If you were born in Lebanon, Jordan or Egypt and now live in the United States, chances are you still have a bank account, investments or shares in family property back home. That's normal. It's also where a lot of tax confusion begins. According to the 2022 American Community Survey, 2.2 million people in the United States reported Arab ancestry (U.S. Census Bureau, 2022), and many of them maintain financial ties with two countries.
Here's something many people don't know. The U.S. government requires certain individuals to report foreign accounts and assets, and the associated penalties are significant. Under the Foreign Account Tax Compliance Act, for example, the penalty for failing to file Form 8938 starts at $10,000 per form per year for the 2024 and 2025 tax years (IRC §6038D, IRS, 2025). That's a significant amount for a form that many people have never heard of.
This isn't about targeting ordinary families for doing something wrong. For many people with foreign accounts, reporting the account does not by itself create extra tax, though a professional should confirm your own situation. However, the reporting is separate from the tax, and missing the paperwork can cause problems. So let's walk through the FATCA filing requirement in plain language: who it covers, which forms are important, and how to resolve an issue if you already have one.
Key takeaways
- Reporting under FATCA on Form 8938 is separate from the FBAR. Some people must file both forms, while others must file only one.
- For the 2024 and 2025 tax years, U.S.-based single filers generally use Form 8938 to report assets that exceed $50,000 at the end of the year or $75,000 at any time during the year (IRS, 2025).
- For the 2024 and 2025 tax years, IRC §6038D (IRS, 2025) provided a Form 8938 failure-to-file penalty starting at $10,000 per form per year.
- Five Gulf jurisdictions — Qatar, Kuwait, the United Arab Emirates (UAE), Saudi Arabia and Bahrain — have FATCA Model 1 agreements in force with the United States (U.S. Treasury, 2026).
- The IRS offers streamlined programs for people who have missed tax returns by mistake.
Table of Contents
What does FATCA actually ask of you?
The Foreign Account Tax Compliance Act (FATCA) is a 2010 law that achieves two things. First, it requires foreign banks to report U.S. account holders to the IRS. Second, it requires certain U.S. taxpayers to report their own foreign assets directly. It is the second part that concerns you.
This form is called 'Form 8938: Statement of Specified Foreign Financial Assets'. It is attached to the regular income tax return. It covers specified foreign financial assets, which include foreign bank accounts, foreign stocks or bonds held outside a U.S. account, and interests in certain foreign entities.
So, who is required to report under FATCA? Generally, it is U.S. citizens, green card holders and individuals who meet the tax residency test if their foreign assets exceed certain dollar amounts. One detail that may surprise people is that for the 2024 and 2025 tax years, specified individuals who were not required to file an income tax return were not required to file Form 8938, even if their foreign assets exceeded the threshold (IRS, 2025). No return means no Form 8938. However, if you file a return, the question arises again.
The dollar thresholds that trigger Form 8938
The thresholds depend on two factors: your filing status and whether you reside in the United States or elsewhere.
If you live in the US, the Form 8938 filing requirements for the 2024 and 2025 tax years are more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year for single filers or those filing separately. For those filing jointly, these figures are more than $100,000 and $150,000 respectively (IRS, 2025).
If you qualify as living abroad, the thresholds are much higher. For tax years 2024 and 2025, that's more than $200,000 at year-end or $300,000 at any point for single or married filing separately, and more than $400,000 or $600,000 for married filing jointly (IRS, 2025). So an Egyptian-American working in Dubai often has far more room before the form kicks in than the same person living in Michigan.
Notice the two-number pattern. One threshold is measured on the last day of the year. The other is measured at any moment during the year. If your account spiked past the higher number in June and dropped by December, that spike still counts.
FATCA is not the FBAR — and you might owe both.
This is where things get confusing. There are two separate reports, each run by a different agency.
The FBAR (Foreign Bank Account Report), filed with FinCEN, is the first form that many families need to complete because its threshold is low. For the 2024 tax year, an FBAR was required if the total value of your reportable foreign accounts exceeded $10,000 at any point during the year (IRS, 2025). This refers to the total value of all your accounts, not the value of each account separately.
The Form 8938 and FBAR requirements are separate (IRS, 2025). Filing one does not fulfill the requirements of the other. For example, say you have three accounts in Amman that together reach $45,000 during the year. You would likely need to file the FBAR, but as a single US resident, you might not need to file Form 8938. However, if your total also passed the Form 8938 threshold, you could owe both.
One account, two reports. The same foreign bank account may appear on both your FBAR and your Form 8938. This is not a mistake involving double-counting — it's simply two laws asking the same question in different places.
The penalties also live in different places. For FBAR violations assessed from January 17, 2025, the maximum was $16,536 for a non-willful violation and the greater of $165,353 or 50% of the account balance for a willful one (FinCEN, 2025). Those are assessment-date amounts, not figures tied to the tax year you're reporting.
What your bank back home already tells the IRS
Many Arab-American families assume that an account in the Gulf or Levant is invisible to the US. This is usually not the case.
FATCA works through agreements between the U.S. and other governments. Treasury's FATCA table lists several Gulf jurisdictions with Model 1 agreements in force: Qatar from June 23, 2015, Kuwait from January 28, 2016, the United Arab Emirates from February 19, 2016, Saudi Arabia from February 28, 2017, and Bahrain from March 5, 2018 — all treated as having an agreement in effect from June 30, 2014 (U.S. Department of the Treasury, 2026). Under these deals, foreign financial institutions report U.S. account holders to their own governments, which pass the information to the IRS.
Put simply, the bank in Doha or Manama may already be disclosing account holder information to the IRS. If your return does not match what the IRS has received, this discrepancy may attract attention.
One wrinkle helps some banks. IRS Notice 2024-78, published November 12, 2024, extended conditional relief for missing taxpayer identification numbers to eligible Model 1 institutions for calendar years 2025 through 2027, though the relief does not cover accounts opened after the agreement's preexisting-account determination date (IRS, 2024). That's a bank-side rule, not a reason for an individual to skip filing.
Do you need an Arab accountant who speaks Arabic? Heritage Web can put you in touch.
Is the IRS really checking?
Short answer: yes, though its reach has limits. A government watchdog report, TIGTA Report 2026-308-009, looked at FATCA enforcement for tax years 2019 through 2021 and found that an IRS campaign identified 405 apparent Form 8938 nonfilers. Of those, 164 were referred for examination, and only 12 examinations had been completed by the end of the audit (TIGTA, 2026). So enforcement is real but slow-moving.
The volume of reporting is enormous on the FBAR side. FinCEN reported roughly 1.5 million FBARs in fiscal year 2022, 1.6 million in fiscal year 2023, and 1.7 million in fiscal year 2024 (FinCEN, 2024). Those are filing-year counts, not tax-year counts, but the trend is clear — more people are reporting each year, not fewer.
The courts have also been active. In Bittner v. United States, the U.S. Supreme Court ruled in 2023 that a non-willful FBAR violation should be counted per annual report, rather than per unreported account. This lowered penalties for many people with multiple accounts. However, courts have also widened the definition of 'willful'. In United States v. Hughes (U.S. Court of Appeals for the Ninth Circuit, 2024), the Ninth Circuit held that civil FBAR willfulness includes knowing and objectively reckless violations, and the Second Circuit reached a similar conclusion in United States v. Reyes (U.S. Court of Appeals for the Second Circuit, 2026). In other words, pretending not to know can still be treated as willful.
What if you have already missed a filing?
Don't panic and don't ignore it. The IRS runs programs to help people who have fallen behind unintentionally.
The Streamlined Filing Compliance Procedures are designed for unintentional errors — the honest 'I didn't know' cases that affect many immigrant families. Under the Streamlined Domestic Offshore Procedures, including submissions relating to the 2024 and 2025 tax years, a miscellaneous offshore penalty of 5% of the applicable foreign asset penalty base is incurred. However, qualifying submissions under the Streamlined Foreign Offshore Procedures — for individuals who pass the non-residency test — are exempt from this penalty (IRS, 2025).
Why is it so important to word it as 'non-willful'? Because the stakes are higher for willful conduct. Other penalties can apply too. For the 2024 and 2025 tax years, IRC §6662(j) permitted a 40% accuracy-related penalty for an underpayment related to an undisclosed foreign financial asset (IRS, 2025). On Form 8938 itself, for the 2024 and 2025 tax years, after the IRS sent a notice and 90 days passed with no resolution, an additional $10,000 penalty could apply for each subsequent 30-day period or fraction, up to a maximum of $50,000 under IRC §6038D (IRS, 2025).
The rules here shift. The IRS announced in IR-2025-124 on December 22, 2025, that it was proposing changes to its Voluntary Disclosure Practice, with final procedures expected to take effect six months after the final terms are published (IRS, 2025). And in Congress, S. 3931, introduced February 26, 2026, proposed a Treasury study of combining and simplifying FBAR and §6038D reporting — a study, not an immediate change (U.S. Congress, 2026). Nothing is settled, which is one more reason to check your facts with a professional before you act.
When English is not your first language
Tax forms are difficult enough in your native language. In 2021, approximately 1.4 million US residents aged 5 and over spoke Arabic at home, with around 34% having limited English proficiency (Pew Research Center, 2021). This can be a real barrier when a form asks about 'specified foreign financial assets'.
Community resources exist. A Southeast Michigan study found that an Arabic-language outreach campaign directed participants to ACCESS Volunteer Income Tax Assistance clinics (National Library of Medicine, 2026), which serves as a reminder that Arabic-language assistance is available. The IRS itself offers telephone interpretation services, and IRS Tax Tip 2023-43 states that these are available in over 350 languages (IRS, 2023). Communities with large MENA populations, such as Wayne County in Michigan, which had 139,751 MENA respondents in the 2020 Census (U.S. Census Bureau, 2020), often have preparers who speak the language and understand how family finances move across borders.
Where to go from here?
Having foreign accounts doesn't have to be stressful. The usual problem isn't owing tax; it's forgetting about a form that you didn't know existed. Start by gathering your foreign account statements for the year, noting the highest balance each one reached, and adding them up. This figure will give you a good indication of which reports might apply.
Then get a professional to look at your specific situation, because thresholds, residency tests and penalty programs all depend on the details. Get in touch with an Arab accountant who speaks Arabic and understands your culture. Submit your details through Heritage Web's secure referral form.
This article is general information, not tax advice. Tax rules change each year; speak with a CPA or enrolled agent about your situation.
Sources
- Form 8938
- U.S. Census Bureau
- Streamlined Domestic Offshore Procedures — IRS, 2025
- Pew Research Center
- National Library of Medicine
- FinCEN
- Tax Tip 2023-43
- Report 2026-308-009
- S. 3931
- Notice 2024-78
- IR-2025-124
- U.S. Department of the Treasury