FBAR and foreign asset reportingFinCEN 114, Forms 8938, 3520, 5471 and 8621

Wang Law Firm, LLC · David Wang, Managing Attorney · Attorney-reviewed · Updated October 2026

Many new immigrants, after obtaining a green card or starting to work in the United States, keep their salary card, savings accounts, securities accounts, bank wealth-management products and insurance in China, and some also hold company equity or real estate there. These assets are entirely lawful and normal in China, but once you become a U.S. tax resident, U.S. law requires you to “report” some of them to the U.S. government every year. Reporting obligations and tax obligations are two different things: many filings generate no tax at all, but the consequences of failing to report can be more serious than underpaying tax.

For who is a U.S. tax resident, see Immigration status and U.S. tax residency. Below, “U.S. person” and “U.S. tax resident” generally include U.S. citizens, green card holders and foreign nationals who meet the substantial presence test.

FBAR: Report of Foreign Bank and Financial Accounts

Legal basis and who must file

FBAR stands for Report of Foreign Bank and Financial Accounts. The form is FinCEN Form 114, and the legal basis is the Bank Secrecy Act and its implementing regulation, 31 CFR 1010.350. It is received by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, and is not filed with your income tax return.

The filing obligation applies to a “United States person,” which includes U.S. citizens, resident aliens (determined under section 7701(b) of the Internal Revenue Code), and corporations, partnerships, limited liability companies, trusts and estates formed in the United States. The conditions are:

• You have a financial interest in, or signature or other authority over, one or more foreign financial accounts; and
• The aggregate value of those accounts exceeds $10,000 at any time during the calendar year.

Note “aggregate” and “at any time”: the test is not whether each account separately exceeds $10,000, but the sum of each foreign account’s highest balance during the year; exceeding the threshold on even a single day of the year is enough. Whether the accounts produced income, and whether you have taxable income, does not affect whether you must file. The $10,000 threshold is written directly into the regulation.

What counts as a “foreign financial account”

Under 31 CFR 1010.350(c), this includes the following accounts at financial institutions located outside the United States:

• Bank accounts: savings, checking, time deposits and the like;
• Securities accounts: accounts for buying, selling or holding stocks, bonds and other securities;
• Other financial accounts: insurance or annuity policies with cash value, futures or options accounts, accounts in mutual funds or similar pooled investment funds, and the like.

For people who have lived in China, common examples include salary cards and savings cards, certificates of deposit, securities accounts, fund accounts opened with banks or fund companies, and life insurance or annuities with cash value. Accounts you manage for your parents or a company and over which you have signature authority may need to be reported even if the money is not yours. For joint accounts held by spouses, each co-owner generally must report the full value of the account (spouses who meet the conditions may have one spouse file for both).

Deadline, filing method and records

• Deadline: April 15 of the year following the reporting year; if not filed by April 15, it is automatically extended to October 15, with no request needed. For example, the FBAR for 2025 is due April 15, 2026, with an automatic extension to October 15, 2026. In cases such as natural disasters, FinCEN may grant additional extensions.
• Filing method: Filed online through FinCEN’s BSA E-Filing System.
• Currency conversion: The maximum account value is converted to U.S. dollars using the Treasury Department’s exchange rate for the last day of the calendar year.
• Recordkeeping: Account records generally must be kept for 5 years from the April 15 due date (or the actual filing date).

In addition, Part III of Schedule B of Form 1040, the individual income tax return, asks whether you have an interest in or signature authority over a foreign account and whether you had dealings with a foreign trust. Answer this truthfully and consistently with your FBAR filing.

Consequences of not filing

FBAR penalties can be severe. They fall into two categories, non-willful and willful, and the amounts are adjusted for inflation each year. In 2023, in Bittner v. United States, the U.S. Supreme Court held that the civil penalty for a non-willful failure to file is calculated per annual report, not per account. Penalties for a willful failure to file are much heavier and can be calculated as a percentage of the account balance; serious cases may also involve criminal liability. Whether the IRS imposes a penalty, and how much, depends on the specific facts, such as whether there was reasonable cause and whether the related income was properly reported for tax purposes.

Form 8938: specified foreign financial assets (FATCA)

Form 8938 comes from the Foreign Account Tax Compliance Act (FATCA), and its legal basis is section 6038D of the Internal Revenue Code. It and the FBAR are two independent requirements: their content overlaps, but their thresholds, scope and receiving agencies differ. Filing one does not mean you have filed the other, and many people must file both.

• Who must file: “Specified individuals” (including U.S. citizens and resident aliens, among others) and certain domestic entities; individuals generally need to attach Form 8938 only in a year in which they are required to file an income tax return.
• When to file: Attached to and filed with the income tax return, with the same due date as the return (including extensions).
• What to report: Foreign financial accounts, as well as certain foreign investment assets not held in a financial account, such as directly held stock in a foreign company, interests in a foreign partnership, foreign funds, and foreign insurance with cash value.

The thresholds above are taken from the IRS page “Comparison of Form 8938 and FBAR requirements” (as of October 2026). “Living outside the U.S.” has its own specific test; check the IRS instructions for the current year.

FBAR vs. Form 8938 (summary)

Form 8938 penalties can also be severe, and failing to file can keep the statute of limitations for the related year from running out (see “Statute of limitations” below).

Form 3520: foreign gifts, inheritances and foreign trusts

Large gifts or bequests from foreign persons

When a U.S. tax resident receives a gift or inheritance from a foreign person, the gift itself generally is not subject to U.S. income tax, but once a threshold is reached it must be reported on Form 3520 (section 6039F of the Internal Revenue Code):

• If, in one tax year, the gifts or bequests you receive from nonresident alien individuals or foreign estates total more than $100,000 (gifts from related persons are combined), you must report them and separately identify each gift over $5,000;
• For “gifts” received from foreign corporations or foreign partnerships, the threshold is much lower and adjusted annually for inflation; the IRS has published $20,573 for 2026 (check the figure the IRS publishes for the current year). The IRS may also recharacterize such payments as income.

Typical situations: parents in China wiring money to a child in the United States to buy a home or pay tuition, or a child inheriting property from parents and transferring it to the United States. Form 3520 is generally due on the same date as the individual income tax return and is extended along with an income tax extension. Penalties for late filing accrue monthly as a percentage of the unreported amount, unless there is reasonable cause.

Foreign trusts

Under section 6048, a U.S. person who creates a foreign trust, transfers property to a foreign trust, is treated as the owner of a foreign trust under the “grantor trust” rules, or receives a distribution from a foreign trust (including uncompensated use of trust property) generally must report on Form 3520. A foreign trust with a U.S. owner must also have its trustee file Form 3520-A; if the trustee does not, the U.S. owner may need to file a substitute form. Penalties for foreign trusts are calculated as a percentage of the reportable amount and are often very heavy. How a family trust set up through a trust company in China, or certain insurance trusts, is characterized under U.S. tax law must be analyzed case by case. For foreign trust issues in estate planning, see Cross-border estate planning and Living trusts.

Form 5471 and Form 8865: foreign companies and foreign partnerships

U.S. persons who own equity in a company in China or another country may need to file Form 5471 (foreign corporations, based mainly on sections 6038 and 6046) or Form 8865 (foreign partnerships, based mainly on sections 6038, 6038B and 6046A). General principles:

• Form 5471: A filing obligation may arise when a U.S. person acquires 10% or more of a foreign corporation, reduces holdings below 10%, becomes a U.S. person while already holding 10% or more, controls a foreign corporation (more than 50%), or holds 10% or more of a controlled foreign corporation (CFC), and also for U.S. persons who are officers or directors of the foreign corporation when such an event occurs. Under IRS rules, filers fall into several categories, each requiring different schedules.
• Form 8865: Filing is generally required when a U.S. person controls a foreign partnership (more than 50%), holds 10% or more of a foreign partnership controlled by U.S. persons, makes contributions to a foreign partnership that meet certain thresholds, or has changes in interest that cross 10%.

“I just got my green card and still own shares in a family business in China” is a very common situation. Becoming a U.S. tax resident can by itself trigger a Form 5471 filing. Whether a Chinese limited liability company or partnership enterprise is treated as a corporation or a partnership for U.S. tax purposes is governed by specific classification rules. Where ownership meets the controlled foreign corporation standard, current income inclusions may also be involved (for example, under the Subpart F rules), which should be handled by a professional familiar with international tax. Penalties for these two forms are calculated per form and per year, and the amounts are substantial.

PFICs and Form 8621: Chinese funds and wealth-management products

The passive foreign investment company (PFIC) rules are among the least favorable rules in U.S. tax law for U.S. persons (sections 1291–1298 of the Internal Revenue Code). A foreign corporation is a PFIC for a year if it meets either of the following tests:

• Income test: 75% or more of its gross income is passive income (such as interest, dividends and investment gains); or
• Asset test: at least 50% of its average assets produce passive income or are held to produce passive income.

Under this definition, pooled investment vehicles purchased in China, such as mutual funds, money market funds and ETFs, usually fall within the PFIC rules if they are classified as corporations for U.S. tax purposes. Bank wealth-management products, trust plans and private investment products have varied legal structures, so whether they are PFICs cannot be answered across the board; it depends on the specific product’s structure and its classification under U.S. tax law.

Under the PFIC default rules (the section 1291 “excess distribution” regime), gains on sale and excess distributions are allocated over the entire holding period; the portion allocated to prior years is taxed at the highest rate for that year with an interest charge added, and the preferential long-term capital gains rates do not apply. Where the conditions are met, you can elect the “qualified electing fund” (QEF) or mark-to-market regime, but these elections have timing and eligibility requirements and are best discussed with a tax professional in the year you buy the investment or become a U.S. tax resident. U.S. persons who hold PFICs generally must file a separate Form 8621 for each PFIC; there is a small-holdings exception, but its scope is limited.

Therefore, people preparing to immigrate or who have just become U.S. tax residents should understand the U.S. tax consequences before continuing to hold or newly buying Chinese funds and wealth-management products. This is only a general reminder; please have a tax professional analyze specific products.

Real estate in China: not reported itself, but income is taxable

Holding the property

Foreign real estate held directly in your own name is not a financial account for FBAR purposes and is not a “specified foreign financial asset” for Form 8938; the IRS comparison table states “not reported” for both. However, if the property is held through a foreign company, partnership or trust, your interest in that entity may need to be reported (on Form 8938, 5471, 8865 or 3520, among others). In addition, Chinese bank accounts that receive rent or hold sale proceeds still count toward the FBAR.

Rental income

U.S. tax residents must report their worldwide income. Rental income from renting out a home in China is generally reported on Schedule E of Form 1040, and related expenses can be deducted. Depreciation of foreign residential rental property has its own rules (for example, foreign residential rental property placed in service after 2017 generally uses 30-year straight-line depreciation), and taxes paid in China may be eligible for the foreign tax credit under the applicable rules.

Selling the property

Gains from selling real estate in China must also be reported for U.S. tax purposes. The capital gain exclusion for the sale of a principal residence (section 121 of the Internal Revenue Code) is not limited to U.S. property; an overseas principal residence that meets the ownership and use requirements may also qualify. In calculating the gain, both the purchase price and the sale price must be converted to U.S. dollars at the exchange rate for each date, and exchange rate changes can make the dollar gain differ significantly from the gain measured in RMB. Taxes already paid in China may be creditable. Before wiring sale proceeds to the United States, gather the purchase and sale documents and tax payment certificates.

Moving money from China to the U.S.: not income, but you must be able to explain the source

• The transfer itself is not income: Wiring your own savings in China, or the proceeds of a property sale, to the United States moves property you already own; it is not by itself new taxable income. What must actually be reported is the underlying income, such as interest, rent, investment gains and sale gains.
• Money others give you: Money given to you by parents or other foreign relatives is a gift, and once it reaches the threshold it must be reported on Form 3520 (see above).
• Be able to document the source: When large sums come into the country, the bank may ask you to explain where they came from; for EB-5 investments and later immigration reviews, the source of funds needs an even more complete paper trail (see EB-5 source of funds). Keep wire records, income and tax payment certificates, real estate purchase and sale contracts, gift letters and similar documents.
• Do not structure transactions to evade reporting: Deliberately breaking cash deposits or withdrawals into smaller amounts to avoid the bank’s large-cash reporting can itself be illegal. Legitimate funds do not need this.
• A new rule in the other direction: As of October 2026, the federal tax law signed in July 2025 (commonly called the One Big Beautiful Bill Act) added a remittance excise tax (section 4475 of the Internal Revenue Code). Starting January 1, 2026, it imposes a 1% tax on remittances sent from the United States abroad that are funded with physical instruments such as cash, money orders or cashier’s checks; remittances funded from an account at a U.S. financial institution or with a U.S.-issued debit or credit card are generally outside its scope. This tax applies to money sent out of the United States and has nothing to do with money coming into the U.S. from China. The IRS released implementing rules as proposed regulations in April 2026; rely on what the IRS ultimately publishes.

China also has rules on overseas income, foreign exchange and reporting, for which you should consult a Chinese tax professional; our firm does not give opinions on Chinese tax law.

Statute of limitations: if you do not file information returns, the year may never close

Under section 6501(c)(8) of the Internal Revenue Code, if certain required foreign information returns (for example, Forms 8938, 5471, 8865 and 8621, and Forms 3520 and 3520-A relating to foreign trusts) are not filed, the statute of limitations for the related tax year generally does not expire until three years after that information is provided to the IRS. Without reasonable cause, this can affect the entire return, not just the items related to those forms. In other words, a failure to report does not automatically go away “after three years.”

If you missed filings: lawful ways to catch up

If you discover you failed to report in earlier years, the most important things are not to keep failing to report and not to simply “quietly file” on your own, but first to have a tax professional assess the situation. As of October 2026, the common lawful options are:

Which path to take depends on facts such as whether the failure was “willful,” whether the IRS has already contacted you, which forms were missed and whether tax is owed, and these judgments themselves require professional advice. In particular, if a “non-willful” certification turns out to be inconsistent with the facts, the consequences can be more serious than not filing at all. If the failure to report may have been willful, consult an attorney first; communications between attorney and client are generally protected by attorney-client privilege.

Where it overlaps with immigration

• Naturalization (N-400): Naturalization requires good moral character, and the N-400 asks about unpaid taxes and tax filing. USCIS guidance states that failing to pay taxes as required may lead to a finding of lack of good moral character, and applicants with overdue taxes must provide IRS transcripts and proof of an installment agreement or similar documentation. People who have lived in China for long periods, have not filed for years, or failed to report overseas income should get their taxes in order before applying for naturalization. See the N-400 form guide.
• Filing as a nonresident: Some green card holders file as nonresidents, or do not file at all, to avoid reporting worldwide income and overseas assets. This may be treated as evidence of abandoning permanent resident status, may affect naturalization, and does not necessarily relieve them of foreign asset reporting. See Tax residency.
• EB-5 investment: The source of investment funds must be traceable to lawful income and consistent with the tax returns and tax payment certificates for the relevant years. Funds gifted by parents may also involve Form 3520.
• I-864 Affidavit of Support and tax records: The sponsor’s tax returns are important evidence in immigration applications, and whether worldwide income was truthfully reported affects consistency across filings. See The role of tax records in immigration applications.
• Giving up a green card: When a long-term resident gives up a green card, they must certify tax compliance for the previous five years, and failing to report foreign assets can make you a “covered expatriate.” See Tax consequences of giving up a green card.

Self-check list

• List every foreign bank card, certificate of deposit, securities, fund and insurance account in your (and your spouse’s) name or over which you have signature authority, and find each account’s highest balance during the year
• Confirm the year in which you became a U.S. tax resident, and whether you met the FBAR and Form 8938 thresholds in each year
• Do you hold pooled investment products such as Chinese funds, ETFs, bank wealth-management products or trust plans (which may involve PFICs)?
• Do you hold equity in a foreign company or partnership, or serve as a director or officer of a foreign company?
• Did you receive large sums or an inheritance this year from parents or relatives abroad, or from a foreign company?
• Are you a grantor or beneficiary of a foreign trust?
• Is your foreign real estate rented out or sold? Have rent and sale gains been reported for U.S. tax purposes? Are your purchase and sale documents and tax payment certificates complete?
• Are your answers in Part III of Schedule B of Form 1040 consistent with your actual FBAR filings?
• Are you planning soon to naturalize, sponsor a relative, make an EB-5 investment or give up your green card (which requires getting your tax records in order first)?

Common misconceptions

• “The money in the account was already taxed in China, so I don’t need to file an FBAR.” The FBAR reports accounts; it does not matter whether the money was taxed or whether there was any income.
• “Each account is under $10,000.” What counts is all foreign accounts combined, adding up each account’s highest balance during the year.
• “If I file the FBAR, I don’t need to file Form 8938.” The two requirements are independent and go to different agencies; many people must file both.
• “My home in China must be reported on the FBAR.” Directly held real estate is not itself reported on the FBAR, but rent and sale gains are taxable, and accounts holding the property funds count toward the FBAR.
• “Buying funds in China is the same as buying funds in the U.S.” Chinese funds may be treated as PFICs, making the tax burden and reporting much more complicated.
• “Money from my parents is taxable.” Gifts from foreign individuals generally are not themselves subject to U.S. income tax, but must be reported on Form 3520 above the threshold.
• “I didn’t file before, so I’ll just start filing from now on.” Failures to report in prior years do not go away automatically, and the statute of limitations may never start running; first assess the appropriate way to catch up.

How we can help

• Based on your immigration status and timeline, determine when you became a U.S. tax resident and which foreign asset filings may apply;
• Before immigration filings such as naturalization, an I-864 Affidavit of Support, EB-5 or giving up a green card, check whether your tax records and immigration materials are consistent;
• If missed filings are discovered, our attorneys and tax team assess the facts and work with your accountant to choose an appropriate way to catch up;
• Provide advice from a U.S. law perspective on arrangements involving foreign trusts, foreign company equity and large gifts from parents, and coordinate with your accountant and a lawyer licensed in China.

Frequently asked questions

Official sources

• IRS: Report of Foreign Bank and Financial Accounts (FBAR)
• FinCEN: BSA E-Filing System
• FinCEN: FBAR line item filing instructions (PDF)
• 31 CFR 1010.350 (Cornell LII)
• IRS: Comparison of Form 8938 and FBAR requirements
• IRS: Large gifts or bequests from foreign persons (Form 3520)
• IRS: Foreign trust reporting requirements
• IRS: Instructions for Form 8865
• IRS: Instructions for Form 8621 (PFIC)
• IRS: Streamlined Filing Compliance Procedures

Related reading

• Immigration status and U.S. tax residency
• Tax consequences of giving up a green card or citizenship
• The role of tax records in immigration applications
• EB-5 source of funds
• Estate planning for cross-border families

This page is general information, not legal or tax advice. Tax rules and IRS-published thresholds may change each year, and individual tax outcomes depend on the specific facts. Consult a tax professional before filing and rely on the official IRS and FinCEN websites. We do not advise on the tax law of China or other countries.