For US citizens living abroad, reporting foreign financial accounts isn’t optional. Two overlapping rules—FBAR (Foreign Bank Account Report) and FATCA (Foreign Account Tax Compliance Act)—often confuse taxpayers. One US-based consultant learned this the hard way, facing a $10,000 penalty for non-compliance.

Here’s what happened and how expats can stay compliant.

The Problem: Confusing Reporting Requirements

The consultant assumed that filing a FATCA Form 8938 with their tax return covered all reporting obligations. They didn’t realize that FBAR (FinCEN Form 114) must be filed separately if foreign accounts exceed $10,000 at any point during the year. Missing this separate filing triggered a substantial penalty—even though the underlying tax had been paid.

The Solution: Understand FBAR vs. FATCA Obligations

• FBAR (FinCEN Form 114): Required if total foreign accounts exceed $10,000 at any point during the year. Filed online with the Treasury Department, separate from your tax return.
  
• FATCA (Form 8938): Part of your US tax return (IRS Form 1040), required if specified foreign financial assets exceed certain thresholds.
  

Knowing which form to file—and when—is critical to avoid penalties.

The Challenge: Multiple Accounts, Multiple Jurisdictions

The consultant held bank accounts in several countries, plus investment accounts in Europe. Without proper tracking, it was easy to miss thresholds, deadlines, or account reporting requirements. The complexity increased with differing currencies, interest reporting, and exchange rates.

The Action: Implement a Compliance Checklist

We worked with them to:

• Consolidate all foreign financial accounts in one spreadsheet
  
• Track balances monthly to identify FBAR filing requirements
  
• Prepare FATCA disclosure for the IRS with accurate valuations
  
• Set reminders for deadlines and document retention to ensure ongoing compliance
  

The Result: Avoid Future Penalties & Peace of Mind

With proper tracking and filing, the consultant avoided repeat penalties and now has a clear system for future years. Both FBAR and FATCA obligations are met accurately and on time, reducing audit risk and compliance stress.

Are You FBAR & FATCA Compliant?

• Understand which foreign accounts need reporting
  
• File FBAR separately from your tax return if required
  
• Include FATCA disclosures with your IRS return
  
• Keep records and track balances to avoid penalties
  

Don’t let confusion cost you thousands. DM us ‘EXPAT’ for a free checklist to ensure your FBAR and FATCA compliance today.