What FATCA Is, and Where Form 8938 Fits
FATCA is short for the Foreign Account Tax Compliance Act, a law passed in 2010. It works on two levels, and keeping them straight makes everything else clearer.
The first level runs through the banks. Foreign financial institutions (foreign banks, brokerages, and insurers) report their US account holders to the IRS every year, either directly or through an agreement between their country and the US Treasury. More than 100 countries take part, Israel among them, so a US person with an account abroad is no longer invisible. This is the detection engine.
The second level is your report: Form 8938. You attach it to your yearly income-tax return and list your foreign financial assets once they cross the threshold for your situation. That is the form this page is about, and it is the half of FATCA you control. The two levels feed a matching system. If a foreign bank reports your account but no Form 8938 arrives with your return, the mismatch is easy for the IRS to spot. So the practical question is never whether the IRS could find out. It is whether your own filing lines up with what your bank already sent.
Who Has to File Form 8938
Form 8938 applies to what the law calls a "specified person," which for most people means an individual in one of these groups:
- US citizens, wherever in the world you live. A citizen who moved to Israel, Canada, or Germany still files.
- Green-card holders and other US residents. This includes someone who became a US resident partway through the year by spending enough days here (the substantial-presence test), measured only for the part of the year they qualified.
- A nonresident alien who elects to be taxed as a US resident jointly with a citizen or resident spouse, for the period of that election.
A nonresident alien who makes no such election generally does not file. And there is a relieving rule at the front end: if you are not required to file a US income-tax return for the year at all, you do not file a Form 8938 for that year either. One more point worth flagging now, because it trips people up: a foreign account you can only sign on but do not own (a parent's account, an employer's account) is not reported on Form 8938, even though it would be on the FBAR. More on that difference below.
Beyond individuals, certain closely-held US companies and trusts that are set up or used to hold foreign assets can have their own Form 8938 duty. That is a narrower, fact-specific analysis we run when it comes up, not something most families need to worry about.
The Reporting Thresholds, Tier by Tier
Whether you file turns on two numbers, not one: the value of your foreign assets on the last day of the year, and the highest value at any point during the year. Cross either one and you file. The numbers themselves depend on your filing status and whether you live in the US or abroad.
- Single or married-filing-separately, living in the US: file if your foreign assets top $50,000 at year-end, or $75,000 at any point during the year.
- Married filing jointly, living in the US: $100,000 at year-end, or $150,000 at any point.
- Single or married-filing-separately, living abroad: $200,000 at year-end, or $300,000 at any point.
- Married filing jointly, living abroad: $400,000 at year-end, or $600,000 at any point.
The higher "living abroad" tiers are the reason many olim and Americans overseas end up under the line even with a real portfolio. You generally qualify as living abroad if your main home is in another country and you either live there for a full tax year or spend at least 330 days abroad in a twelve-month stretch. That is the same test used for the foreign earned income exclusion, and you do not have to actually claim that exclusion to use the higher threshold.
Two counting rules catch people. First, the any-point-in-the-year trigger: an account that peaked at $76,000 in the summer and fell to $48,000 by December still crosses the US single-filer line. Second, if you own an asset jointly, you generally count its full value toward your own threshold, not half, so a shared account can push one spouse over on its own.
What Counts as a Foreign Financial Asset
The law's term is a "specified foreign financial asset," and it comes in two buckets.
The first bucket is any financial account held at a foreign institution: a foreign bank account, a foreign brokerage account, a foreign pension or savings arrangement, cash-value foreign life insurance, and foreign annuities. If an asset sits inside one of these accounts, you do not list it separately; reporting the account covers what is in it.
The second bucket is foreign assets you hold for investment outside of any account: stock or securities issued by a non-US person, an interest in a foreign company, partnership, or trust, and financial contracts with a foreign party. A beneficial interest in a foreign trust or estate also counts once you know, or have reason to know, about it, and receiving a distribution counts as knowing.
Just as important is what is left off, because this is where the form differs sharply from what people assume:
- A foreign home held directly in your own name is not reported. But if you hold that same home through a foreign LLC, corporation, or trust, your interest in the entity is reportable.
- Directly-held tangible things: art, foreign cash (actual banknotes), gold and other precious metals held as bullion, and jewelry.
- Assets already inside a foreign account you are reporting.
- A US retirement account, like a 401(k) or IRA, even when it holds foreign funds.
- An account you only have signature authority over, with no ownership stake.
How Form 8938 Differs From the FBAR
Form 8938 has a close cousin, the FBAR, and confusing the two is one of the most expensive mistakes in this area. They are separate reports, under different laws, filed in different places, and you can owe both for the very same account.
The FBAR is FinCEN Form 114. You file it online, separately from your tax return, once all your foreign accounts combined top $10,000 at any point in the year. It includes accounts you can merely sign on. Form 8938 is attached to your tax return, kicks in at the higher thresholds above, and reaches assets the FBAR does not, such as foreign stock or a foreign partnership interest you hold directly. The FBAR captures a foreign house held through a company only as an account question; a directly-held foreign house appears on neither form.
The rule to remember is simple: file both when both apply. A person coming into compliance is usually behind on both, and cleaning up one while leaving the other open just leaves the exposure in place. For a side-by-side of which asset triggers which form, see our Form 8938 vs FBAR comparison, and for the penalty tiers and cleanup on the FBAR side, our page on FBAR penalties and how to fix late FBARs.
Not sure whether you owe Form 8938, the FBAR, or both?
A free 30-minute consult maps your foreign accounts and assets to every form they touch, and tells you the realistic cost to get current, before anything is filed.
Book your free consultThe Penalties, and Why a Missed Form Is Worse Than It Looks
The dollar penalty for not filing Form 8938 starts at $10,000 for the year. If you still have not filed 90 days after the IRS mails you a notice, it adds another $10,000 for each 30-day period that passes, up to an extra $50,000. So a single year can reach $60,000. The 90 days after the notice is a grace period: the add-on does not start running until then, which is a real window to act once you get that letter.
There is a second penalty that hits when a missed asset also hid income. If you left income off your return that came from a foreign asset you should have reported, the ordinary 20% accuracy penalty doubles to 40%. Unlike the FBAR, Form 8938 has no innocent-versus-willful split and no "per account" multiplier. The only way out of the penalty is to show reasonable cause, which you have to establish with real facts. Foreign bank-secrecy law, by the way, is not reasonable cause; the IRS has rejected that argument for years.
Now the part practitioners consider the real danger, because it dwarfs the dollar figures. Under US law, the clock the IRS has to audit your return does not even start until you file the required Form 8938. Leave it unfiled and your entire tax return stays open for audit with no deadline, and not just the foreign piece. Every item on the return, your ordinary income, your deductions, your credits, sits exposed indefinitely. Filing the form starts the normal three-year clock. And separately, if you omitted more than $5,000 of income tied to a foreign asset, the IRS gets six years instead of three. This open-return effect is the argument that tends to get attention: a client who treats the 8938 as a technicality is leaving their whole return unprotected.
How to Fix a Late or Missing Form 8938
Being behind is fixable, and the path scales to your situation. Because Form 8938 is part of your income-tax return rather than a stand-alone filing, you correct a missing one by filing an amended return for each open year with the form attached and a short reasonable-cause statement. The three practical questions that decide your route are whether you lived abroad, whether you reported the foreign income, and whether the IRS has already contacted you.
- Only the form was missed, income was reported. The delinquent-filing route lets you file the late forms with a reasonable-cause explanation, and the penalty is ordinarily waived.
- Foreign income was also left off, and the miss was innocent. The streamlined programs are usually the fix. They cover three years of tax returns (with the Forms 8938 attached) plus six years of FBARs. The version for people who lived abroad can carry no penalty; the version for US residents costs 5% of the highest year-end value of the unreported assets.
- The conduct was willful. That belongs in the voluntary-disclosure track, not streamlined, because signing an innocence certification you cannot support is its own serious problem.
One caution the streamlined window does not solve on its own: because an unfiled Form 8938 keeps a return open with no deadline, years that fall outside the three-year streamlined period can still be open, so the whole history needs a look, not just the covered years. And do not file the old forms quietly on your own outside a program; that forfeits the protections these paths give you. For the step-by-step on eligibility and the forms each path needs, see our guide to the streamlined filing compliance procedures.
How We Work, and When We Co-Counsel
Foreign-asset cleanup ranges from a single late form to a multi-entity willful disclosure, so we are honest about where our role sits. The screening that tells you which forms you actually owe, the streamlined and delinquent filings, the reasonable-cause work, the companion forms, and the Florida estate side are handled here. For complex valuation questions, the closely-held-entity analysis, and willful or voluntary-disclosure matters, we co-counsel with an international tax advisor so you get the right depth without paying for the wrong tool.
Where this meets our Florida practice is the estate. Foreign accounts and foreign trust interests surface constantly when a family settles an estate, and a decedent who never filed can leave exposure the estate has to clear before assets go out the door. Most of this runs remotely, by phone and video, which fits clients who are out of state or out of the country, including the many Americans living in Israel. The first and most valuable step is the screen, because it decides everything that follows. See our foreign account reporting guide for the full form-by-form map, or the international and cross-border overview →
Frequently Asked Questions
What Is FATCA, and What Does Form 8938 Have to Do With It?
FATCA is the Foreign Account Tax Compliance Act, a 2010 law with two sides. On one side, foreign banks and investment firms report their US account holders to the IRS every year, either directly or through their home country. On the other side, you report your own foreign assets on Form 8938, which you attach to your yearly tax return. The two sides create a matching system: if a foreign bank reports your account but no Form 8938 shows up with your return, that gap is flagged. So Form 8938 is your half of FATCA, and it is the half you control.
Who Has to File Form 8938?
You file if you are a "specified person" whose foreign assets cross the threshold for your situation. That covers US citizens (wherever you live), green-card holders, and people who count as US residents for tax purposes, including someone who crossed the substantial-presence day count partway through the year. A nonresident alien generally does not file unless they elect to be taxed as a US resident with a citizen or resident spouse. And you only file for a year in which you are required to file a US income-tax return in the first place.
What Are the Form 8938 Filing Thresholds?
They depend on your filing status and whether you live in the US or abroad, and there are two triggers each: a year-end number and a higher any-point-in-the-year number. Living in the US, a single filer files if foreign assets top $50,000 at year-end or $75,000 at any point; a married couple filing jointly, $100,000 or $150,000. Living abroad, those jump to $200,000 or $300,000 for a single filer and $400,000 or $600,000 for a joint return. Either trigger is enough, so an account that peaked mid-year and then dropped can still put you over.
Do I Report My Foreign House on Form 8938?
Not if you hold it directly in your own name. A foreign home, and directly-held things like art, foreign cash, or gold bars, are not "specified foreign financial assets." But the answer flips if you hold the property through a foreign company, a foreign trust, or a foreign partnership: your interest in that entity is reportable, even though the house itself would not have been. Foreign accounts, foreign stock, foreign pensions, and foreign cash-value life insurance are all in. This is one of the most common places people guess wrong.
I Already File the FBAR. Do I Still Need Form 8938?
Maybe both. The FBAR and Form 8938 are two separate reports under two different laws, run by two different parts of the government, with different thresholds and different coverage. You can owe one, the other, or both for the very same account. The FBAR starts at just $10,000 combined and includes accounts you only have signature authority over; Form 8938 has higher thresholds but reaches assets the FBAR does not, like foreign stock you hold directly. The costly mistake is fixing the FBAR and leaving the Form 8938 unfiled, because that keeps your tax return exposed.
What Is the Penalty for Not Filing Form 8938?
The starting penalty is $10,000 for the year. If you do not file within 90 days after the IRS mails you a notice, it adds $10,000 for each additional 30-day period, capped at another $50,000, so a single year can reach $60,000. On top of that, if you left income off your return that came from an unreported foreign asset, the usual 20% accuracy penalty doubles to 40%. There is no innocent-versus-willful split like the FBAR has; the only way out of the penalty is to show reasonable cause. And the quieter risk is bigger than the dollars: a missing Form 8938 keeps your entire tax return open to audit with no deadline.
I Missed Form 8938 for Several Years. How Do I Fix It?
There is almost always a path, and one of them carries no penalty. Because Form 8938 rides on your tax return, you fix a missing one by filing an amended return for each open year with the form attached and an explanation. If you reported all the income and only missed the form, the delinquent-return route runs on a reasonable-cause statement. If you also left off foreign income, the streamlined programs are usually the fix: they cover three years of returns plus six years of FBARs, with no penalty for those who lived abroad and a 5% penalty for US residents. Willful conduct goes through voluntary disclosure instead. Do not just file the old forms quietly on your own.
Do You Handle This In-House or Refer It Out?
Both, depending on the facts. The screening that tells you which forms you actually owe, the streamlined and delinquent filings, the reasonable-cause work, and the Florida estate side are handled here. For complex valuation, entity analysis, and willful or voluntary-disclosure matters, we co-counsel with an international tax advisor so you get the right depth. We tell you up front which pieces your matter needs before you commit to anything.
Common Situations
The oleh with Israeli accounts and a pension. An American who made aliyah keeps ordinary Israeli bank accounts, a keren hishtalmut, and a pension arrangement, and worries she should have been filing Form 8938. Because she lives abroad, her threshold is $200,000, not $50,000, and once the accounts are added up she is comfortably under it for most years. Where a year does cross, the fix is a straightforward late filing rather than a penalty fight, and knowing the right tier is what turned a scare into a small task.
The green-card holder in Florida with a home-country brokerage. A professional who moved to Miami kept a brokerage account back home and assumed a US form could not reach it. As a US resident, his threshold is $50,000, the account is well over it, and several years of Form 8938 were missed. He reported all his income, so a delinquent filing with a reasonable-cause statement brings him current, and he pairs it with the matching FBAR cleanup so neither form is left open.
The heir who inherited a foreign trust interest. While settling a parent's Florida estate, the family finds the parent held an interest in a foreign trust, and a distribution came through to a US child. That distribution counts as knowing about the interest, so the child now has a Form 8938 asset and likely a separate foreign-trust form too. The estate's own foreign-reporting history is reviewed before distribution, and the heir is set up to report correctly going forward.
Sources of Law
- Form 8938 authority and the FATCA framework: 26 U.S.C. §6038D; Treas. Reg. §§1.6038D-1 to 1.6038D-8 (who files, thresholds, specified foreign financial assets, valuation, duplicative reporting, penalties). FATCA enacted as Pub. L. 111-147 (2010); the foreign-institution reporting and 30% withholding regime, 26 U.S.C. §§1471 to 1474.
- Thresholds: Treas. Reg. §1.6038D-2(a) (US-resident single or MFS $50,000 year-end / $75,000 any time; US-resident MFJ $100,000 / $150,000; living abroad single or MFS $200,000 / $300,000; living abroad MFJ $400,000 / $600,000). "Living abroad" qualified-individual test, 26 U.S.C. §911(d)(1).
- What is a specified foreign financial asset, and what is excluded: 26 U.S.C. §6038D(b); Treas. Reg. §1.6038D-3 (financial accounts at foreign institutions and other foreign investment assets; directly-held real estate and signature-authority accounts excluded).
- Penalties: 26 U.S.C. §6038D(d) ($10,000 initial; additional $10,000 per 30-day period after 90-day notice, capped at $50,000; $60,000 per year maximum); §6038D(e) value presumption; §6662(j) 40% accuracy-related penalty on an undisclosed-asset understatement; reasonable-cause defense, §6038D(g); Treas. Reg. §1.6038D-8.
- Statute of limitations: 26 U.S.C. §6501(c)(8) (the whole income-tax return stays open until Form 8938 is furnished); §6501(e)(1)(A)(ii) (6-year period where over $5,000 of income tied to a foreign asset is omitted).
- Companion FBAR report: 31 U.S.C. §5314; 31 C.F.R. §1010.350. FATCA upheld against constitutional challenge: Crawford v. United States Dep't of the Treasury, 868 F.3d 438 (6th Cir. 2017); FBAR non-willful penalty is per form: Bittner v. United States, 598 U.S. 85 (2023). (retrieved 2026-07-16)
Updated on July 16, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate planning and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US law, not legal or tax advice, and does not create an attorney-client relationship. FATCA and Form 8938 are specialized; complex valuation, entity analysis, and willful matters are co-counseled with an international tax advisor. Federal figures are adjusted periodically and may change. Your result depends on your specific facts.