What's the point of filing the FBAR (FinCEN form 114) in addition to one's US tax returns, which include Form 8938 ("Statement of Specified Foreign Financial Assets")? FBAR seems to contain the same information as Form 8938.

I understand one must file for the FBAR assuming one has non-US assets, but I don't understand what the motivation behind this rule is.

From Comparison of Form 8938 and FBAR Requirements (mirror) I understand that the reporting threshold for FBAR is lower that for Form 8938 (50k USD vs 10k USD in for the 2019 tax year), but assume that the taxpayer has over 50k USD of non-US assets and that the FBAR form contains the same list of accounts as Form 8938.

  • Non-reporting of income from foreign assets was a very common for many years, not just by the rich who had off-shore accounts including Swiss accounts,, but also by immigrants who tended to not report income from assets that they still held in the "old country", especially since foreign banks did not issue Forms 1099 (with copy to IRS). The FBAR requirements are relatively new and caused howls of outrage among many immigrant communities when they were instituted, some time this century, if I remember correctly. – Dilip Sarwate Jul 19 '20 at 22:47
  • @DilipSarwate But Form 8938 is already listing non-US accounts. So what's the point of adding FBAR for those already filling out Form 8938? – Franck Dernoncourt Jul 19 '20 at 22:49
  • Form 8938 needs to be filed only when the assets are $50K or more. For us poorer folks who have smaller levels of assets, we have to file FBAR reports when our assets exceed $10K even though we don't need to file Form 8938. It was the FBAR requirement that triggered the howls of anguish referred to earlier. – Dilip Sarwate Jul 20 '20 at 2:03
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    @DilipSarwate: other way. FBAR, previously FinCEN 104, has been in place since the Bank Secrecy Act (BSA) in 1970. Due to noncompliance, the Foreign Account Tax Compliance Act (FATCA) was passed in 2010 which adds more requirements on individuals, implemented as IRS 8938, but also requires reporting directly by foreign (non-US) financial institutions to IRS, or in some cases to their own government which then shares it with IRS. See en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act . In addition to outrage among US immigrants this upset foreign banks and countries. – dave_thompson_085 Aug 19 '20 at 9:13
  • @dave_thompson_085 Thanks for the corrections. It is too late to edit my comment, though. – Dilip Sarwate Aug 19 '20 at 13:04

From the IRS page on the difference between the two:

The Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts). Unlike Form 8938, the FBAR (FinCEN Form 114) is not filed with the IRS. It must be filed directly with the office of Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury, separate from the IRS.

So, the difference isn't whether they cover the same information or not (they're similar, but not identical) but who they are filed with.

Separately from that, there are differences; as you note, FBAR has much lower limits (aggregate value of all accounts reaches $10k at any time in the year), while Form 8938 only kicks in at $50k (single) at the end of the year or $75k at any point in the year. The linked page lists all of the differences.

Since they are filed with different entities, and they have significantly different rules, you must file both - the US government doesn't do very well sharing between divisions (even divisions of the US Treasury), and so you file paperwork twice rather than filing it once and having the information sent over.

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