The Role of FBAR and Form 8938 in a Streamlined Submission
The FBAR 8938 streamlined role is straightforward once broken down: FBAR reports your foreign financial accounts to FinCEN for 6 years, while Form 8938 attaches to 3 amended tax returns and reports specified foreign assets to the IRS; together, they form the backbone of the disclosure a streamlined filer must get right.
By the TaxYork Cross-Border Tax Team — reviewed by a US-UK dual-qualified adviser (CPA / Enrolled Agent).
What is a streamlined submission, and why do FBAR and Form 8938 matter?
The Streamlined Filing Compliance Procedures allow non-wilful taxpayers to catch up on unreported foreign income and assets without incurring the harshest civil penalties. A US citizen in Leeds who never realized her ISA and current account needed to be reported, or an American in Boston who forgot about an inherited UK pension, can both use the program to get compliant.
Two forms sit at the center of every package. The FinCEN 114 (FBAR) covers six years of foreign account reporting. Form 8938 attaches to three years of amended or delinquent returns and covers a broader category of foreign assets. Get the FBAR 8938 streamlined role wrong — miss an account, skip a threshold check, or misjudge the penalty base — and a submission meant to close the door on risk can instead open a new one.
What's the difference between FBAR and Form 8938?
FBAR and Form 8938 look similar on the surface but serve different purposes, are handled by different agencies, and have different thresholds. Filing one does not excuse you from the other, and plenty of taxpayers with UK accounts owe both.
Filing thresholds compared
Feature
FBAR (FinCEN 114)
Form 8938
Filed with
FinCEN, via BSA E-Filing
Attached to the federal tax return
Threshold, single/MFS abroad
Aggregate foreign accounts over $10,000 at any point in the year
Over $200,000 on 31 December, or over $300,000 at any time in the year
Threshold, MFJ abroad
The same $10,000 aggregate test applies jointly
Over $400,000 on 31 December, or over $600,000 at any time in the year
What it covers
Foreign bank, savings, and investment accounts
Broader "specified foreign financial assets" — accounts plus certain foreign stock, partnership interests,s and financial instruments
See the IRS's own side-by-side breakdown at the Comparison of Form 8938 and FBAR Requirements and the underlying rules on the FBAR page and the About Form 8938 page.
UK accounts that commonly trigger both
A UK SIPP, a stocks-and-shares ISA, and an ordinary high-street current account can all sit within the same client's disclosure, and each is treated differently. The SIPP is usually treaty-protected from current US tax under Article 17 of the US-UK treaty, but still needs reporting on both the FBAR and Form 8938. The ISA has no UK tax shelter recognized by the US, and its growth is taxable. Cash accounts almost always appear on the FBAR and on Form 8938 once the value exceeds the relevant threshold. Readers weighing up pension treatment in more depth may find our piece on what the US-UK treaty means for retiring to the UK a useful piece of background.
How does the FBAR 8938 streamlined role work when you file the streamlined package?
Inside a Streamlined Domestic (SDOP) or Streamlined Foreign (SFOP) submission, six years of delinquent FBARs are filed through FinCEN's BSA E-Filing system, and three years of amended or delinquent returns are filed with Form 8938 attached wherever the asset thresholds are met. The certification, Form 14653 for SFOP or Form 14654 for SDOP, must explain why the earlier non-disclosure was non-wilful — a genuine misunderstanding, not concealment.
SFOP carries no penalty at all, but only for taxpayers who meet the non-residency test: no US abode and at least 330 full days outside the United States in one of the last three years. SDOP, for taxpayers who don't meet that test, carries a 5% penalty on the highest aggregate year-end balance of unreported foreign financial assets across the relevant years — full details on both routes sit on the Streamlined Domestic FAQ page. Whichever track applies, the mechanics of the FBAR 8938 streamlined role stay consistent: FBAR handles the six-year account picture, Form 8938 handles the three-year asset picture, and both feed into the same certification.
How is the SDOP 5% penalty calculated across FBAR and Form 8938 assets?
This is where most competitor guides oversimplify. The SDOP penalty base is not a single, flat three-year lookback — it blends two different reporting periods into a single figure, and getting that blend wrong can understate or overstate what a client owes.
The blended calculation, step by step
The base combines FBAR-reportable foreign accounts that should have been disclosed across the full six-year FBAR period with Form 8938-reportable assets and income-producing assets across the shorter three-year return period. From that combined pool, you take the single highest year-end aggregate value across all the years involved — no valuation discounts are allowed. Assets already reported on a timely-filed Form 3520 or 5471 are excluded from the base; the same assets filed late do not get that exclusion. This is exactly why the FBAR 8938 streamlined role in the penalty calculation deserves more attention than it usually gets.
Worked example
Consider a case study built from typical figures. James, a dual UK-US citizen living in Manchester who moved to the US for work eighteen months ago, never filed FBARs or Form 8938 for his UK ISA and joint savings account. Over the six FBAR years, his highest combined account balance was £180,000 (roughly $225,000). Over the three Form 8938 years, an additional small UK investment fund pushed the peak asset value to $240,000 in one year.
Because James now lives in the US and fails the non-residency test, SFOP is unavailable, so his adviser uses SDOP. The penalty base is the single highest year-end figure across the combined six-year FBAR and three-year 8938 picture — in James's case, $240,000 — giving a one-off penalty of $12,000, against non-wilful FBAR exposure that could otherwise have reached well into six figures.
Scenario
Penalty exposure
Non-wilful FBAR penalty per account, outside streamlined
Up to $16,536 per account, per year
Wilful FBAR penalty
Greater of $165,353 or 50% of the account balance
Form 8938 failure-to-file penalty
$10,000 initial, plus up to $50,000 more after IRS notice, plus a 40% accuracy penalty on related underpayments
SDOP penalty (James's case)
5% of $240,000 = $12,000, one-off, no accuracy penalty
Full statutory penalty figures sit at 31 U.S.C. §5321, and the IRS's own guidance on the comparative penalty exposure is on the Taxpayer Advocate Service's foreign accounts page.
Compare James's outcome with that of Sarah, a US citizen who has lived in Bristol for nine years, works for a UK employer, and files from nowhere near a US mailing address. Sarah's unreported UK current account, cash ISA and workplace pension peaked at a combined $190,000 across the relevant years.
Because Sarah genuinely meets the non-residency test — no US abode and well over 330 days a year outside the United States for each of the last three years — she qualifies for SFOP instead of SDOP. Her FBARs and Form 8938s cover the same six-year and three-year periods as James's, but because she certifies on Form 14653 rather than Form 14654, she pays no penalty at all. The difference between the two outcomes has nothing to do with how much was unreported and everything to do with residency, which is why checking that test carefully, before assuming SDOP is the only option, is one of the first things a good adviser does.
What happens if you only file one of the two forms?
Filing Form 8938 without the FBAR, or vice versa, leaves a submission incomplete and can undermine the non-wilfulness certification itself. Each form asks a different question of a different agency, so satisfying one doesn't satisfy the other, and an incomplete package is a common reason streamlined submissions get kicked back or later challenged.
The safest approach treats the FBAR 8938 streamlined role as a single, combined exercise from the outset: pull six years of account statements for the FBAR, identify which assets cross the Form 8938 threshold for each of the three return years, and file both in a single package. Clients who are also untangling a UK business, a divorce, or a home sale alongside their disclosure often have overlapping FBAR and 8938 exposure — see our related pieces on unfiled US taxes after starting a UK business, streamlined filing after a cross-border divorce, and selling a UK home with unfiled US returns.
Why is a partial submission worse than doing nothing, yet
Filing FBARs alone, without checking whether Form 8938 also applies, can create a paper trail that flags a taxpayer's foreign holdings to the IRS without providing the full financial picture the streamlined certification requires. The reverse is just as risky: attaching Form 8938 to amended returns while leaving six years of FBARs unfiled leaves the FinCEN side completely exposed to the standard non-wilful penalty regime, which carries none of the streamlined program's protection.
Advisers who understand the combined FBAR 8938 streamlined role from the start avoid building a submission with a gap, because reopening a "completed" streamlined package to add a missed form is far harder than getting it right the first time. It also matters which years each form covers — a taxpayer who arrived in the UK four years ago, for example, may only need three years of Form 8938 filings but still owes FBARs stretching back further, and mismatching those periods is one of the more common preparation errors we see.
Interaction with foreign tax credit and NIIT
Getting the FBAR and Form 8938 disclosure right also feeds directly into the amended returns themselves. Foreign tax paid on UK-source income can generally be claimed via the Foreign Tax Credit, though the credit does not offset the Net Investment Income Tax on unearned income such as dividends or fund gains from a UK ISA. Clients with income taxed only in the UK due to non-residence should also check GOV.UK's guidance on UK income while living abroad to confirm their UK-side position before the US streamlined package is finalized.
High earners with more complex accounts, including those relocating for work, often benefit from a fuller review rather than a form-by-form fix — our guide for US-UK tax specialists working with high earners in Boston covers how that broader review typically runs.
Get FBAR and Form 8938 right the first time — talk to TaxYork.
A streamlined submission only works if both forms are built correctly and consistently from the same set of facts. TaxYork's cross-border team handles the FBAR and Form 8938 side by side, checks every UK account and asset against the right threshold, and calculates the SDOP base using the correct blended six-year and three-year method — not the flattened version that leads to over- or under-payment. Email hello@taxyork.com, call 020 3488 8606, or visit taxyork.com to get your submission reviewed before it's filed.