If you're a Non-Resident Indian (NRI) living in the United States, chances are you hold foreign financial assets in India—such as bank accounts, mutual funds, shares, ULIPs, real estate, or business interests. Even if these assets remain in India, U.S. tax authorities require full disclosure under two key reporting requirements:

1. FBAR (Foreign Bank Account Report – FinCEN Form 114)
2. Form 8938 (Statement of Specified Foreign Financial Assets – IRS Form)

These forms are often misunderstood, even by financially literate NRIs. While both relate to foreign asset reporting, they serve different purposes, are submitted to different authorities, and have different thresholds and compliance rules.

Let’s break it down simply so you can stay compliant, avoid penalties, and manage your cross-border tax obligations smoothly.

What is FBAR (FinCEN Form 114)?

The Foreign Bank Account Report (FBAR) is filed not with the IRS, but with the Financial Crimes Enforcement Network (FinCEN). It is used to report foreign bank and financial accounts if the combined value exceeds a certain threshold.

Who Needs to File FBAR?

• Holders of foreign bank accounts
• Demat or trading accounts outside the US
• Foreign mutual funds
• Accounts with signatory authority (e.g., Power of Attorney), even if not owned

FBAR Filing Requirements:

• Threshold: Aggregate value exceeds $10,000 at any time during the calendar year
• Deadline: April 15 (automatic extension to October 15)
• Filed With: FinCEN, not the IRS

Penalties:

• Up to $10,000 for non-willful violations
• Up to $100,000 or 50% of account balance for willful violations

What is Form 8938 (IRS Form 8938)?

Form 8938 is submitted as part of your annual IRS tax return (Form 1040). It requires reporting of a broader range of foreign financial assets, including ownership interests, unlisted investments, and more.

Who Needs to File Form 8938?

NRIs who own:

• Foreign companies or partnerships
• ULIPs, PMS, AIFs
• Foreign trust assets
• Foreign retirement accounts
• Rental property income via foreign entity

Form 8938 Filing Requirements:

Thresholds vary by residency and filing status:

• Single filer in the US: >$50,000 (year-end) or >$75,000 (any time)
• Married filing jointly abroad: >$400,000 (year-end) or >$600,000 (any time)

Deadline: April 15 (extensions align with Form 1040)

Filed With: IRS

Penalties:

• $10,000 per violation, up to $50,000 for continued non-compliance
• Potential criminal penalties
• FBAR vs Form 8938: Detailed Comparison for US-Based NRIs

Examples: What NRIs Must Report on FBAR vs Form 8938

Why Proper Filing of FBAR and Form 8938 is Critical for NRIs

The U.S. taxes global income, so your assets and income in India are potentially taxable and must be disclosed—even if you’ve paid Indian taxes.

Failure to report can result in:

• Heavy civil and criminal penalties
• Audits and scrutiny by the IRS or FinCEN
• Loss of eligibility for tax benefits like Foreign Tax Credit or DTAA

Why This Matters for Global NRIs and US Tax Residents
Whether you’re:

• A US-based NRI with Indian assets
• An expat planning to return to India
• An investor managing cross-border wealth

…it is essential to understand the difference between FBAR and Form 8938 to remain compliant and avoid surprises.

Expert NRI Tax Services: We Simplify Global Tax Compliance

At Dinesh Aarjav & Associates, we specialize in:

• FBAR & Form 8938 Filing Services
• NRI Tax Return Filing in India & US
• DTAA Claims and Cross-Border Structuring
• Global Mobility & Asset Reporting Compliance

One-Line Summary: FBAR vs Form 8938

• FBAR = Foreign financial accounts & signatory authority → Reported to FinCEN
• Form 8938 = Broader foreign assets & income interests → Reported to IRS