10.4 FBAR & FATCA Reporting

Enrolled Agent EA

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1 Part 1, Chapter 1: Tax Return Basics & Filing Requirements

1.1 Form 1040 Overview & Structure 1.2 Form 1040-SR for Seniors 1.3 Who Must File (Income Thresholds) 1.4 Filing Deadlines & Extensions (Form 4868) 1.5 Penalties: Failure to File vs. Failure to Pay 1.6 Sources of Tax Information (W-2s, 1099s, K-1s) 1.7 Preparer Due Diligence Requirements 1.8 Amended Returns (Form 1040-X)

2 Part 1, Chapter 2: Filing Status & Dependents

2.1 Single & Married Filing Jointly 2.2 Married Filing Separately 2.3 Head of Household Requirements 2.4 Qualifying Surviving Spouse 2.5 Qualifying Child Test (5 Tests) 2.6 Qualifying Relative Test (4 Tests) 2.7 SSN, ITIN & Residency Status

3 Part 1, Chapter 3: Wages & Employee Compensation

3.1 W-2 Income & Withholding 3.2 Employee vs. Independent Contractor 3.3 1099-NEC, 1099-MISC & 1099-K Reporting 3.4 Fringe Benefits (Taxable vs. Non-Taxable) 3.5 Stock Options (ISO vs. NQSO) 3.6 Special Categories (Clergy, Military, Foreign)

4 Part 1, Chapter 4: Interest, Dividends & Other Income

4.1 Taxable vs. Tax-Exempt Interest 4.2 US Savings Bonds & OID 4.3 Ordinary vs. Qualified Dividends 4.4 Schedule B Requirements 4.5 Rental & Royalty Income Basics 4.6 Alimony, Gambling & Other Income 4.7 Cancelled Debt & Form 1099-C 4.8 Net Operating Loss (NOL)

5 Part 1, Chapter 5: Capital Gains & Property Transactions

5.1 Capital vs. Non-Capital Assets 5.2 Cost Basis Calculation 5.3 Inherited & Gifted Property Basis 5.4 Short-Term vs. Long-Term Gains 5.5 Capital Gains Tax Rates (0%, 15%, 20%) 5.6 Netting & the $3,000 Loss Limit 5.7 Wash Sales & Related Party Rules 5.8 Sale of Primary Residence (Section 121) 5.9 Installment Sales (Form 6252) 5.10 Like-Kind Exchanges (Section 1031)

6 Part 1, Chapter 6: Adjustments to Income

6.1 Educator Expenses & HSA Contributions 6.2 Self-Employment Tax Deduction 6.3 IRA Contributions (Traditional) 6.4 Student Loan Interest Deduction 6.5 Alimony Paid (Pre-2019 Divorces) 6.6 Other Adjustments & New OBBBA Deductions (Tips, Overtime, Auto Loan, Senior Bonus)

7 Part 1, Chapter 7: Deductions (Standard & Itemized)

7.1 Standard Deduction by Filing Status 7.2 Medical & Dental Expenses (7.5% Floor) 7.3 State & Local Taxes (SALT $40K Cap) 7.4 Mortgage Interest Deduction 7.5 Charitable Contributions 7.6 Casualty & Theft Losses 7.7 QBI Deduction (Section 199A)

8 Part 1, Chapter 8: Tax Calculation & Credits

8.1 Tax Tables & Rate Schedules 8.2 Alternative Minimum Tax (AMT) 8.3 Self-Employment Tax Calculation 8.4 Child Tax Credit & Additional CTC 8.5 Earned Income Tax Credit (EITC) 8.6 Education Credits (AOC & LLC) 8.7 Child & Dependent Care Credit 8.8 Other Credits (Saver's, Premium Tax)

9 Part 1, Chapter 9: Retirement Accounts & Social Security

9.1 Traditional vs. Roth IRA 9.2 401(k), 403(b) & TSP Basics 9.3 SEP-IRA & SIMPLE IRA 9.4 Required Minimum Distributions (RMDs) 9.5 Early Withdrawal Penalties & Exceptions 9.6 Social Security Taxation

10 Part 1, Chapter 10: Specialized Individual Returns

10.1 Estate Tax (Form 706) 10.2 Gift Tax (Form 709) 10.3 Foreign Income (Form 2555) 10.4 FBAR & FATCA Reporting 10.5 Farm Income (Schedule F) 10.6 Disaster Area Rules

11 Part 2, Chapter 11: Business Entity Types

11.1 Overview of Entity Types 11.2 State Law vs. Tax Classification 11.3 Entity Selection: Reasonable Comp & QBI 11.4 Form 8832 & Rev. Proc. 2009-41 11.5 LLC Deep Dive: Spouses & EINs 11.6 Changing Status: The 60-Month Rule

12 Part 2, Chapter 12: Starting a Business

12.1 Hobby vs. Business (Profit Motive) 12.2 Employer Identification Number (EIN) 12.3 Tax Year Selection 12.4 Recordkeeping Requirements 12.5 Statute of Limitations 12.6 Related Party Transactions 12.7 Start-Up Costs, Entity Choice & OBBBA Business Changes (2025)

13 Part 2, Chapter 13: Worker Classification & Payroll

13.1 Employee vs. Independent Contractor 13.2 Common Law Test (Behavioral, Financial, Relationship) 13.3 Statutory Employees & Non-Employees 13.4 Form 941 & Payroll Deposits 13.5 Trust Fund Recovery Penalty 13.6 FUTA & Unemployment Taxes

14 Part 2, Chapter 14: Accounting Methods & Income

14.1 Cash vs. Accrual Method 14.2 Hybrid Methods & Changes 14.3 Inventory & COGS 14.4 Gross Receipts & Income Recognition 14.5 Constructive Receipt 14.6 Form 1099 Reporting Requirements 14.7 §163(j) Business Interest Expense Limitation 14.8 §174 Research & Experimental Expenditures

15 Part 2, Chapter 15: Depreciation & Asset Treatment

15.1 MACRS Basics & Recovery Periods 15.2 Mid-Month, Mid-Quarter, Half-Year Conventions 15.3 Section 179 Expense Deduction 15.4 Bonus Depreciation 15.5 Listed Property Rules 15.6 Amortization of Intangibles 15.7 Depletion 15.8 Disposition of Business Assets

16 Part 2, Chapter 16: Business Deductions

16.1 Ordinary & Necessary Test 16.2 Business Travel Expenses 16.3 Business Meals (50% Limitation) 16.4 Business Use of Vehicle 16.5 Home Office Deduction 16.6 Business Interest Limitation (163(j)) 16.7 Business Bad Debts

17 Part 2, Chapter 17: Business Credits & Fringe Benefits

17.1 General Business Credit Overview 17.2 R&D Credit & Disabled Access Credit 17.3 Small Employer Health Insurance Credit 17.4 Fringe Benefit Rules 17.5 Cafeteria Plans (Section 125) 17.6 Achievement Awards & Other Benefits

18 Part 2, Chapter 18: Sole Proprietorships

18.1 Schedule C Overview 18.2 Calculating Net Profit/Loss 18.3 Self-Employment Tax (Schedule SE) 18.4 Estimated Tax Payments 18.5 Hobby Loss Rules

19 Part 2, Chapter 19: Partnerships

19.1 Partnership Formation 19.2 Partner's Basis Calculation 19.3 Form 1065 Overview 19.4 Schedule K-1 (Partner's Share) 19.5 Guaranteed Payments 19.6 Partnership Distributions 19.7 At-Risk & Passive Activity Rules 19.8 Partnership Termination & Liquidation

20 Part 2, Chapter 20: C Corporations

20.1 Form 1120 Overview 20.2 Corporate Tax Rate (21%) & CAMT 20.3 Accumulated Earnings Tax 20.4 Dividends Received Deduction 20.5 Earnings & Profits (E&P) 20.6 Corporate Distributions, Dividends & Stock Redemptions 20.7 §351 Transfers, §1032, §1202 QSBS & Other Corporate Provisions 20.8 Corporate Liquidation

21 Part 2, Chapter 21: S Corporations

21.1 S Election Requirements (Form 2553) 21.2 Form 1120-S Overview 21.3 Shareholder Basis Calculation 21.4 Reasonable Compensation 21.5 S Corporation Distributions 21.6 Built-In Gains Tax & Termination

22 Part 2, Chapter 22: Specialized Business Returns

22.1 Trusts & Estates (Form 1041) 22.2 Simple vs. Complex Trusts 22.3 Distributable Net Income (DNI) 22.4 Tax-Exempt Organizations (Form 990) 22.5 Retirement Plans (Form 5500) 22.6 Qualified Retirement Plans Overview 22.7 Farm Taxation 22.8 Rental Real Estate Activities

23 Part 3, Chapter 23: Practice Before the IRS

23.1 What is Practice Before the IRS? 23.2 Who Can Practice (Full Rights) 23.3 Limited Practice Rights (AFSP, Unenrolled) 23.4 Special Relationships (Family, Employees) 23.5 PTIN Requirements 23.6 Circular 230 Overview 23.7 Office of Professional Responsibility (OPR)

24 Part 3, Chapter 24: Becoming & Maintaining EA Status

24.1 Two Paths to EA (Exam vs. IRS Experience) 24.2 Application Process (Form 23) 24.3 Background & Compliance Checks 24.4 Renewal Requirements (Form 8554) 24.5 Continuing Education Requirements 24.6 Inactive Status & Termination

25 Part 3, Chapter 25: Practitioner Duties (Circular 230)

25.1 Due Diligence Requirements 25.2 Knowledge of Client's Omission 25.3 Conflict of Interest Rules 25.4 Fee Requirements (Contingent, Unconscionable) 25.5 Advertising & Solicitation Rules 25.6 Tax Return Position Standards 25.7 Written Advice Standards 25.8 Sanctions & Penalties for Violations

26 Part 3, Chapter 26: Power of Attorney & Authorization

26.1 Form 2848 (Power of Attorney) 26.2 CAF (Centralized Authorization File) 26.3 Form 8821 (Tax Information Authorization) 26.4 Third-Party Designee 26.5 Signing Returns for Taxpayers 26.6 Client Confidentiality & Privilege 26.7 Representing Clients in Audits (Examination) 26.8 Appealing IRS Decisions 26.9 Collection Representation

27 Part 3, Chapter 27: Legal Authority & Research

27.1 Hierarchy of Tax Authority 27.2 Internal Revenue Code 27.3 Treasury Regulations 27.4 Revenue Rulings & Procedures 27.5 Court Cases & Precedent 27.6 Statutes of Limitations

28 Part 3, Chapter 28: Specific Representation Issues

28.1 Trust Fund Recovery Penalty (TFRP) 28.2 Innocent Spouse Relief (Form 8857) 28.3 Injured Spouse Allocation (Form 8379) 28.4 Penalty Abatement (FTA & Reasonable Cause) 28.5 Taxpayer Advocate Service (TAS) 28.6 Freedom of Information Act (FOIA)

29 Part 3, Chapter 29: Final Review & Exam Strategy

29.1 Exam Structure & Logistics (2026-2027) 29.2 The "Clock" of Representation (Master Deadlines) 29.3 Ethics vs. Law (Sanctions & Penalties) 29.4 Final Mock Review & Exam Strategy

30 Part 3, Chapter 30: Filing Process & E-File

30.1 E-File Requirements (The "More Than 10 Returns" Rule) 30.2 ERO Responsibilities 30.3 EFIN & Application Process 30.4 Form 8879 (Signature Authorization) 30.5 Record Retention & Data Security (WISP) 30.6 Preparer Penalties (Filing Specific)

10.4 FBAR & FATCA Reporting

Key Takeaways Explain This Topic AI

FBAR (FinCEN Form 114) must be filed when aggregate foreign account balances exceed $10,000 at any time during the year; due April 15 with automatic extension to October 15

FATCA (Form 8938) thresholds for 2025 are unchanged: $50,000/$75,000 (Single in US), $100,000/$150,000 (MFJ in US), $200,000/$300,000 (Single abroad), $400,000/$600,000 (MFJ abroad)

FBAR is filed electronically with FinCEN (Treasury BSA E-Filing System), while Form 8938 is filed with the IRS attached to Form 1040

Non-willful FBAR penalties are inflation-adjusted (roughly $16,000+ per violation); willful penalties are the greater of approximately $135,000+ or 50% of the account balance per account, per year

Many taxpayers must file BOTH FBAR and Form 8938—they serve different purposes and have different thresholds, assets, and filing channels

Last updated: October 2026

U.S. persons with foreign financial interests face two distinct reporting requirements: the Report of Foreign Bank and Financial Accounts (FBAR) and the Foreign Account Tax Compliance Act (FATCA) . While both aim to prevent offshore tax evasion, they have different thresholds, filing locations, and penalties. For tax year 2025, none of the statutory thresholds changed.

FBAR (FinCEN Form 114)

What is FBAR?

The Foreign Bank Account Report (FBAR) is filed using FinCEN Form 114 . It is required under the Bank Secrecy Act and is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department separate from the IRS.

Who Must File?

A U.S. person must file an FBAR if:

They have a financial interest in or signature authority over one or more foreign financial accounts, AND
The aggregate value of all foreign accounts exceeded $10,000 at any time during the calendar year

U.S. persons include:

U.S. citizens (including those living abroad)
U.S. residents (green card holders, or those meeting the substantial presence test)
Domestic entities (corporations, partnerships, LLCs, trusts, estates)
Filing Threshold

Requirement Amount
Aggregate threshold $10,000 at any time during the year
Calculation method Combine maximum values of ALL foreign accounts

Example: If Account A had a maximum balance of $6,000 and Account B had a maximum balance of $5,000 during 2025, the aggregate is $11,000, triggering the filing requirement even though neither account individually exceeded $10,000.

What Accounts Must Be Reported?

Bank accounts (checking, savings)
Securities accounts (brokerage)
Mutual fund accounts
Accounts with signature authority (even without ownership)
Life insurance policies with cash value
Foreign pension accounts
Filing Details

Item Requirement
Form FinCEN Form 114
Where filed Electronically through FinCEN BSA E-Filing System (NOT the IRS)
Due date April 15
Automatic extension October 15 (no request needed)
Record retention 5 years from the due date
FBAR Penalties (2025 Tax Year)

Violation Type Maximum Penalty
Non-willful Approximately $16,000+ per violation (inflation-adjusted annually)

Willful Greater of approximately $135,000+ or 50% of account balance per account, per year (inflation-adjusted)

Criminal (willful) Up to $500,000 fine and/or 10 years imprisonment

Important: Following the Supreme Court's Bittner v. United States decision (2023), non-willful penalties are assessed per report (not per account), limiting exposure for non-willful violations. The willful "50% of balance" rule continues to be assessed per account, per year.

Inflation adjustment: FBAR civil penalty caps are adjusted each January under the Federal Civil Penalties Inflation Adjustment Act. The exact 2025 amounts are published by FinCEN; the key concept (non-willful capped at low-five-figures, willful 50% of balance) is the testable EA point.

FATCA (Form 8938)

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) requires reporting of Specified Foreign Financial Assets on Form 8938 , filed with the taxpayer's annual income tax return (Form 1040).

Filing Thresholds (2025 — Unchanged from Prior Years)

FATCA thresholds depend on filing status and residency :

U.S. Residents (Living in the United States)

Filing Status End of Year Any Time During Year
Single / MFS More than $50,000 More than $75,000
Married Filing Jointly More than $100,000 More than $150,000
Foreign Residents (Living Abroad)

Filing Status End of Year Any Time During Year
Single / MFS More than $200,000 More than $300,000
Married Filing Jointly More than $400,000 More than $600,000

Note: A taxpayer "lives abroad" if their tax home is in a foreign country AND they were present in foreign countries for at least 330 days during a consecutive 12-month period.

What Must Be Reported on Form 8938?

Form 8938 covers a broader range of assets than FBAR:

Foreign financial accounts (bank, securities, brokerage)
Foreign stocks and securities not held in a financial account
Foreign partnership interests
Interests in foreign trusts
Foreign mutual funds
Foreign hedge funds and private equity funds
Foreign-issued life insurance or annuity contracts with cash value
Filing Details

Item Requirement
Form Form 8938 (Statement of Specified Foreign Financial Assets)
Where filed Attached to Form 1040, filed with the IRS
Due date Same as Form 1040 (April 15, with extensions)
Filing requirement Only required if filing a tax return
Form 8938 Penalties

Violation Type Penalty Amount
Failure to file $10,000 per year
Continued failure (after IRS notice) Additional $10,000 per 30 days (max $50,000 )
Accuracy-related penalty 40% understatement penalty may apply
Criminal penalties Possible under general tax fraud provisions
FBAR vs. FATCA Comparison Chart

Feature FBAR (FinCEN Form 114) FATCA (Form 8938)
Legal authority Bank Secrecy Act Internal Revenue Code §6038D
Form FinCEN Form 114 Form 8938
Filed with FinCEN (Treasury) IRS (attached to Form 1040)
Filing method Electronic only (BSA E-Filing) With tax return
Threshold $10,000 aggregate $50,000–$600,000 (varies by status/residence)
Assets covered Foreign financial accounts only Accounts + securities + other foreign assets
Signature authority Must report Not required
Due date April 15 (auto-extension to Oct 15) Same as Form 1040
Required if no tax return? Yes No
Non-willful penalty Approx. $16,000+ per report (inflation-adjusted) $10,000 + $10,000/30 days (cap $50,000)
Willful penalty Greater of approx. $135,000+ or 50% of balance 40% accuracy penalty + criminal
EA Exam Tips

Remember the $10,000 FBAR threshold — This is the aggregate of ALL foreign accounts at ANY time during the year, not year-end balances.

Know the filing locations — FBAR goes to FinCEN; Form 8938 goes to the IRS with Form 1040.

Understand who files FBAR — Anyone with signature authority over a foreign account must file, even if they don't own the account (e.g., corporate officers).

FATCA thresholds double for MFJ — And are 4× higher for those living abroad (Single abroad: $200K/$300K; MFJ abroad: $400K/$600K).

Both may be required — Filing one does NOT satisfy the other. Many taxpayers must file BOTH forms.

No extension request needed for FBAR — The extension to October 15 is automatic.

Form 8938 requires a tax return — If you don't file Form 1040, you don't file Form 8938 (even if you exceed thresholds).

Bittner (2023) survives 2025 — Non-willful FBAR penalty is per report, not per account; willful 50%-of-balance rule remains per account, per year.