When you live outside the U.S., life already feels full enough, with family, work, and keeping up with two sets of rules and responsibilities. But whether you’re a dual citizen with U.S. citizenship and another nationality or an expat simply living abroad as a U.S. person, one thing doesn’t change: the Internal Revenue Service (IRS) still wants to know about your accounts overseas. The surprise usually isn’t the tax itself, but the forms you didn’t even know existed. For dual citizens, a FATCA compliance checklist is an important list to consider. If you’re an expat curious about FATCA reporting, this is for you.
Read along and see how these rules might matter more to you than you think.

Understanding FATCA Reporting Requirements for Expats

The Foreign Account Tax Compliance Act is a law in the United States that allows American taxpayers to report their money and investments held in other countries when the value is above certain limits (discussed in detail in the filing thresholds section below).

This rule applies to every U.S. citizen, no matter where they live. If you are a dual citizen, someone who holds U.S. citizenship along with another nationality, your dual citizenship tax obligations still apply under this law; you count as a U.S. taxpayer, regardless of where you live. The reason is simple. The United States follows a system of citizenship-based taxation, meaning it taxes individuals based on their citizenship, not where they live.

So even if you have lived outside the country for many years or you hold a second passport, the IRS still expects you to follow U.S. reporting requirements. FATCA is one of the key ways the government keeps track of these obligations.

Who Must Comply with FATCA as Dual Citizens?

FATCA sets clear rules for who must report foreign assets, often referred to as dual citizenship FATCA requirements. The IRS calls the people who fall under these rules “specified individuals.” If you are in this group, you must file Form 8938 with your tax return when your assets go above the reporting limits.

This group includes:

• All U.S. citizens, even if they live outside the country.
• Dual citizens must follow U.S. person abroad reporting rules, as U.S. citizenship always brings tax obligations, regardless of any other passport they hold.
• Green card holders and other resident aliens who live in the United States.
• Non-resident aliens who choose to be treated as residents for tax purposes, such as those filing jointly with a U.S. spouse.

For dual citizens, the rule is clear. If you are a U.S. citizen, you remain responsible for reporting your specified foreign financial assets under FATCA, even if you have never lived in the United States.

FATCA vs. FBAR: Understanding the Differences

Many taxpayers confuse FATCA and the Foreign Bank Account Report (FBAR), but they are not the same. Both require reporting of foreign assets, and in many cases, you may need to file both forms. The main difference is that FATCA uses Form 8938, while FBAR uses Form 114.

Here’s a simple way to see the differences:

FATCA Form 8938 Requirements: Complete Filing Guide

Many taxpayers think filing is only about the amount they hold, but the rules shift based on where they live, how they file, and even when their balances peak during the year.

Filing Thresholds Based on Residency Status

The IRS has set clear FATCA filing thresholds for 2025, which determine if you must report your foreign assets on Form 8938. These thresholds are part of the broader foreign financial asset reporting rules that apply to U.S. citizens and dual nationals under FATCA. These limits change based on your filing status and whether you live in the United States or abroad. If the value of your accounts crosses the Form 8938 asset limits, even once during the year, you are required to file.

Here are the current thresholds:

To be treated as living abroad, your main home must be outside the U.S., and you must meet either the bona fide residence test or the physical presence test as defined by the IRS.

What Assets Must Be Reported on Form 8938?

You don’t need to list everything you own, only the specified foreign financial assets that the IRS cares about. These are what IRS rules call reportable FATCA assets. Below is a FATCA compliance checklist for dual citizens of what counts and what doesn’t.

Reportable Assets (you must include these if you meet thresholds) →

• Bank, savings, or deposit accounts held with foreign banks or financial institutions.
• Stocks, bonds, and securities issued by non‑U.S. entities.
• Interests in foreign entities like foreign corporations, partnerships, or limited liability companies (LLCs).
• Foreign mutual funds, exchange‑traded funds, or similar investment funds.
• Foreign pension or retirement plans (if an interest in them exists).
• Life insurance or annuity contracts held abroad with cash value.
• Financial contracts or derivatives (swaps, options) with a non‑U.S. counterparty.

Assets That Are Generally Not Reported on Form 8938 →

• Real estate (your foreign home or land) held directly.
• Personal possessions (art, jewelry, vehicles, etc.).
• Social security or similar foreign social insurance benefits.
• Foreign currency held physically (if not in an account).
• Interests in foreign trusts or estates only if you don’t otherwise have to report them; when distributions occur, those may become reportable.

A few more things to keep in mind: you must report your maximum value of each reportable FATCA asset during the year (not just year‑end), converted into U.S. dollars using IRS or Treasury exchange rates.

Step-by-Step FATCA Compliance Checklist for Dual Citizens

Even when the intention is right, many dual citizens get tripped up by the small details, often because the reporting process feels scattered and unclear. A focused step-by-step approach can make the difference between filing with confidence and dealing with penalties later.

Documentation Requirements for Dual Citizens

Everything you report on Form 8938 must be backed by proper documents. The IRS doesn’t ask for them when you file, but if they come knocking later, you’ll need to show clear proof that your foreign assets were reported correctly. That’s why organizing your dual citizen tax records early can save you from bigger issues down the road.

Here’s what to gather and keep on file:

• Foreign bank account statements with year-round balance activity.
• Investment account records for stocks, mutual funds, and bonds held abroad.
• Foreign pension or retirement plan summaries, if you have an interest in them.
• Ownership proof for foreign companies, partnerships, or trusts.
• Exchange rate records showing how you converted values into U.S. dollars.
• Maximum value logs to document the highest balance each account reached during the year.

These are your core FATCA documentation requirements, and they’re especially important if your reporting depends on fluctuating balances or multiple accounts.

Currency Conversion and Valuation Rules

Everything reported on Form 8938 must be in U.S. dollars. That means you’ll need to convert each foreign balance using a valid rate and report the maximum value during the year, not just the ending balance.

Here’s how the FATCA currency conversion and foreign asset valuation process works:

• Use the U.S. Treasury’s official yearly average or year-end exchange rate, unless a better available rate “more clearly reflects income.”
• If you use a non-Treasury source (like OANDA or XE), make sure it’s reliable, and report the source on your Form 8938.
• For assets like shares in a foreign company or a foreign annuity, use fair market value based on reasonable estimates or foreign asset valuation methods such as third-party appraisals.
• Keep printouts or digital records of every rate used. Even if not submitted with your return, they’re part of your audit defense file.

Common FATCA Compliance Challenges for Dual Citizens

FATCA rules weren’t built with cross-border lives in mind, so dual citizens often run into issues that aren’t clearly explained in the forms or instructions. From joint accounts to foreign pensions, the rules get tricky fast, and small mistakes can lead to serious trouble. These are some of the most common dual citizenship tax challenges taxpayers face today.

Joint Accounts and Non‑U.S. Spouse Considerations

The challenge: Many dual citizens are married to non-U.S. persons or hold joint accounts abroad. FATCA doesn’t offer much clarity on how to report those accounts, and that leads to mistakes. Even if your spouse is not a U.S. person, your share of any joint foreign account may still need to be reported. This confusion is one of the most overlooked FATCA expatriate tax compliance issues.

Here’s what to know:

• If you file jointly with a U.S. spouse, report the full value of the joint account.
• If you file separately and both of you are U.S. taxpayers, split the value 50/50.
• If your spouse is not a U.S. person, report your full share, even if the account is in their name.
• You must disclose that the account is jointly owned, but you don’t always have to name the co-owner.

Failing to report joint accounts properly is one of the most frequent joint account FATCA reporting errors, especially for mixed nationality couples’ taxes.

Foreign Pension and Retirement Account Reporting

The challenge: Foreign retirement plans are often hard to value, and they’re treated very differently from U.S. retirement accounts. Many dual citizens don’t realize their overseas pensions are reportable under FATCA.

Here’s what you need to watch for:

• If you hold a pension or deferred compensation plan from another country, it likely counts as a specified foreign financial asset.
• If you know the fair market value at year-end, report it. If not, use the value of what was distributed. If you received nothing and don’t know the value, report it as zero.
• Some pensions may also require reporting on Forms 3520 or 3520-A if they resemble foreign trusts.

Many taxpayers delay reporting these plans out of confusion, but doing so can bring bigger problems later. These are among the most common foreign pension FATCA reporting errors, especially for those dealing with expat retirement account taxes.

FATCA Penalties and Enforcement for Dual Citizens

For dual citizens, missing a FATCA requirement can feel small in the moment, but it rarely stays that way. The IRS doesn’t need you to owe tax to penalize you. Just forgetting to file Form 8938 can open the door to serious consequences. Here’s what you need to know about Form 8938 non-compliance consequences and how steep FATCA penalties in 2025 can really get. If you don’t file Form 8938 when you’re supposed to:

• The IRS charges a $10,000 penalty right away.
• If you don’t respond to their notice within 90 days, they add $10,000 for every 30 days, up to $50,000 total.
• If they find you underreported income tied to foreign assets, they can charge a 40% penalty on that amount.
• In some cases, the audit window gets extended from 3 years to 6 years, especially if you left out over $5,000 in reportable assets.
• Penalties apply whether or not you owe tax; they’re triggered by failure to file, and while most FATCA issues are civil matters, cases involving willful concealment or suspected fraud may be subject to further IRS investigation.

These kinds of FATCA compliance issues are more common than you’d think, especially for dual citizens who didn’t even realize they were supposed to file. And because the IRS now receives more international banking data than ever, assuming they won’t find out is not a safe bet.

Read in Detail About → What is FATCA Reporting 2025? Who Must File, and Penalties for Non-Compliance?

How Dual Citizens Can Avoid FATCA Penalties?

The best way to deal with a missed form is to act before the IRS contacts you. If the mistake was honest and not intentional, you may be eligible for FATCA penalty relief. This usually falls under what the IRS calls reasonable cause penalty relief, meaning you had a valid reason for not filing and took timely steps to correct it. Here’s what can help:

• Use the streamlined filing compliance procedures made for dual citizens and expats who didn’t know about the rules.
• File the missing Form 8938 as soon as possible, even if no tax is owed.
• Write a short, clear explanation of what went wrong and why.
• Keep documents showing your account values, exchange rates, and ownership.
• Don’t wait for a notice; voluntary action often makes all the difference.

Note: While streamlined procedures are designed for non-willful taxpayers, the IRS also offers voluntary disclosure programs for individuals whose noncompliance may be considered willful, including potential cases of offshore tax evasion, and who wish to correct past mistakes before enforcement action begins.

Get the Right Help on FATCA Compliance for Dual Citizens→

If you’re a dual citizen trying to comply with FATCA, the forms alone aren’t the hardest part. It’s knowing when a missed filing could trigger consequences. FATCA penalties can apply even when no tax is owed, and the IRS doesn’t always offer second chances. That’s why seeking a FATCA attorney consultation with someone who understands both U.S. tax law and foreign asset reporting can make all the difference.

As a dual citizen tax lawyer, Anthony N. Verni brings together legal insight and Certified Public Accountant (CPA)-level tax expertise to help clients respond to IRS notices, fix reporting gaps, avoid unnecessary penalties, and, when needed, provide representation in audits or potential civil tax litigation related to FATCA enforcement. He also works with U.S. taxpayers living abroad, including dual citizens and expats with international reporting obligations.

Need help now? Contact Anthony N. Verni directly to discuss your situation in confidence. 

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