aggregate balance in these accounts exceeded $10,000 at any time
during 2012. The due date for your 2012 FBAR is June 30th 2013.
In the light of IRS' increasing focus on taxpayers' offshore income and assets the
FBAR is increasingly becoming an important document to file. Parag Patel, a tax
attorney with New Jersey based Patel Law Offices points out, "This is the first year
that we are in the shadow of the Foreign Account Tax Compliance Act (FATCA), which
is an important development in US enforcement of tax laws involving foreign
financial assets and offshore accounts. FATCA is the end of foreign bank secrecy.
Under FATCA, US taxpayers with specified foreign financial assets that exceed
certain thresholds must report those assets to the IRS on Form 8938. In addition,
starting in 2014, FATCA requires foreign financial institutions to report directly to the
IRS information about financial accounts held by US taxpayers, or held by foreign
entities in which US taxpayers hold a substantial ownership interest."
Also read: What Indian Americans should know about FATCA
It is important to remember that the FBAR is in addition to Form 8938 - Statement of
Specified Foreign Financial Assets that you may have filed along with your tax return
in April. "There is still much confusion about the FBAR and Form 8938. Many people
don't realize that the two forms are completely separate and that filing one doesn't
exempt you from filing the other, if required," reminds Vinay Navani, a CPA and
director of tax at New Jersey based firm Wilkin and Guttenplan PC.
So let us quickly look at some of the important points to remember while filing the
FBAR:
Who should file and when

You must file an FBAR if, in 2012, you were a US citizen, green card holder or
resident and had, at any time during 2012, an aggregate balance of over $10,000 in
foreign financial assets. Resident means any person who lived in the US for at least
31 days in 2012 and 183 days during the 3 year period that includes the current
year and the 2 years immediately before (see here for detailed definition). This
would include those who are on a visa and are working in the US on assignments for
a medium to long term.
The last date for submission of the FBAR is 30th June. Unlike the tax return that
must be post marked April 15th, the FBAR must be received by the Treasury by the
30th of June. No extensions are available.
Even if no income, you must report
If you hold a foreign financial account, you may have a reporting obligation even
though the account produces no taxable income. Financial accounts include savings
account, bank fixed deposit account, brokerage and securities account, commodity
futures or options account, insurance policy with cash surrender value, annuities
cash value and mutual funds.
Even a single day's high balance counts
The FBAR must be filed by US residents, green card holders and citizens if the
aggregate of their bank and financial accounts exceeded $10,000 at any time
during 2011.
This means that if the aggregate of your accounts exceeded $10,000 even on a
single day in 2011, you would have to file the FBAR and disclose all the individual
accounts.
Signature authority and financial interest
You must either have a signature authority OR financial interest in the foreign bank
or financial account, for that account to qualify as 'your' account under FBAR. So
you must file the FBAR even if you have financial interest without signature
authority.
Treatment of joint accounts
In case you hold a joint foreign account with your parents who are in India, then you
must file the FBAR if all other conditions are met.
Failure to file FBAR attracts penalties
Willful failures can be subject to civil penalties of up to the greater of $100,000 or
50 per cent of the account balance and/or criminal penalty of up to $250,000 and/
or 5 years imprisonment. This penalty can be applied for each year an FBAR is

willfully not filed. The IRS can also go back 6 years and check your tax returns to
trace the balances reflecting in the FBAR.
Non-willful failures can be subject to a penalty of $10,000 per year for each year an
FBAR is not filed, also going back 6 years. This penalty can be waived if reasonable
cause is shown for the failure to file.
Missed to file FBARs in the past
"If you failed to file FBARs but reported all your income from foreign accounts, you
can just file 6 years' of FBARs with an explanatory letter and do not owe any taxes,
and there are no penalties. This IRS guidance generally known in the tax world as
OVDP FAQ 17," explains Patel.
If you did have foreign income that you did not report in the past, then you would
need to consider your options after talking to your tax advisor. You may choose to
silently amend past returns or enter the Offshore Voluntary Disclosure Program. If
you do neither and if you do get audited, you face high penalties as described
above.

FBAR filing for Indian Americans: 10 things to keep

in mind
Deepa Venkatraghvan Jun 7, 2012,
As the US cracks down on foreign bank and financial accounts, it only means one
thing for Indian Americans - more reporting! If you thought you were done with this
year's reporting when you filed your tax returns in April, you probably forgot about
the FBAR - Foreign Bank and Financial Account Report.
The FBAR is a report to be filed in addition to your tax return. For 2011, you must
file the FBAR if you were a US resident or citizen and had, at any time in 2011, an
aggregate balance of more than $10,000 in all your overseas bank and financial
accounts. The due date for the 2011 FBAR is June 30 th 2012.
We have already covered, in this earlier article, the basics of FBAR filing, such as
eligibility, account limits etc.
In today's article, we look at 10 key points about the FBAR, including some
important practical interpretations of the law.
1. FBAR is different from your tax return

The FBAR is filed in addition to your income tax return. The FBAR must be filed in
Form TD F 90-22.1 even if you have already filed Form 8938, 'Statement of Specified
Foreign Financial Assets' along with the tax return.
The historical roots of the FBAR are found in the Bank Secrecy Act of 1970 and the
intention then was only to collect information on foreign bank accounts. Only
recently the US Treasury handed over administration of the FBAR to the IRS which in
turn started linking the FBAR to the tax return to check tax evasion.
While Form 8938 and the FBAR require more or less the similar kinds of details,
there are some differences in thresholds and type of assets. You can get a complete
comparison here.
2. FBAR is due on 30th June
The last date for submission of the FBAR is 30th June. Unlike the tax return that
must be post marked April 15th, the FBAR must be received by the Treasury by the
30th of June. No extensions are available.
"So if you complete your FBAR on June 29th, you will have to send it via overnight
mail so that it reaches by June 30th. If you complete it on June 30th it will be late,"
says Vinay Navani, a CPA and director of tax at New Jersey based firm Wilkin &
Guttenplan, P.C
3. Even if no income, you must report
If you hold a foreign financial account, you may have a reporting obligation even
though the account produces no taxable income.
4. Even a single day's high balance counts
The FBAR must be filed by US residents, green card holders and citizens if the
aggregate of their bank and financial accounts exceeded $10,000 at any time
during 2011.
This means that if the aggregate of your accounts exceeded $10,000 even on a
single day in 2011, you would have to file the FBAR and disclose all the individual
accounts.
"Sometimes it may seem like you have to report more assets than you actually
have, especially when you transfer funds between accounts. Make the appropriate
reporting and don't worry too much because there are no real tax implications from
the FBAR if you have reported income from these assets on your tax return," Navani
adds.
The FBAR regulations say that you must have either signature authority or financial
interest in these accounts. We'll discuss these two in the following points.

5. Signature authority
You must either have a signature authority OR financial interest in the foreign bank
or financial account, for that account to qualify as 'your' account under FBAR.
The important thing to remember is that it is either signature authority or financial
interest. You may have signature authority on an account with no financial interest.
For instance, a CFO of a company may have signature authority over the company's
bank account.
In such cases, Navani explains, "If a US company has a foreign bank account and
the US CFO is the only person who is an authorized signatory, then both the
company will file an FBAR (signed by a corporate officer - maybe the CFO). In
addition, the CFO will file a personal FBAR and report the account as one which he
or she doesn't have a financial interest in but does have signature authority."
There are some exceptions. Individuals who have signature authority over, but no
financial interest in, a foreign financial account are not required to report the
account in certain situations. Employees of publically traded companies who only
have signature authority over foreign bank accounts are usually exempt from FBAR.
You can read the complete list of exceptions in the instructions to the FBAR.
6. Financial interest
You must file the FBAR even if you have financial interest without signature
authority. "An important example here would be if a US person owns more than 50%
of an Indian Pvt. Ltd., then he or she must file an FBAR since he or she has a
financial interest in the bank accounts maintained by the Indian Pvt. Ltd," Navani
explains.