Form 8938 vs FBAR: What's the Difference and Do You Need to File Both?

Most people who discover they have a foreign account reporting obligation assume it is one filing. It is not. The FBAR goes to FinCEN. Form 8938 goes to the IRS. They have different thresholds, cover different assets, and carry separate penalty structures. Filing one while missing the other is one of the more common compliance gaps the IRS uses as an audit entry point.

Here is a quick comparison before we get into the details.

1. FBAR: The $10,000 Threshold That Runs Separately from Your Tax Return

The FBAR (FinCEN Form 114) is filed electronically through FinCEN's BSA E-Filing System, completely separate from your federal tax return. The legal authority behind it is the Bank Secrecy Act, not the Internal Revenue Code, which is why it goes to a different agency with a different submission process entirely.

• The threshold: Aggregate balance across all foreign financial accounts exceeded $10,000 at any single point during the calendar year, not just at year-end
• The aggregation rule: Two accounts with $6,000 each cross the threshold. Both accounts must be reported.
• Who must file: US citizens, green card holders, US residents including those who meet the substantial presence test, and US domestic entities. How an LLC is taxed by default determines its reporting obligations, which we cover in full in our LLC taxation guide.
• Deadline: April 15, with an automatic extension to October 15. No request required.

The complexity trap: Calculating the highest aggregate balance is not just a matter of checking your statements. You have to identify the single highest combined balance across all accounts on the same date, and convert foreign currency balances using the Treasury's Year-End exchange rate for December 31, even if your account peaked at a higher balance in July. Using the exchange rate from the date your balance peaked is a technically incorrect calculation. Nested account structures, multi-currency accounts, and accounts held through a foreign entity you control are exactly where this breaks down.

2. Form 8938: The IRS's Net for Assets That FBAR Doesn't Reach

Form 8938 is attached to your Form 1040 or 1040-NR as part of the FATCA framework under IRC Section 6038D. Where FBAR covers accounts, Form 8938 covers ownership. The two forms overlap on foreign bank accounts but diverge significantly once you move into foreign equity and entity ownership.

• Additional assets covered: Foreign stocks or securities held directly outside of a financial account, foreign partnership interests, interests in foreign corporations and trusts, foreign hedge funds, foreign pensions. Ownership in a foreign corporation also triggers a Form 5471 obligation that runs alongside Form 8938.
• Threshold for single filers in the US: More than $50,000 at year-end, or more than $75,000 at any point during the year
• Threshold for married filing jointly in the US: More than $100,000 at year-end, or more than $150,000 at any point
• Threshold for filers living outside the US: $200,000 at year-end ($300,000 at any point) for single; $400,000 at year-end ($600,000 at any point) for MFJ
• Deadline: Same as your tax return, including any extensions

3. The 2026 Crypto Reality: Foreign Exchanges Are Financial Accounts

FinCEN Notice 2020-2 stated that a foreign account holding only virtual currency is not currently required to be reported on the FBAR. That position has not been updated, but the proposed rulemaking to add virtual currency to the BSA's definition of "account" has also not been withdrawn.

• Foreign custodial exchange with fiat or stablecoins (Binance, OKX, KuCoin): Generally treated as reportable as a financial account, depending on the facts and custodial structure, particularly where fiat or custodial features exist. A balance of $11,000 in USDT on Binance crosses the $10,000 FBAR threshold under the conservative compliance approach most practitioners apply.
• Foreign exchange holding only crypto: Not currently required per Notice 2020-2. The conservative compliance approach is to report anyway given the pending rulemaking.
• Self-custody wallets (MetaMask, Ledger): Not reportable. No foreign financial institution is involved.
• Non-custodial DeFi (Uniswap, Aave): Not reportable.
• Form 8938 for crypto: Accounts on foreign exchanges are likely reportable as specified foreign financial assets at the applicable threshold. Use the exchange login ID as the account identifier.

4. The LLC Trap: Your Disregarded Entity Is Not Disregarded by FinCEN

For IRS income tax purposes, a single-member LLC is a disregarded entity, meaning it is invisible for federal income tax. For FBAR purposes, that same LLC is a domestic US entity with its own independent filing obligation. FinCEN looks at where the entity was formed, not who owns it, and a US LLC is domestic regardless of whether the owner lives in India, the UK, or anywhere else, or whether the LLC is active or dormant.

• The trigger: If your US LLC has a financial interest in or signature authority over foreign financial accounts, and the aggregate balance exceeded $10,000 at any point during the year, the LLC must file the FBAR as the reporting entity.
• The common fact pattern: Foreign founder opens a US LLC, collects payments into a foreign bank account before setting up US banking, balance crosses $10,000. The LLC has an unfiled FBAR.
• Form 8938 at entity level: In limited cases where the entity meets specified domestic entity rules, a US LLC with foreign financial assets above $50,000 at year-end may also be required to file Form 8938 attached to its applicable return.
• Form 5472 is a separate but related obligation: A foreign-owned single-member LLC already has a Form 5472 filing requirement every year regardless of activity. The FBAR adds another layer on top of that.

If you are unsure whether your LLC structure triggers an entity-level FBAR obligation, that uncertainty itself is a risk signal. A flat-fee compliance review removes that ambiguity before FinCEN does.

5. The Penalty Stack: What Happens When You Miss One or Both

Both agencies enforce their own penalty structure independently. There is no credit for filing one against the other.

• FBAR non-willful: Up to $16,536 per violation (2025 inflation-adjusted, subject to annual updates)
• FBAR willful: Greater of $165,353 or 50% of the account balance per account per year, plus potential criminal exposure (2025 inflation-adjusted, subject to annual updates)
• Form 8938 failure to file: $10,000 initial penalty, plus up to $50,000 more in continued failure penalties after IRS notice
• Form 8938 accuracy penalty: 40% of any income understated by more than $5,000 from a foreign financial asset, with the audit window extended to six years

The willful grey area is where the real risk lives. The difference between a $16,000 penalty and a $165,000 penalty is "intent," and the IRS does not take your word for it. They look at your prior filing history, your entity structure, and how the late filing was positioned. A DIY amended return that simply drops in the missing form without any written explanation of the circumstances can signal willfulness to an auditor rather than resolve it. How a late or corrected FBAR filing is framed determines which standard applies. That is not a checkbox. It is a written narrative.

Form 8938 errors extend your audit window to six years. Most filers who make a mistake do not find out until years later, by which point the continued failure penalties have already compounded. A professional review that confirms your position is correct closes that window permanently.

6. The BOI Connection: One More FinCEN Obligation to Know

Under FinCEN's Interim Final Rule effective March 26, 2025, all US-formed entities are currently exempt from BOI reporting. A US LLC owned by a foreign founder does not have a BOI obligation under the current rule, though this area has seen multiple changes and remains subject to further updates.

The obligation that remains is for foreign companies registered to do business in a US state. That registration triggers a BOI filing within 30 days, and it sits within the same FinCEN system as the FBAR. The broader compliance obligations that come with operating a foreign-registered entity in the US go well beyond BOI alone. For the full picture of what a foreign-owned US entity owes at the federal level, including Form 5472, ECI classification, and the $25,000 penalty that applies regardless of income, our post on whether foreign-owned US entities pay US tax covers all of it in one place.

Quick decision check:

• Foreign bank account → FBAR if aggregate exceeds $10,000
• Foreign stock or partnership ownership → Form 8938 if above your applicable threshold
• Both → file both, separately, to two different agencies
• US LLC with foreign accounts → entity-level FBAR applies regardless of owner residency

This post is for general informational purposes only and does not constitute professional tax, legal, or accounting advice for your specific situation. Reading this post does not create a CPA-client relationship. Tax laws are complex and subject to change. If you would like advice tailored to your situation, consult a qualified tax professional, including through the services offered on this site.