U.S. Foreign Asset Reporting: A Compliance Dashboard
Understanding complex obligations and avoiding costly penalties is the best 'tax benefit'.
Which Filing Requirements Apply to You?
Answer the questions below to identify which reporting requirements might apply to your situation.
1. Personal Foreign Financial Assets: FBAR & Form 8938
These are the two most common foreign financial asset reporting requirements. They have different purposes and thresholds, and you may need to file both. Filing one does not excuse you from filing the other.
FinCEN Form 114 (FBAR)
Bank Secrecy Act (BSA)
Purpose: To combat money laundering and other financial crimes. Tax collection is not its primary goal.
- Jurisdiction: Financial Crimes Enforcement Network (FinCEN)
- Threshold: Aggregate value of all foreign accounts exceeds $10,000 at any time during the year.
- What to Report: Foreign financial "accounts". Signature authority alone triggers reporting.
- Penalty (Willful): The greater of $100,000 or 50% of the account balance.
Form 8938
Foreign Account Tax Compliance Act (FATCA)
Purpose: To prevent offshore tax evasion on foreign income.
- Jurisdiction: Internal Revenue Service (IRS)
- Threshold: Varies from $50,000 to $600,000 based on residency and filing status (see chart below).
- What to Report: Specified foreign financial "assets" (includes non-account assets like stocks, partnership interests, etc.).
- Penalty: Starts at $10,000, up to $60,000 plus accuracy-related penalties.
FBAR vs. Form 8938 Filing Thresholds
2. Foreign Business Interests: Form 5471 & 8865
These are highly complex informational returns for those who own stakes in foreign corporations or partnerships. Failure to file can result in penalties and the loss of tax benefits.
Form 5471 (Foreign Corporations)
Applies to shareholders, directors, or officers of foreign corporations. The key concept is the Controlled Foreign Corporation (CFC), whose income can be taxable in the U.S. even without distributions.
🚨 Key Risk
Failure to file can lead to a 10% reduction in foreign tax credits, resulting in a direct increase in your tax liability.
Form 8865 (Foreign Partnerships)
Applies if you own an interest in or contributed property to a foreign partnership.
🚨 Key Risk
Failure to report certain property contributions can result in a penalty of 10% of the value of the contributed property (up to $100,000).
3. Foreign Trusts & Gifts: Form 3520
This form applies to transactions with foreign trusts and the receipt of large foreign gifts or bequests. The penalties are exceptionally high, requiring careful attention.
Transactions with Foreign Trusts
Creating, transferring assets to, or receiving distributions.
Receiving Foreign Gifts/Bequests
Over $100,000/year from individuals/estates.
Gifts from Foreign Entities
Over $18,557 (2023 figure) from foreign corps/partnerships.
Penalty Simulator: Feel the Risk of Non-Filing
Move the slider below to see the potential penalty based on the value of the transaction or assets.
Estimated Penalty (35% of Value)
$175,000
This is an estimate; actual penalties may vary.
4. Consolidated: International Reporting Deadlines
Stay on top of key filing dates to ensure you don't miss a deadline.
| Form Name | Agency | Original Due Date | Extended Due Date |
|---|---|---|---|
| FinCEN Form 114 (FBAR) | FinCEN | April 15 | October 15 (Automatic) |
| Form 8938, 5471, 8865 | IRS | Your tax return due date | Your extended tax return due date |
| Form 3520 | IRS | Your tax return due date | October 15 |
| Form 3520-A (Trust Filing) | IRS | March 15 | September 15 |