Form 8938 FATCA Reporting

Form 8938, Statement of Specified Foreign Financial Assets, is an IRS international information return used by certain U.S. taxpayers to report foreign financial accounts and other specified foreign financial assets when applicable reporting thresholds are exceeded.

Form 8938 is part of the Foreign Account Tax Compliance Act, commonly known as FATCA. It is separate from the FBAR. Depending on the taxpayer’s assets and account values, the same foreign account may need to be reported on Form 8938, the FBAR, both forms, or neither form.

Colorado Legal assists taxpayers with Form 8938, FBARs, foreign account reporting, late international filings, Streamlined submissions, and international tax penalty issues. Philip M. Falco is both a Colorado attorney and Certified Public Accountant.

What Is Form 8938?

Form 8938 is the IRS Statement of Specified Foreign Financial Assets.

It generally reports specified foreign financial assets held by specified individuals and certain specified domestic entities when the aggregate value of those assets exceeds the applicable reporting threshold.

Unlike FinCEN Form 114, commonly called the FBAR, Form 8938 is normally filed with the taxpayer’s federal income tax return.

What Does FATCA Mean?

FATCA is the Foreign Account Tax Compliance Act.

FATCA includes reporting obligations affecting both foreign financial institutions and certain U.S. taxpayers holding foreign financial assets.

For individual taxpayers, Form 8938 is one of the most visible FATCA reporting requirements.

Who May Need to File Form 8938?

Form 8938 can apply to specified individuals, including qualifying:

• U.S. citizens;
• U.S. resident aliens;
• certain nonresident aliens who elect to be treated as U.S. residents for tax purposes; and
• certain bona fide residents of U.S. territories when a federal income tax return filing requirement applies.

Certain domestic corporations, partnerships, and trusts can also be treated as specified domestic entities subject to Form 8938 reporting.

Form 8938 Filing Thresholds for Taxpayers Living in the United States

For most specified individuals who are not treated as living abroad for Form 8938 purposes, the reporting thresholds are:

Filing Status	Value on Last Day of Tax Year	Value at Any Time During Year
Single	More than $50,000	More than $75,000
Married filing separately	More than $50,000	More than $75,000
Married filing jointly	More than $100,000	More than $150,000

The thresholds apply to the aggregate value of specified foreign financial assets in which the taxpayer has the relevant interest.

Higher Form 8938 Thresholds for Taxpayers Living Abroad

Specified individuals who satisfy the Form 8938 rules for taxpayers living abroad receive substantially higher reporting thresholds.

Filing Status	Value on Last Day of Tax Year	Value at Any Time During Year
Single / not filing jointly	More than $200,000	More than $300,000
Married filing separately	More than $200,000	More than $300,000
Married filing jointly	More than $400,000	More than $600,000

Whether a taxpayer qualifies as living abroad for this purpose depends upon the applicable tax-home and foreign-residence or physical-presence requirements. A foreign mailing address by itself does not necessarily establish eligibility for the higher thresholds.

Specified Domestic Entity Threshold

A specified domestic entity generally satisfies the Form 8938 reporting threshold when its specified foreign financial assets exceed:

• $50,000 on the last day of the tax year; or
• $75,000 at any time during the tax year.

Whether a corporation, partnership, or trust qualifies as a specified domestic entity requires analysis of the entity and the regulatory requirements.

What Is a Specified Foreign Financial Asset?

Specified foreign financial assets can include more than foreign bank accounts.

Depending on the taxpayer’s circumstances, reportable assets can include:

• foreign bank accounts;
• foreign brokerage and custodial accounts;
• certain foreign retirement or pension accounts;
• foreign stocks or securities not held through a U.S. financial account;
• interests in foreign corporations;
• interests in foreign partnerships;
• interests in certain foreign trusts or estates;
• foreign mutual funds and other foreign investment funds;
• certain financial instruments or contracts involving non-U.S. persons; and
• other foreign financial assets falling within the FATCA reporting rules.

Do Foreign Stocks Held at a U.S. Brokerage Need to Be Reported?

A financial account maintained by a U.S. financial institution generally is not itself a specified foreign financial asset merely because the account contains foreign stocks or securities.

For example, foreign-company shares held through a U.S. brokerage account generally present a different Form 8938 reporting question than shares held directly or through a foreign financial institution.

This distinction is particularly important because taxpayers often assume that the nationality of the investment alone determines whether Form 8938 applies.

Foreign Accounts at Foreign Financial Institutions

A financial account maintained by a foreign financial institution generally is a specified foreign financial asset when the taxpayer otherwise meets the Form 8938 reporting requirements.

Examples can include:

• foreign checking accounts;
• foreign savings accounts;
• foreign brokerage accounts;
• foreign custodial accounts; and
• certain foreign retirement or investment accounts.

Form 8938 vs. FBAR

Form 8938 and FBAR reporting overlap, but they are legally distinct requirements.

Issue	Form 8938	FBAR / FinCEN Form 114
Filed with	IRS	FinCEN
How filed	Attached to federal income tax return	Filed separately through the BSA electronic filing system
Basic subject	Specified foreign financial assets	Foreign financial accounts
Threshold	Depends on filing status, residence, and taxpayer type	Generally aggregate foreign financial accounts exceeding $10,000 at any time during the calendar year
Foreign assets outside accounts	Can be reportable	Generally focused on foreign financial accounts
Signature authority	Rules differ from FBAR	Can create FBAR reporting even without beneficial ownership
Penalty regime	Internal Revenue Code / Title 26	Bank Secrecy Act / Title 31

For a detailed FBAR discussion, see our FBAR Filing and FinCEN Form 114 page.

Can the Same Account Appear on Both Form 8938 and FBAR?

Yes.

A foreign bank or brokerage account can potentially be reportable on both Form 8938 and the FBAR when the taxpayer independently meets the requirements for each form.

The fact that an account was disclosed on one form does not eliminate an otherwise applicable obligation to disclose it on the other.

Do I File Form 8938 If I Am Not Required to File a Tax Return?

Generally, a taxpayer who is not required to file an annual federal income tax return for the year is not required to file Form 8938 solely because foreign assets exceed the Form 8938 threshold.

This differs from FBAR reporting, which has its own filing rules and is not simply an attachment to Form 1040.

Jointly Owned Foreign Assets

Joint ownership can affect both threshold calculations and the information reported on Form 8938.

Married taxpayers filing jointly generally file one Form 8938 reporting the specified foreign financial assets in which either spouse has the relevant interest.

Different valuation rules can apply when spouses file separate returns or when an asset is jointly owned with another person.

How Are Foreign Assets Valued?

Form 8938 generally requires taxpayers to determine the maximum value of specified foreign financial assets during the tax year.

Foreign-currency values generally must be translated into U.S. dollars using the applicable exchange-rate rules.

Different valuation issues can arise for:

• bank accounts;
• publicly traded securities;
• closely held foreign corporations;
• partnership interests;
• trust interests;
• pension interests; and
• other assets without a readily quoted market value.

What If an Asset Is Already Reported on Form 5471, 3520, 8621 or 8865?

The Form 8938 rules include coordination provisions for certain assets that are reported on other international information returns.

In appropriate circumstances, an asset reported on another specified IRS international information return does not have to be duplicated in full on Form 8938. However, Form 8938 can still require identification of the other international form being filed.

This is why international tax compliance should be reviewed as a complete filing package rather than form by form in isolation.

What Is the Form 8938 Late-Filing Penalty?

A taxpayer required to file a complete and correct Form 8938 can face an initial $10,000 penalty for failure to timely provide the required information.

If the failure continues for more than 90 days after the IRS mails notice of the failure, additional continuation penalties can potentially apply at $10,000 for each 30-day period or part of a period, subject to the applicable statutory maximum.

The additional continuation penalty can reach $50,000 for a failure, in addition to the initial penalty.

Reasonable Cause for a Late Form 8938

The Form 8938 penalty provisions contain a reasonable-cause exception when the taxpayer can establish that the reporting failure was due to reasonable cause and not willful neglect.

Reasonable cause is based on facts and circumstances.

Relevant factors can include:

• the taxpayer’s knowledge and experience;
• professional advice received;
• information supplied to prior tax preparers;
• complexity of the foreign asset;
• efforts made to understand U.S. reporting requirements;
• the circumstances causing the failure;
• when the taxpayer discovered the omission; and
• steps taken after discovery.

Simply stating that the taxpayer did not know Form 8938 existed does not necessarily resolve the reasonable-cause analysis.

Additional Tax Penalties Can Apply

A Form 8938 reporting failure can exist alongside an income-tax understatement involving an undisclosed foreign financial asset.

Depending on the circumstances, an increased accuracy-related penalty can apply to an underpayment attributable to certain undisclosed foreign financial assets.

This penalty is separate from the basic Form 8938 information-return penalty.

Form 8938 and the Statute of Limitations

Failure to furnish required international information can affect the period during which the IRS may assess tax.

Section 6501(c)(8) contains special assessment-period rules involving failures to provide certain international information, including information required under the Form 8938 statute.

The effect of those rules can depend on whether reasonable cause exists and on the particular item or return involved.

This can make an old Form 8938 omission significant even when the taxpayer originally filed the underlying income tax return many years ago.

What If I Forgot to File Form 8938?

The appropriate correction depends on the broader facts.

Questions to consider include:

• Was Form 8938 actually required?
• Which tax years were affected?
• Were FBARs also required?
• Was all foreign income reported?
• Were Forms 5471, 3520, 8621, 8865, or other international forms required?
• Has the IRS already contacted the taxpayer?
• Does reasonable cause exist?
• Was the conduct non-willful?
• Would Streamlined treatment provide a more appropriate compliance procedure?

Delinquent Form 8938 Filing

The IRS currently instructs taxpayers with delinquent international information returns to evaluate the current filing procedures applicable to those returns.

Form 8938 can generally be included with the appropriate amended income tax return when correcting a prior filing.

See our Delinquent International Information Returns guide for the current framework, penalty considerations, and reasonable-cause issues.

Form 8938 and Streamlined Filing Compliance

A missing Form 8938 often appears as one part of a larger offshore compliance problem.

For example, a taxpayer may have:

• unreported foreign income;
• missing FBARs;
• missing Forms 8938;
• foreign mutual funds requiring Form 8621;
• a foreign corporation requiring Form 5471; or
• other foreign-asset reporting failures.

Where the failures resulted from non-willful conduct, the Streamlined Filing Compliance Procedures may need to be evaluated.

Qualifying taxpayers residing in the United States may fall under Streamlined Domestic Offshore Procedures, while qualifying taxpayers abroad may be eligible for Streamlined Foreign Offshore Procedures.

What If the Conduct May Have Been Willful?

Where the taxpayer is concerned that foreign assets or income were intentionally concealed, the appropriate analysis changes substantially.

See our guide to Willful vs. Non-Willful FBAR Violations.

Potentially willful tax noncompliance may also require evaluation of the IRS Criminal Investigation Voluntary Disclosure Practice.

Form 8938 and PFIC Investments

Foreign mutual funds and similar investments can raise both Form 8938 and Passive Foreign Investment Company reporting issues.

See our PFIC Tax and Form 8621 resource for additional information.

Frequently Asked Questions

Is Form 8938 the same as an FBAR?

No. Form 8938 is filed with the IRS as part of the federal income tax filing process. The FBAR is a separate Bank Secrecy Act report filed with FinCEN. A taxpayer may be required to file both.

What is the Form 8938 threshold for a single taxpayer living in the United States?

The threshold is generally more than $50,000 on the last day of the tax year or more than $75,000 at any time during the year.

What is the threshold for a married couple filing jointly?

For taxpayers living in the United States and filing jointly, the general thresholds are more than $100,000 on the last day of the year or more than $150,000 at any time during the year.

Are the thresholds higher if I live overseas?

Yes. Qualifying taxpayers treated as living abroad generally receive substantially higher Form 8938 thresholds.

Do foreign stocks in my U.S. brokerage account require Form 8938?

A financial account maintained by a U.S. financial institution generally is not a specified foreign financial asset merely because it holds foreign securities. Direct ownership or ownership through a foreign financial account can produce different results.

Can I be penalized if I reported the account on my FBAR but forgot Form 8938?

Yes. The two filing requirements are separate. Filing one does not automatically satisfy the other.

Can reasonable cause eliminate a Form 8938 penalty?

The Form 8938 penalty rules contain a reasonable-cause exception where the taxpayer establishes that the failure was due to reasonable cause and not willful neglect. The determination depends on the facts and circumstances.

Should I simply amend my return and attach the missing Form 8938?

Sometimes that is appropriate, but the taxpayer should first determine whether other international forms, FBARs, foreign income, Streamlined procedures, or penalty issues also need to be addressed.

Foreign Partnership Interests

A foreign partnership interest can create reporting beyond Form 8938. Depending on ownership, control, contributions, acquisitions, dispositions, and other facts, the taxpayer may also need Form 8865 foreign partnership reporting.

Form 8938 and Foreign Entity Reporting

Form 8938 is an asset-reporting regime and does not replace entity-specific information returns. Foreign business interests may separately require Form 5471, Form 8865, or Form 8858, depending on the entity and ownership structure.

See U.S. Tax Reporting for Foreign Business Ownership for a broader discussion of these overlapping reporting systems.

Official IRS Resources

• IRS — About Form 8938
• IRS — Do I Need to File Form 8938?
• IRS — Comparison of Form 8938 and FBAR Requirements
• IRS — FATCA Information for Individuals

This page provides general information. Form 8938 filing requirements, valuation rules, penalties, reasonable cause, and offshore compliance procedures depend on the taxpayer’s individual circumstances and current law.