Americans living in Italy must separately report foreign financial accounts if their aggregate value exceeds $10,000 at any point during the year (FBAR / FinCEN 114) and foreign financial assets if they exceed $200,000 on the last day of the year or $300,000 at any point (FATCA Form 8938). Most Americans in Italy will trigger FBAR simply by having an Italian bank account. Missing these filings carries severe civil and criminal penalties. Both filings are required regardless of whether you owe any US tax.
The Core Principle: The USA Taxes Citizens Worldwide
I file FBAR every year for my Italian accounts and I've watched Americans get tripped up by the same thing repeatedly: they think because their Italian balance never reaches $10,000, they're safe. The rule is aggregate — you add up ALL foreign accounts on any single day during the year. Two accounts of €6,000 each? You file. My Italian commercialista and my US CPA communicate directly; if yours don't, that's a problem waiting to happen.
The United States is one of only two countries in the world (the other is Eritrea) that taxes its citizens based on citizenship rather than residency. Moving to Italy does not make you exempt from US taxes. You must file a US return every year, reporting your worldwide income, regardless of whether you live in Rome or Reykjavik. The US-Italy tax treaty and the Foreign Tax Credit reduce double taxation, but the filing obligation remains.
FBAR and FATCA are reporting requirements — not taxes — but they are separate from and in addition to your tax return.
FBAR: Report of Foreign Bank and Financial Accounts
What It Is
FBAR stands for Foreign Bank Account Report. Officially it is FinCEN Form 114, filed with the Financial Crimes Enforcement Network (a bureau of the US Treasury, not the IRS).
Who Must File
You must file an FBAR if:
- You are a US person (citizen, green card holder, or resident for tax purposes)
- AND you have a financial interest in, or signature authority over, one or more foreign financial accounts
- AND the aggregate maximum value of all those accounts exceeded $10,000 at any point during the calendar year
"Financial accounts" includes: checking accounts, savings accounts, investment accounts, mutual funds, securities accounts, insurance policies with cash value, and pension plans.
The $10,000 Threshold
The $10,000 threshold is aggregate — meaning you add up all your foreign accounts. An Italian checking account with €6,000 and an Italian savings account with €5,000 = €11,000 aggregate → FBAR required, even if neither account individually exceeded $10,000. Convert to US dollars using the Treasury's end-of-year exchange rate (published at treasury.gov).
How to File
FBAR is filed electronically through the BSA E-Filing System at bsaefiling.fincen.treas.gov. It cannot be filed on paper. Filing the FBAR is free.
Deadline: April 15, with an automatic extension to October 15. No action is needed to get the extension.
What Information You Report
For each account: name of the foreign financial institution, account number, maximum value during the year, type of account, and your ownership interest. You do not send account statements — just the report.
FATCA: Foreign Account Tax Compliance Act — Form 8938
What It Is
FATCA created Form 8938, filed with your US tax return (Form 1040). It is administered by the IRS, not FinCEN. It has different thresholds and covers a broader category of assets than FBAR.
Who Must File (Living Abroad)
- Unmarried: total specified foreign financial assets exceed $200,000 on the last day of the tax year OR $300,000 at any point during the year
- Married filing jointly: thresholds double ($400,000/$600,000)
Most Americans in Italy with only a basic Italian bank account will hit FBAR but not FATCA. However, if you have Italian investment accounts, Italian pension contributions, or Italian real estate held through an entity, you may hit FATCA thresholds.
Specified Foreign Financial Assets
FATCA covers a wider net than FBAR:
- Foreign bank and investment accounts
- Stock or securities issued by a foreign corporation
- Interest in a foreign entity (e.g., Italian SRL ownership)
- Foreign pension plans (Italian INPS voluntary contributions may qualify)
- Foreign life insurance with cash value
- Foreign annuities
FBAR vs. FATCA: Key Differences
| Feature | FBAR (FinCEN 114) | FATCA (Form 8938) |
|---|---|---|
| Filed with | FinCEN (separate from tax return) | IRS (attached to Form 1040) |
| Threshold (single, abroad) | $10,000 aggregate at any point | $200,000 at year-end / $300,000 at any point |
| What it covers | Bank and financial accounts | Broader financial assets |
| Deadline | April 15 (auto-extends to Oct 15) | April 15 (Oct 15 with extension) |
| Cost | Free | Part of tax return |
| Penalty (non-willful) | Up to $10,000/year | Up to $10,000 (non-filing) |
| Penalty (willful) | Up to $100,000/year or 50% of balance | Up to $50,000 (continued failure) |
FBAR and FATCA overlap but are not identical. You may need to file both, or one but not the other. Do not assume filing one satisfies the other.
Penalties for Non-Compliance
FBAR penalties:
- Non-willful failure: up to $10,000 per violation per year
- Willful failure: greater of $100,000 or 50% of account balance, per year
- Criminal penalties possible for willful violations: up to 5 years imprisonment
FATCA penalties:
- Failure to file Form 8938: $10,000
- Continued failure after IRS notice: up to $50,000
- 40% penalty on understatement of tax related to undisclosed assets
These penalties can accumulate over multiple years. The IRS has dramatically increased enforcement of foreign account reporting since 2010.
The Streamlined Filing Compliance Procedure
If you have been living abroad and did not know about FBAR/FATCA, you are not alone — and there is a remedy. The IRS Streamlined Foreign Offshore Procedures allow Americans residing abroad to come into compliance for prior years with:
- Zero penalties (for the streamlined offshore version)
- Filing 3 years of amended returns and 6 years of FBARs
- A certification that non-compliance was non-willful
This procedure is available as long as the IRS has not already contacted you about the delinquency. If you have years of unfiled FBARs, do not wait — the streamlined procedure is far better than being found non-compliant.
Practical Example: A Typical American in Italy
Scenario: Italian checking account max balance €12,000; Italian savings account max balance €8,000; US IRA account $180,000; Italian pension (INPS voluntary) €3,000.
FBAR analysis: Italian accounts: €12,000 + €8,000 = €20,000 → FBAR required. US IRA is not a foreign account — not reportable on FBAR.
FATCA analysis: Total specified foreign financial assets ~€20,000–€23,000 → well below $200,000 threshold → Form 8938 likely NOT required in this scenario.
Italian Banks and FATCA Reporting
Under the US-Italy FATCA intergovernmental agreement (IGA), Italian financial institutions are required to report US account holders' information to the Agenzia delle Entrate, which then shares it with the IRS. This means:
- Your Italian bank knows you are American (they will ask for your US taxpayer identification number when you open an account)
- The IRS may already have information about your Italian accounts
- Attempting to hide Italian accounts from the IRS is extremely high-risk
Key Dates Calendar
| Deadline | Requirement |
|---|---|
| April 15 | File US Form 1040 (or request extension) |
| April 15 | File FBAR FinCEN 114 (automatic extension available) |
| April 15 | File Form 8938 with 1040 (if required) |
| June 15 | Automatic extension for Americans abroad (Form 1040) |
| October 15 | Extended deadline for 1040 (with Form 4868 filed) |
| October 15 | Extended FBAR deadline (automatic) |
Official Sources
- FBAR guidance: fincen.gov
- BSA E-Filing System: bsaefiling.fincen.treas.gov
- IRS FATCA: irs.gov
- Streamlined Procedures: irs.gov/streamlined
FAQ
I have a joint Italian account with my Italian spouse — do I report it?
Yes. If you have signature authority over the account and it meets the threshold, you report it. Your Italian spouse's ownership share does not exempt you.
I only have a small Italian account for daily expenses — do I still need FBAR?
If the aggregate value ever exceeded $10,000 during the year, yes. Even a temporarily high balance (e.g., a large transfer that passed through) counts.
Does FBAR reporting mean I pay US tax on my Italian bank interest?
FBAR is a reporting requirement, not a tax. However, the interest itself must be reported on your US return as income.
My Italian employer pays me — do I report that payroll account?
Payroll accounts you cannot directly access are generally not FBAR-reportable. But the income is reportable on your US return.
Last verified: May 2025 — Sources: IRS, FinCEN, US Department of Treasury