FATCA penalties: What happens if you don't file on time?

If you have a bank account or investments abroad, you need to know about FATCA penalties.

The Foreign Account Tax Compliance Act (FATCA) requires US taxpayers to report their foreign assets to the IRS. If you don't do it on time, you could pay thousands of dollars in penalties.

Here's everything you need to know about the problems that can arise if you don't file FATCA on time, and what to do if you're already late to avoid fines.

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Table of contents
What is FATCA, and why is it important? What triggers FATCA penalties? Types of FATCA penalties that you must be aware of How to avoid FATCA penalties What happens in the case of non-compliance What makes you exempt from FATCA reporting?

What is FATCA, and why is it important?

FATCA is a law that requires US taxpayers to report certain foreign financial assets to the IRS. Congress passed it in 2010 to combat tax evasion by Americans holding money offshore.¹

If you're a US citizen, Green Card holder, or resident for tax purposes (even on a non-immigration visa like F1 or J-1), you'll need to file FATCA if you hold foreign financial assets above certain thresholds.

"Specified foreign financial assets" include foreign bank accounts, investment accounts, stocks, securities, and interests in foreign entities held for investment purposes, among other things.

You report these assets on Form 8938, which you attach to your annual tax return.²

The form is due with your regular tax return, typically on April 15 if you live in the US, June 15 if you live abroad, or October 15 if you file an extension.³

FATCA thresholds

Whether you need to file depends on where you live and how much you have in foreign assets:

Filing status	Living in the US²	Living abroad²
Single	50,000 USD (year-end) or 75,000 USD (anytime)	200,000 USD (year-end) or 300,000 USD (anytime)
Married filing jointly	100,000 USD (year-end) or 150,000 USD (anytime)	400,000 USD (year-end) or 600,000 USD (anytime)

💡 FATCA reporting is separate from FBAR reporting (FinCEN Form 114).

You'll need to report some of your foreign financial accounts on both forms, but filing FATCA doesn't exempt you from filing FBAR (and vice versa).

What triggers FATCA penalties?

You can face FATCA penalties if you don't file Form 8938 on time or file it incorrectly.

For example:

• You don't file Form 8938 when your foreign assets exceed the reporting threshold
• You file the form, but leave out the required information about your assets
• You underreport the value of your foreign assets
• You fail to file after the IRS notifies you about missing or incomplete forms
• You don't report income from those foreign assets on your tax return

Plus, if you omit more than 5,000 USD in gross income from a foreign financial asset, the IRS extends the statute of limitations to 6 years instead of the normal 3 years.²

This gives them more time to audit your return and assess penalties.

Types of FATCA penalties that you must be aware of

Failure to file penalty

If you don't file Form 8938 on time, the IRS can charge you a 10,000 USD penalty.²

This is the baseline penalty for non-compliance, and the fines only increase from here.

Continued non-compliance penalty

If you receive a notice from the IRS about your missing or incorrect Form 8938 and still don't fix the problem, the penalties increase.

You can face an additional penalty of up to 50,000 USD on top of the first 10,000 USD failure to file penalty.²

Tax understatement penalty

If you underreport income from your foreign assets, the IRS can assess a 40% penalty on the additional tax you owe.²

Extended statute of limitations

When you omit more than 5,000 USD in gross income from a foreign financial asset, the IRS gets 6 years instead of the normal 3 years to audit your return.²

This makes you more vulnerable to future fines and penalties.

Criminal penalties

In serious cases, you could face criminal prosecution. This typically applies when the IRS determines that you intentionally hid foreign assets or income to avoid paying taxes.⁴

💡 Learn more about the US taxes you have to pay on your foreign income.

How to avoid FATCA penalties

The simplest way to avoid FATCA penalties is to file Form 8938 correctly and on time with your annual tax return.

It can take some time to gather all the documents you need and fill out the form, so plan to do this in advance and consult a tax professional if needed.

If you've fallen behind on your FATCA filing obligations, the IRS has streamlined filing compliance procedures for non-resident US taxpayers who want to catch up.²

If you're an American living abroad who wasn't aware of FATCA filing obligations and wants to comply with the law, these procedures will help you avoid penalties.

💡 Learn more about US taxes for citizens living abroad.

What happens in the case of non-compliance

If you miss filing Form 8938, the IRS will typically send you a notice informing you of the missing form and the potential penalties. This notice gives you a chance to file the form and explain why you didn't submit it on time.

If you can show that you had a reasonable cause for not filing when you were supposed to, the IRS may waive the penalties.

However, if you ignore the IRS notice or can't prove reasonable cause, the penalties start adding up. Sometimes, the IRS may even escalate the matter to its Criminal Investigation division.

What makes you exempt from FATCA reporting?

Generally, you don't need to file Form 8938 if:

• Your foreign assets are below the reporting thresholds
• You don't need to file a US income tax return for the year
• Your accounts are held at US financial institutions (even if the money is in foreign currency)
• You've already reported your foreign assets on other IRS forms like Form 3520, Form 5471, Form 8621, Form 8865, or Form 8891²

Remember, FBAR is a reporting requirement that's similar to FATCA, but filing one doesn't exempt you from filing the other. Many Americans have to comply with both.

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FATCA penalties can be costly. The best thing to do is file Form 8938 with your tax return on time if your foreign assets exceed the thresholds.

If you've fallen behind on filing, look into the streamlined compliance procedures to minimize penalties (if you're a US taxpayer living abroad).

Living and working internationally often means moving money between countries to pay bills, receive income, and manage investments.

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Sources

1. IRS - Summary of key FATCA provisions
2. IRS - Summary of FATCA reporting for US taxpayers
3. IRS - US citizens and resident aliens abroad
4. IRS - FATCA information for individuals

Sources checked 12/08/2025