Form 8938, “Statement of Specified Foreign Financial Assets,” is a reporting requirement under
the U.S. tax code for certain taxpayers who have an interest in specified foreign financial assets.
Foreign financial assets are generally aggregated to determine if they meet the reporting threshold. Additionally, Form 8938 is not a substitute for the Report of Foreign Bank and Financial Accounts, which must be filed separately and has its own requirements. Aspects to consider regarding filing Form 8938 include exceptions for foreign assets, such as those in a U.S. bank or brokerage accounts.
Who is Required to File Form 8938?
U.S. citizens, resident aliens, and certain non-resident aliens who meet specific criteria are required to file Form 8938. These thresholds depend on your filing status and whether you live in the U.S. or abroad.
For those living in the U.S., filing status depends on whether you are single or married filing separately or married filing jointly. Those who are single or married filing separately are required to file Form 8938 if they make more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. Those who are married filing jointly are required to file Form 8938 if they make more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year. Single or married filing separately and married filing jointly status also matters for those living abroad. Those that are single or married filing separately and make more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year are required to file.
Form 8938. Additionally, those who are married filing jointly are required to file if they make more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year.
What to Report on Form 8938:
The following types of foreign financial assets must be reported on Form 8938: (1) foreign bank accounts, (2) foreign stocks and securities, (3) foreign mutual funds, (4) foreign hedge funds and private equity funds, and (5) foreign hedge funds and private equity funds.
What are the Filing Requirements for Form 8938?
Various parts are required in order to fill out Form 8938. First, personal information including your name, address, and taxpayer identification number is required. Next, you must list your specified foreign financial assets and provide the necessary details including account numbers, the financial institution’s name, and the maximum value of the assets during the year. Third, you are required to provide a description of your assets. Fourth, any income from these assets, including interest, dividends, and other forms of income must be reported. Lastly, provide a summary of your foreign financial assets and the total value.
Form 8939: Filing Guidelines and Penalties
Form 8938 must be filed with the IRS along with your annual federal income tax return (Form 1040) and will act to provide additional information regarding your foreign financial assets. It is due on the same date as your tax return, including extensions. Failure to file Form 8938 or providing incomplete or inaccurate information can result in significant penalties. The initial penalty is $10,000, with additional penalties of $10,000 per month up to a maximum of $50,000 for continued failure to file after IRS notification. There can also be penalties for negligence and criminal penalties in some cases.
Given the complexity of international tax rules, it may be beneficial to consult a tax professional experienced in international tax matters to ensure compliance. It is also recommended to contact an experienced attorney to make sure that you are up to date with any changes in tax laws or reporting requirements, as these can affect your filing obligations.
