Form 8938

About Filing Form 8938

If you are a “specified individual” (generally a U.S. citizen or resident), Form 8938, Statement of Specified Foreign Financial Assets reports your specified foreign financial assets if the total value of all the specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold.

This holds true even if none of the assets affects the individual’s tax liability for the year. In addition, filing the FBAR does not eliminate the need to report some of these same financial assets on the Form 8938.

While filing Form 8938 began under FATCA, there is heightened concern that under FATCA, foreign financial institutions provide to the IRS third-party information reporting about financial accounts, including the identity and certain financial information associated with the account, which they maintain offshore on behalf of U.S. individual account holders. This heightened concern highlights the need for taxpayers to ensure foreign account tax compliance with Form 8938 reporting requirements.

Reporting Threshold For Form 8938

The reporting threshold for the Form 8938 varies depending on whether you live in the United States or outside of the United States and your filing status.

Below are the reporting thresholds that apply.

Taxpayers Living In The United States

Unmarried Taxpayers

If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

Married taxpayers filing a joint income tax return

If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

Married taxpayers filing separate income tax returns

If you are married and file a separate income tax return from your spouse, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

Taxpayers Living Outside Of The United States

If your tax home is in a foreign country and you meet one of the presence abroad tests, then you qualify to file the Form 8938 based on the reporting thresholds for a taxpayer living outside of the U.S.

You satisfy the presence abroad test if you are one of the following:

  • A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
  • A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the reporting tax year.

Unmarried Taxpayers

If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year.

Married taxpayers filing a joint income tax return

If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year.

Married taxpayers filing separate income tax returns

If you are married and file a separate income tax return from your spouse, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year.

Specified Foreign Financial Assets For Form 8938

The proper identification and reporting of specified foreign financial assets is a common area of confusion and reporting errors.

It is important to understand that while there is overlap on the Form 8938 with reporting on the FBAR (FinCEN Form 114), there are additional assets that are taken into consideration to determine whether the reporting threshold is met and in turn are part of the reporting disclosure.

Frequently, there are assets that are not taken into consideraion and subject to disclosure. Specified foreign financial assets generally include the following assets. There are exceptions to these rules that should be reviewed with a tax professional:

  • Financial accounts maintained by a foreign financial institution
  • The following foreign financial assets if they are held for investment and not held in an financial institution account:
    • Stock or securities issued by someone that is not a U.S. person,
    • Any interest in a foreign entity. Such as stock issued by a foreign corporation or capital or profits interest in a foreign partnership; excludes U.S. domestic entities, and
    • Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person. Such as a note, bond, debenture, or other form of indebtedness issued by a foreign person, interest in a foreign trust or foreign estate, and more.

Potential Traps

There are many areas that could apply to taxpayers that reside overseas or own assets overseas that could be a trap for those that are not 100% aware of disclosure reporting requirements.

For example, if you have foreign real estate that is held through a foreign entity, such as a corporation, partnership, trust or estate, then the interest in the entity is a specified foreign financial asset that is reported on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.

The value of the real estate held by the entity is taken into account in determining the value of the interest in the entity to be reported on Form 8938. But, the real estate itself is not subject to disclosure separately on the Form 8938.


There are many other examples like the above that could apply to you. We advise seeking support from an expat tax professional, such as Tax Samaritan, to ensure that you have full protection for all of your interests.

Form 8938 Penalties

You may be subject to penalties if you fail to timely file a correct Form 8938. Or, if you have an understatement of tax relating to an undisclosed specified foreign financial asset.

Below is a summary of some of the potential penalties that could apply.

Failure-To-File Penalty

If you have a Form 8938 filing requirement but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000.

Continuing failure to file. If you do not file a correct and complete Form 8938 within 90 days after the IRS mails you a notice of the failure to file, you may be subject to an additional penalty of $10,000 for each 30-day

Accuracy Related Penalty

If you underpay your tax as a result of a transaction involving an undisclosed specified foreign financial asset, you may have to pay a penalty equal to 40 percent of that underpayment.

Fraud Penalty

If you underpay your tax due to fraud, you must pay a penalty of 75 percent of the underpayment due to fraud.

Criminal Penalties

In addition to the penalties already discussed, if you fail to file Form 8938, fail to report an asset, or have an underpayment of tax, you may be subject to criminal penalties.

Form 8938 Statute of Limitations

If you fail to file Form 8938 or fail to report a specified foreign financial asset that you is subject to reporting, the statute of limitations for the tax year may remain open for all or a part of your income tax return until 3 years after the date on which you file Form 8938.

Extended statute of limitations for failure to include income. If you do not include in your gross income an amount relating to one or more specified foreign financial assets, and the amount you omit is more than $5,000, any tax you owe for the tax year is subject to assessment at any time within 6 years after you filed your return.

To learn more, please read our article on IRS Form 8938 to learn about Form 8938 instructions and advice.