Every year, even very sophisticated clients ask some version of the same question:

“I already disclosed my foreign account last year. That should cover it, right?”

If you work in cross border tax long enough, you know the answer is usually no.

Form 8938 and FBAR overlap, but they solve two different compliance questions. Treating them as interchangeable is one of the most common reasons otherwise compliant taxpayers end up exposed.

Here is how I explain it, and how we operationalize it inside the firm.

The simplest way to think about it

FBAR asks a very narrow but very strict question:

Did all your foreign financial accounts, taken together, cross $10,000 at any point during the year?

Form 8938 asks a broader, tax return focused question:

Do you hold specified foreign financial assets above your applicable threshold that must be disclosed with your return?

One filing does not replace the other. Filing one does not automatically mean you were compliant with both.

Where practitioners get tripped up

The confusion usually comes from three places.

First, where the forms live.
FBAR is not an IRS form in the traditional sense. It is filed separately through FinCEN and does not attach to the tax return. Form 8938 is filed with the return itself.

Second, what they actually cover.
FBAR is about foreign financial accounts. Period.
Form 8938 is about specified foreign financial assets, which can include accounts but can also extend beyond what a client mentally labels as a “bank account.”

Third, authority versus ownership.
FBAR can apply even when the taxpayer does not own the money. Signature authority alone can be enough. This is especially common with founders, executives, and anyone involved in overseas operations.

That last point is where many well advised clients still get caught.

Thresholds matter more than people think

FBAR has one threshold. It is simple and unforgiving.

If the combined highest value of all foreign accounts exceeds $10,000 at any time during the year, the filing requirement is triggered.

Form 8938 thresholds depend on filing status and whether the taxpayer lives in the US or abroad. For US residents, the thresholds are higher than FBAR but still surprisingly easy to cross for globally mobile clients. For those living abroad, the thresholds increase significantly, which is why residency analysis matters.

This leads to situations where a client clearly has an FBAR obligation but no Form 8938 filing requirement, or the reverse. Assuming overlap without doing the math is a mistake.

Deadlines are not aligned

FBAR has its own due date. It aligns with April 15, but it also carries an automatic extension to October 15 without any action required by the taxpayer.

Form 8938 follows the tax return. Extensions apply only if the return itself is extended.

This sounds obvious, but every year we see FBAR filings missed because someone assumed the return extension covered everything.

It does not.

The workflow we use internally

We do not treat this as a checkbox exercise. We treat it as an inventory and analysis problem.

Step one is forcing clarity during intake. We ask clients to think in three buckets.

Foreign financial accounts.
Foreign assets that are not obviously “accounts.”
Situations where they have authority but not ownership.

Step two is building a single foreign asset inventory. One line per item. Institution, country, highest balance during the year, currency, ownership or authority type.

Clients almost always give year end balances. We always push for highest balance. That difference alone determines filing obligations more often than people realize.

Step three is running the tests separately.
We run the FBAR aggregation test on accounts only.
We run the Form 8938 threshold test based on filing status and residency.

Only after that do we reconcile overlap. We never copy one form into the other blindly. The disclosures look similar, but the rules behind them are not identical.

Real situations that come up constantly

A US resident with long standing accounts in India or Europe who moves money mid year for a property transaction. The balances spike briefly, then settle back down. FBAR is triggered even if year end balances look modest.

A founder with signing authority on an overseas operating account who never took a dollar personally. FBAR may still apply, even though the client is convinced there is nothing to report.

An expat living abroad who cleared FBAR thresholds easily but does not meet Form 8938 thresholds due to residency rules. Filing one but not the other is still correct.

These are not edge cases. They are normal cross border profiles.

Why firms should be disciplined here

Penalties are not theoretical. Both regimes carry real exposure, and they sit under different enforcement frameworks.

More importantly, sloppy process is what creates risk. Not lack of intent.

A clean inventory, documented assumptions, and a repeatable workflow go a long way toward protecting both the client and the firm.

Frequently Asked Questions

Q. Do I file Form 8938 instead of FBAR?
No. One does not replace the other.

Q. If I already reported the income, do I still have to disclose the account?
Possibly yes. These are disclosure rules, not just income reporting rules.

Q. What if the account never earned income?
FBAR can still apply based on balance alone.

Q. When is FBAR due?
April 15, with an automatic extension to October 15.

Final thought

If you handle international taxpayers, the technical rules matter. But what matters more is having a workflow that does not rely on memory, assumptions, or last year’s workpapers.

Form 8938 and FBAR are not difficult. They are just unforgiving when treated casually.

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