Living in Hong Kong offers adventure and opportunity, but US tax rules don’t stop at the border. If you miss FATCA reporting thresholds, you could face an initial IRS penalty of $10,000. The good news is many expats find compliance easier than they expect once you map which assets to report and when to file. Here’s what you need to know about staying compliant with your foreign account obligations.
Key takeaway
Knowing the thresholds that trigger Form 8938 helps you report your foreign financial assets on time and avoid steep penalties.
Understand FATCA compliance
The Foreign Account Tax Compliance Act (FATCA) requires certain US taxpayers to report specified foreign financial assets on Form 8938, attached to their annual tax return. You must disclose assets ranging from overseas bank accounts to foreign-issued life insurance when their combined value exceeds set limits. To see which types of holdings count, review the foreign asset reporting requirements.
Who needs to file
You’ll file Form 8938 if you’re a US citizen, green card holder, or resident alien living abroad with foreign assets above the reporting threshold. You also must file if you form or use a domestic entity to hold those assets. For a full list of who must comply, check our guide on FATCA reporting obligations.
What counts as foreign financial assets
Specified foreign financial assets include:
- Deposit and custodial accounts held at non-US financial institutions
- Stocks, securities and partnership interests issued by foreign entities
- Contracts with non-US persons and foreign-issued insurance policies
- Interests in foreign trusts or estates
Direct ownership of real estate doesn’t trigger FATCA unless you hold it through a foreign financial entity.
Review reporting thresholds
FATCA sets different thresholds for US residents and expats based on filing status and account values. You measure the value using the highest fair market value at any point during the tax year (periodic statements often suffice).
| Filing status | US resident thresholds | Expats abroad thresholds |
|---|---|---|
| Single or separate filer | $50,000 end of year, $75,000 any time | $200,000 end of year, $300,000 any time |
| Married filing jointly | $100,000 end of year, $150,000 any time | $400,000 end of year, $600,000 any time |
The thresholds double for joint filers. If your assets cross these limits at any time, you need to file Form 8938.
Compare Form 8938 and FBAR
You may also have to file an FBAR (FinCEN Form 114) for foreign bank and financial accounts, even if you don’t owe FATCA reporting. The two forms differ in scope, thresholds and due dates.
| Feature | Form 8938 | FBAR (Form 114) |
|---|---|---|
| Trigger threshold | See thresholds above | $10,000 aggregate account value |
| Covered assets | Specified foreign financial assets | Foreign bank and financial accounts |
| Filing deadline | April 15 (with extensions) | April 15 plus automatic extension to October 15 |
| Penalties | Up to $10,000 initial, $50,000 more, 40% of understatement | Up to $10,000 non-willful, higher for willful violations |
| More info | Attached to Form 1040 | Filed separately at FinCEN |
Form 8938 attaches to your annual return and follows regular due dates. For details on IRS deadlines, see IRS foreign account disclosure. If you hold overseas bank accounts, you’ll likely file both forms—learn more about overseas bank account reporting.
Know potential penalties
Missing FATCA reporting thresholds or deadlines can trigger serious fines:
- Failure to file penalty: Up to $10,000 per tax year
- Continued failure: Additional penalties up to $50,000
- Understatement penalty: 40% of the tax underpayment tied to undisclosed assets
The IRS may waive penalties if you missed a filing due to reasonable cause and not willful neglect. Don’t worry—prompt action often minimizes fees.
Plan your next steps
- Inventory your foreign holdings (bank accounts, securities, life insurance)
- Compare their values against the thresholds in our table
- Gather statements that show peak fair market values
- File Form 8938 with your return if you exceed the limits
- Consider FBAR filing even if FATCA thresholds aren’t met
If you need expert help, our team at American Pacific Tax specializes in expat tax return preparation and foreign account compliance. We make sure you report correctly and avoid penalties, so you can enjoy life in Hong Kong with peace of mind.
Frequently asked questions
What counts as a specified foreign financial asset?
You must report assets like foreign bank accounts, stocks held abroad, partnership interests, and foreign-issued insurance contracts. Direct real estate ownership doesn’t count unless held through a foreign entity.
When do I file Form 8938?
File Form 8938 with your Form 1040 by April 15, including extensions. If you live abroad, you may qualify for an automatic two-month extension to June 15, plus the usual six-month extension.
Can I avoid penalties for late filing?
Yes, if you can show a reasonable cause for missing the deadline (for example, serious illness). Document your reasons and request penalty relief when you file.
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