US Foreign-Account Reporting — FBAR & FATCA v0.1

What this file is

This is a topic content skill. It loads on top of cross-border-tax-workflow-base and assumes the cross-border router has already run, identified the taxpayer as a US person, and confirmed the presence of foreign financial accounts and/or foreign assets. It does not re-derive residency or US-person status; consume those from the router's working paper.

It produces a working paper and a reviewer brief describing which reporting regimes are triggered and why. It is not advice, not a filed FBAR, and not a filed return. A licensed accountant signs off before anything is filed.

Two distinct regimes are in scope, governed by different bodies of law and filed in different places. They overlap but neither satisfies the other:

• FBAR — FinCEN Form 114, filed electronically with FinCEN (the Financial Crimes Enforcement Network) through the BSA E-Filing System, not the IRS and not attached to the Form 1040. Statutory basis: Bank Secrecy Act, 31 USC §5314; regulation 31 CFR 1010.350.
• FATCA — Form 8938, Statement of Specified Foreign Financial Assets, filed with the Form 1040 under IRC §6038D.

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Layer A — Reference layer (decision trees)

Each rule cites the form or statute that controls it. When a threshold figure is involved, confirm the current-year figure against the live IRS/FinCEN instructions before relying on it — do not treat any number below as authoritative for the filing year.

A1. Is the taxpayer a "US person"? (gate for both regimes)

• A US person includes US citizens, US resident aliens (green-card or substantial-presence), and certain US entities/trusts/estates (31 CFR 1010.350(b) for FBAR; IRC §6038D and 8938 instructions for FATCA). If the router has not confirmed US-person status, stop and resolve that first — neither regime applies to a non-US person.

A2. FBAR decision tree (31 USC §5314 / 31 CFR 1010.350)

1. Does the US person have a financial interest in OR signature authority over one or more foreign financial accounts? (Bank, securities, brokerage, certain foreign-issued insurance/annuity with cash value, certain foreign mutual funds.)
   • No → FBAR not required on those facts.
   • Yes → continue.
2. Did the aggregate maximum value of all such accounts exceed US$10,000 at any point during the calendar year?
   • This is an aggregate-across-all-accounts test, evaluated at the highest balance each account reached during the year — NOT a per-account test. Five accounts of $3,000 each trip the threshold even though no single account exceeds $10,000.
   • No → FBAR not required.
   • Yes → FBAR required (FinCEN Form 114), reporting every qualifying account, including signature-authority-only accounts.
3. Deadline: April 15, with an automatic extension to October 15 (no separate extension request needed for the FBAR).

A3. FATCA / Form 8938 decision tree (IRC §6038D)

1. Does the US person hold specified foreign financial assets (SFFAs)? SFFAs are broader than FBAR-reportable accounts — they include foreign financial accounts plus foreign stock or securities held outside an account, interests in foreign entities, and foreign financial instruments held for investment.
   • No → Form 8938 not required.
   • Yes → continue.
2. Does the aggregate value of SFFAs exceed the filing-status- and residency-specific threshold? Thresholds are higher than the $10,000 FBAR threshold and differ for taxpayers living abroad vs living in the US:
   • Illustrative (living abroad) — confirm exact current-year figures:
     • Single / married-filing-separately: > $200,000 on the last day of the year or > $300,000 at any time during the year.
     • Married-filing-jointly: > $400,000 last day or > $600,000 any time.
   • US-resident thresholds are lower than the abroad thresholds. Do not hardcode — pull the exact figures from the current Form 8938 instructions.
   • Below threshold → Form 8938 not required.
   • At/above threshold → Form 8938 required, filed with the 1040.
3. Deadline: with the income tax return, including extensions (Form 8938 follows the 1040 due date, unlike the standalone FBAR deadline).

A4. Overlap rule

Many assets — e.g. a foreign brokerage account — are reportable on both FBAR and Form 8938. Filing one does not discharge the obligation to file the other. Map each asset to both regimes independently.

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Layer B — Executable layer

Input: a list of foreign accounts/assets, each with: type, institution, country, financial-interest vs signature-authority, max balance during year (in account currency), year-end balance, and the USD-converted equivalents.

Procedure:

1. Normalize to USD. Convert each account's maximum balance and year-end balance to USD using the Treasury year-end exchange rate (or a documented published rate). Record the rate and source in the working paper.
2. FBAR test. Sum the maximum USD balances across all foreign financial accounts (financial interest + signature authority).
   • If aggregate > $10,000 → flag FBAR required; list every qualifying account, marking signature-authority-only ones.
3. FATCA test. Identify which holdings are SFFAs (superset of FBAR accounts — add foreign stock/securities held outside an account, foreign-entity interests).
   • Determine the taxpayer's filing status and abroad vs US residency from the router output.
   • Look up the current-year Form 8938 threshold pair (last-day / any-time) for that status+residency. Do not rely on the illustrative numbers in A3 — confirm them.
   • Apply both the last-day test (year-end aggregate) and the any-time test (peak aggregate). Tripping either triggers Form 8938.
4. Deadlines. Set FBAR to Oct 15 (auto-extended) and Form 8938 to the 1040 due date including extensions.
5. Output the reviewer brief: which forms are required, which thresholds were tripped and by how much, the list of accounts/assets mapped to each regime (noting the overlap), FX rates used, and any open items requiring counsel (willfulness, pension treatment, signature-authority edge cases).

If the taxpayer is below all thresholds, still document the test and the margin — near-threshold cases should be re-checked, and conservative posture is: when genuinely unsure whether an item counts or whether a threshold is tripped, file.

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Comparison table — FBAR vs Form 8938

Dimension	FBAR (FinCEN Form 114)	FATCA (Form 8938)
Legal basis	Bank Secrecy Act, 31 USC §5314 / 31 CFR 1010.350	IRC §6038D
Where filed	FinCEN, via BSA E-Filing (separate from the return)	Attached to the Form 1040
Who files	US persons with financial interest or signature authority	US persons holding specified foreign financial assets
Threshold	Aggregate > $10,000 at any time (all accounts)	Higher, varies by filing status and abroad vs US (confirm current-year figures)
What counts	Foreign financial accounts	SFFAs — broader: accounts plus foreign stock/securities held outside an account, foreign-entity interests
Test type	Aggregate, not per-account; peak balance	Last-day and any-time aggregate of SFFAs
Deadline	Apr 15, auto-extended to Oct 15	With the 1040, including extensions
Penalty regime	Non-willful vs willful (see below); civil + potential criminal	§6038D penalties (e.g., failure-to-file + continuation; understatement penalties)

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Penalties (FBAR)

• Non-willful: a civil penalty applies per failure. Per Bittner v. United States, 598 U.S. 250 (2023), the non-willful penalty is assessed per-report (per annual FBAR form), not per-account — a single late FBAR listing many accounts is one non-willful violation, not one per account.
• Willful: materially higher — up to the greater of $100,000 or 50% of the account balance, assessed per violation, plus potential criminal exposure.
• Whether conduct is willful or non-willful is a legal determination requiring counsel; do not characterize it in the working paper beyond flagging it as an open item.

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Remediation paths (non-willful past non-compliance)

For a US person who failed to file in prior years, the standard paths for non-willful conduct are:

• Streamlined Filing Compliance Procedures — Streamlined Foreign Offshore (taxpayer meets a non-residency / abroad test) or Streamlined Domestic Offshore (US-resident). Requires amended/delinquent returns, delinquent FBARs, and a non-willful certification.
• Delinquent FBAR Submission Procedures — where the income was reported and tax paid but FBARs were simply not filed; file the delinquent FBARs with a reasonable-cause statement.

Describe these at a high level only. Path selection turns on a willfulness analysis, which requires professional/legal judgement and frequently counsel. Do not certify non-willfulness or recommend a streamlined submission without that review.

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⚑ AUDIT FLASH POINT — Willfulness. Never label conduct willful or non-willful in the working paper. It drives both penalty exposure and remediation-path eligibility and is a legal call for counsel. Flag it as an open item; do not resolve it.

⚑ AUDIT FLASH POINT — Signature-authority-only accounts. Accounts the taxpayer can direct but does not own (employer accounts, accounts they manage for others) are FBAR-reportable even with no financial interest. Easy to miss; capture them.

⚑ AUDIT FLASH POINT — Foreign pensions. Whether a foreign pension or retirement plan is FBAR- and/or 8938-reportable depends on the plan's structure (account-style vs entity interest) and any treaty position. Do not assume it is exempt; flag for review.

⚑ AUDIT FLASH POINT — Aggregate-not-per-account trap. The $10,000 FBAR threshold is tested on the sum of peak balances across all accounts. Multiple small accounts can trip it even when none individually exceeds $10,000. Never test accounts in isolation.

⚑ AUDIT FLASH POINT — Assets reportable on both forms. Reporting a foreign account on the FBAR does not satisfy Form 8938, and vice versa. Map every asset to both regimes independently; the overlap is intentional, not redundant.

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Topic self-checks

• US-person status confirmed from the router output before applying either regime.
• All foreign accounts normalized to USD with documented FX rate and source.
• FBAR tested on aggregate peak balances, not per-account.
• Signature-authority-only accounts identified and included in the FBAR set.
• SFFA list built as a superset of FBAR accounts (added stock/securities held outside an account and foreign-entity interests).
• Form 8938 thresholds pulled from current-year instructions for the correct filing status and abroad/US residency — not the illustrative figures here.
• Both the last-day and any-time Form 8938 tests applied.
• Overlap noted: assets on both forms mapped independently; one does not satisfy the other.
• Deadlines set: FBAR Oct 15 (auto-extended); Form 8938 with the 1040 incl. extensions.
• Willfulness and remediation-path selection flagged as open items for counsel — not resolved.
• Conservative posture applied: where genuinely unsure, the item is flagged to file.
• Output is a working paper + reviewer brief; no claim of human sign-off.

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Disclaimer

Provides computational and interpretive guidance on FBAR and FATCA reporting only. Not tax or legal advice and not a filed return. Willfulness and remediation-path selection require professional/legal judgement. Have outputs reviewed and signed by a qualified, licensed accountant before acting. Research-verified (tier 2) pending credentialed sign-off.