The Form 8938 threshold for a US taxpayer living abroad is $200,000 of specified foreign financial assets on the last day of the tax year, or more than $300,000 at any time during the year, for anyone filing other than a joint return. File jointly and those figures double to $400,000 and $600,000. Cross either limb of the test and Form 8938 is attached to your Form 1040.
Almost everyone reads the first number and stops. The costly detail is the second: the any-time-during-the-year test uses the highest value your assets reached at any point, so a taxpayer who sold a UK flat in June and reinvested the proceeds in October can breach $300,000 without ever holding that much on 31 December. The higher thresholds are also not automatic — "living abroad" is a defined test with a 330-day component, and failing it drops you to the domestic thresholds of $50,000 and $75,000.
The four threshold sets, and which one applies to you
There are four combinations, driven by filing status and by whether you meet the definition of living abroad. The IRS sets them out in its summary of FATCA reporting for US taxpayers.
Note how large the gap is. An American in London filing jointly reports from $400,000; the same couple back in Boston reports from $100,000. Moving home mid-career, or simply failing the presence test in a year of heavy travel, can quadruple your exposure to the filing requirement without a single asset changing.
- Living abroad, not filing jointly: more than $200,000 at year end, or more than $300,000 at any time during the year.
- Living abroad, filing a joint return: more than $400,000 at year end, or more than $600,000 at any time during the year.
- Living in the US, not filing jointly: more than $50,000 at year end, or more than $75,000 at any time during the year.
- Living in the US, filing a joint return: more than $100,000 at year end, or more than $150,000 at any time during the year.
- Either limb triggers the filing — you do not need to breach both.
"Living abroad" is a test, not a description
To use the higher thresholds you must qualify, and the IRS sets out the test on its Do I need to file Form 8938 page. For a US citizen, that means either your tax home is in a foreign country and you have been present in a foreign country or countries for at least 330 full days during a consecutive twelve-month period, or you are a bona fide resident of a foreign country for an uninterrupted period covering an entire tax year.
The 330-day route is the one that trips people up, because it counts days outside the United States, and a year with a long American work assignment, an extended family visit or a medical stay can quietly fail it. Thirty-six days in the US is the whole allowance across the twelve-month period.
The bona fide residence route is generally the more robust one for an American settled in Britain with a home, a family and an indefinite intention to stay — but it is unavailable for your first partial year and it is a facts-and-circumstances judgement rather than a day count. The same tests underpin the foreign earned income exclusion, which is why they should be settled once per year and applied consistently across the whole return.
What counts as a specified foreign financial asset
The category is broader than a bank account. It covers foreign financial accounts held at foreign financial institutions, and also foreign non-account assets held for investment: foreign stock and securities held directly, foreign financial instruments, contracts with non-US persons, and interests in foreign entities.
For an American in the UK, that ordinarily means current and savings accounts, cash and stocks and shares ISAs, general investment accounts, UK-domiciled funds and investment trusts, a UK workplace pension or SIPP, shares in a private UK company, and any interest in a UK partnership or LLP.
The exclusions matter as much as the inclusions. An account maintained by a US payor — including a US branch of a foreign bank, or a foreign branch of a US institution — is outside the definition. So is an interest in a social security or similar government programme, which is why the UK State Pension is not a reportable asset while a private workplace scheme generally is.
- Reportable: UK bank and building society accounts, ISAs, general investment accounts, UK funds, SIPPs and workplace pensions, private company shares, LLP interests.
- Reportable: foreign stock held directly in your own name rather than through an account.
- Not reportable on Form 8938: accounts maintained by a US payor, and interests in social security or similar government programmes such as the UK State Pension.
- Not reportable: personally held tangible assets — a UK house owned directly, artwork, gold in a safe deposit box.
- A UK home held through a company or trust changes the answer, because the interest in that entity is itself a specified asset.
The valuation rules that decide whether you cross the Form 8938 threshold
You report the maximum value of each asset during the year, converted to US dollars. Conversion uses the Treasury Reporting Rates of Exchange for the last day of the tax year — a single year-end rate applied to values, not the rate on the day each balance peaked.
That produces a result which surprises people: a year in which sterling strengthens against the dollar can push you over the threshold with no change in your actual holdings. An American with a stable £280,000 portfolio sits below $400,000 at 1.40 and above it at 1.45.
For assets without a readily determinable market value, such as an interest in a private company, a reasonable estimate based on year-end value is acceptable, and periodic account statements are sufficient evidence of maximum value for accounts. Keep the statements — the valuation, not the filing, is what an examiner will test.
Form 8938 and the FBAR are not the same form, and both usually apply
The two are routinely confused because they overlap heavily. FBAR is FinCEN Form 114, filed with FinCEN through the BSA E-Filing System, with a $10,000 aggregate threshold and no distinction between residents and expatriates. Form 8938 goes to the IRS attached to your Form 1040, with the much higher thresholds above.
The scope differs too. FBAR catches foreign financial accounts, including those you merely have signature authority over. Form 8938 catches accounts and also non-account assets — directly held foreign stock, an interest in a foreign entity — but excludes accounts you only sign on without a financial interest.
The practical position for most Americans in the UK is that both are required, with overlapping but not identical content, and a UK pension is often reportable on both. Our comparison of FBAR versus FATCA reporting works through where each applies, and the FBAR filing guide covers the FinCEN side in detail.
The penalties, and why the statute of limitations is the real risk
The headline penalty for failing to file Form 8938 is $10,000. If the failure continues after the IRS notifies you, further penalties accrue up to an additional $50,000. On top of that sits a 40% accuracy-related penalty on any understatement of tax attributable to an undisclosed foreign asset — double the ordinary 20% rate.
But the sharper consequence is procedural. Failing to file Form 8938 keeps the assessment statute of limitations open for the entire return, not merely for the foreign asset, until three years after the form is eventually filed. A separate six-year statute applies where more than $5,000 of income attributable to foreign financial assets is omitted from gross income.
That means a single missing Form 8938 leaves an entire tax year permanently open to examination. It is the reason a technically minor omission on a return with no tax due is still worth correcting: closing the year is the point, not the $10,000.
The 2026 enforcement picture: quieter than the rules suggest
There is a genuine gap between the statutory position and current enforcement reality, and being honest about it serves readers better than pretending otherwise.
A Treasury Inspector General for Tax Administration report published in 2026 examined the IRS campaign targeting egregious FATCA non-filers. Of 405 taxpayers identified with significant foreign account balances and apparent Form 8938 non-compliance, the campaign produced very few examinations, and among the group that received only educational or soft letters, none were examined or assessed the initial $10,000 penalty. The report is critical of the IRS's follow-through.
Two conclusions follow, and they point in opposite directions. Enforcement of the Form 8938 penalty has been weak, so the probability-weighted cost of a past omission is lower than the headline numbers imply. But the statute of limitations consequence is automatic and does not depend on anyone at the IRS taking an interest — an unfiled 8938 keeps the year open regardless of enforcement appetite, and enforcement appetite can change with a single budget cycle.
The assets people forget to count
Threshold tests fail on omission far more often than on arithmetic. Four categories account for almost every case we see where a taxpayer concluded they were under the limit and were not.
The first is the workplace pension, because it does not feel like an asset you own — contributions are made by an employer into a scheme you never chose, and the balance arrives in an annual statement nobody opens. It is frequently the largest single reportable item.
The second is a stocks and shares ISA, which is invisible to most people precisely because it is tax-free in Britain. The third is an interest in a private company or LLP, including a dormant consultancy vehicle set up years ago. The fourth is a foreign account you have forgotten — a legacy building society account, or one opened during a previous posting in a third country.
- Workplace pensions and SIPPs — usually the largest reportable asset for a settled American in Britain.
- Cash and stocks and shares ISAs — reportable despite being tax-free in the UK.
- Shares in a private UK company or an interest in an LLP, including dormant vehicles.
- Dormant or legacy accounts in the UK or a third country from an earlier posting.
- Accounts held for a child where you have a financial interest, and joint accounts with a non-US spouse.
When the threshold is crossed only in one year
The requirement is tested annually, and there is no continuing obligation once you drop back below. A year in which you sold a property, received an inheritance or transferred a pension can breach the any-time limb on its own, requiring Form 8938 for that year and nothing thereafter.
That produces an isolated filing which people are reluctant to make, on the theory that a single year's form looks odd. It does not. A one-year Form 8938 with a large transitional balance is an entirely ordinary pattern, and it is far better than the alternative of an unfiled year that never closes.
The opposite case matters too. If you crossed the threshold in an earlier year and did not file, dropping back below since does not cure it — the statute of limitations for that year remains open until the form is filed, however modest your assets are today.
Married to a non-American: the filing status decision
Filing status changes the threshold, and for a mixed-nationality couple the choice is not free. Filing jointly with a non-resident alien spouse requires an election that brings the non-American spouse's worldwide income into the US tax net permanently until revoked — a very large decision to make in order to double a reporting threshold.
Filing separately keeps the spouse outside the US system but drops you to the $200,000 and $300,000 limits, and requires care over which assets are yours. Where an account is jointly held with a non-US spouse, the full value is generally reported by the filing spouse, not half of it.
This is the point at which the reporting question becomes a planning question, and it should be decided on the tax outcome across the whole return rather than on the reporting thresholds alone. Our guide to being married to a non-American covers the election in full.
If you are below the threshold this year
Being under the limit is a conclusion you should be able to evidence, not merely assume. The any-time-during-the-year test means the working needs to show peak values, not year-end balances, and a year with a property sale, a pension transfer or an inheritance passing through an account can breach it invisibly.
Keep a simple annual schedule: each account, its maximum value in local currency, the year-end conversion rate, and the dollar figure. It takes twenty minutes and it is the difference between a defensible position and a guess.
You can test your own numbers, including both limbs of the test and the living-abroad qualification, in our Form 8938 threshold calculator.
If you should have filed and did not
The route depends on whether there was unreported income. Where all income was properly reported and tax paid, and only the information return was missed, the delinquent international information return procedures allow the late forms to be filed with a reasonable cause statement attached.
Where income was also unreported, the streamlined procedures are usually the right vehicle — three years of returns, six years of FBARs and a non-willfulness certification, with a 0% penalty for those who meet the non-residency requirement. Filing the missing forms quietly, without either framework, gives up the protection while doing the same work.
TaxStone prepares Form 8938 and FBAR reporting for Americans in the UK, including delinquent-year packages and the valuation schedules that support them. If you are unsure whether you crossed a threshold in a past year, contact us with the years and rough asset values and we will tell you where you stood.
