Form 8938 is the reporting form the IRS uses to enforce the Foreign Account Tax Compliance Act, and it trips up thousands of taxpayers every year because it looks like a duplicate of the FBAR but is not. The two forms have different thresholds, different definitions of a reportable asset, and go to two different agencies. This guide covers who must file Form 8938, the exact thresholds, what counts as a specified foreign financial asset, how the form is structured, and what happens if you miss it.
What Is Form 8938 and Who Has to File It?
Form 8938 is filed by specified individuals and specified domestic entities whose specified foreign financial assets exceed the reporting threshold that applies to them. A specified individual is a U.S. citizen, a resident alien for any part of the year, a nonresident alien who elects to be treated as a resident to file a joint return, or a nonresident alien who is a bona fide resident of Puerto Rico or American Samoa.
Two features separate Form 8938 from the FBAR at the outset:
- You only file Form 8938 if you are already required to file an income tax return. If you have no filing requirement for the year, no Form 8938 is due, even if your foreign assets are large.
- Signature authority is not enough. On the FBAR, being able to sign on an account you do not own makes it reportable. On Form 8938, you generally report only assets you actually own.
Since the 2016 tax year, certain closely held domestic corporations, partnerships, and trusts (specified domestic entities) formed or used to hold foreign financial assets must also file. Most filers, however, are individuals: U.S. citizens abroad, green card holders, and immigrants who kept accounts and investments back home.
What Are the Form 8938 Filing Thresholds?
The threshold depends on your filing status and whether your tax home is inside or outside the United States. You must file if your total specified foreign financial assets exceed the amount on the last day of the year, or exceed the higher "any time during the year" amount at any single point.
| Filing status | Living in the U.S. (year-end / any time) | Living abroad (year-end / any time) |
|---|---|---|
| Single or married filing separately | $50,000 / $75,000 | $200,000 / $300,000 |
| Married filing jointly | $100,000 / $150,000 | $400,000 / $600,000 |
The "living abroad" thresholds are not automatic. To use them, your tax home must be in a foreign country and you must meet either the bona fide residence test or the physical presence test (330 full days abroad in a 12-month period), the same tests used for the Foreign Earned Income Exclusion. A U.S. resident who simply travels overseas does not qualify for the higher figures.
Two points that catch filers off guard:
- The test is aggregate, not per asset. Six accounts of $10,000 each put a single U.S.-resident filer over the $50,000 year-end line.
- The "any time" figure is a separate trigger. If your assets peaked at $80,000 in June but ended the year at $40,000, a single U.S.-resident filer still crosses the $75,000 any-time threshold and must file.
Which Foreign Assets Must Be Reported on Form 8938?
Specified foreign financial assets fall into two groups: financial accounts held at a foreign institution, and other foreign assets held for investment that are not inside an account. The second group is what makes Form 8938 broader than most people expect.
Reportable vs Not Reportable on Form 8938
ReferenceReportable specified foreign financial assets:
- Foreign bank, deposit, and brokerage accounts
- Foreign stock or securities held directly, outside of an account
- Interests in foreign partnerships, corporations, trusts, and estates
- Foreign mutual funds and PFIC interests
- Foreign-issued life insurance or annuities with a cash value
- Foreign pension and deferred-compensation interests
Not reportable on Form 8938:
- Directly held foreign real estate (a rental flat or vacation home in your own name)
- Directly held tangible assets such as gold, art, jewelry, and cars
- Foreign currency held directly (cash)
- Accounts at a U.S. branch of a foreign bank, or a foreign branch of a U.S. bank
Foreign real estate is the single most common point of confusion. Property you own directly is not reported. But the moment you hold it through a foreign holding company or trust, the interest in that entity becomes reportable, which is why cross-border real estate structures so often pull people into Form 8938 (and sometimes Form 5471). Our guide on selling foreign property covers the related income-tax side.
How Is Form 8938 Different From the FBAR?
Form 8938 and the FBAR are two separate obligations that frequently apply to the same account, and satisfying one never satisfies the other. The FBAR has a lower threshold and broader account coverage; Form 8938 has higher thresholds but reaches investment assets the FBAR ignores.
The practical takeaway: the FBAR catches more filers because $10,000 is a low bar, while Form 8938 attaches its penalties directly to your income tax return. A single foreign brokerage account holding a mutual fund can generate three filings at once, the FBAR for the account, Form 8938 for the assets, and a Form 8621 for each fund treated as a PFIC.
What Are the Parts of Form 8938?
Form 8938 has six parts. The first two summarize your assets by count and value, the third links the assets to the income on your return, the fourth avoids duplicate reporting, and the last two collect the detail for each individual account and asset.
| Part | What it covers |
|---|---|
| Part I | Foreign deposit and custodial accounts summary: number of accounts and maximum value |
| Part II | Other foreign assets summary: number of assets and maximum value |
| Part III | Tax items (interest, dividends, gains, royalties, deductions, credits) tied to the assets, and where each appears on your return |
| Part IV | Assets already reported on Forms 3520, 3520-A, 5471, 8621, or 8865, listed by count so you do not report the detail twice |
| Part V | Detailed information for each foreign deposit or custodial account |
| Part VI | Detailed information for each "other" foreign asset |
Part IV is the piece filers overlook. If you already report a foreign corporation on Form 5471 or a foreign fund on Form 8621, you do not re-enter every detail on Form 8938. Instead you tell the IRS how many of each of those forms you filed, so the same asset is not counted twice. You still must file Form 8938 itself if you cross the threshold, even if every asset is reported elsewhere.
How Do You Value Assets and Convert Currency on Form 8938?
You report the maximum value of each asset during the year in U.S. dollars, converted using the U.S. Treasury year-end exchange rate. For most accounts you can rely on the highest periodic statement value (for example, the highest quarterly balance) rather than tracking a daily peak.
A few valuation rules keep the process manageable:
- Use the Treasury Bureau of the Fiscal Service exchange rate for the last day of the year, unless another published rate applies.
- For a financial account, the periodic statement value is presumed reliable unless you have reason to know it is wrong.
- An asset with no positive value during the year is reported at zero, but it still adds to the number of assets you report.
- If an asset is denominated in foreign currency, convert only at the end, after finding the maximum value in that currency.
Because the same balances feed the FBAR and Form 8938, keeping one clean schedule of year-end and peak values in both the local currency and U.S. dollars saves duplicated work across the two filings.
What Are the Penalties for Not Filing Form 8938?
The base penalty for failing to file a required Form 8938 is $10,000, and it escalates quickly if you ignore an IRS notice. Beyond the flat penalty, the bigger exposure is often the accuracy-related penalty and the extended statute of limitations that a missing form triggers.
Form 8938 Penalty Structure
CautionFailure to file: $10,000 for each year a required Form 8938 is not filed.
Continuation penalty: An additional $10,000 for each 30-day period (or part of one) that you fail to file after the IRS mails notice, beginning 90 days after the notice, up to a maximum of $50,000. Combined with the base penalty, the ceiling is $60,000 per year.
Accuracy-related penalty: A 40 percent penalty under Section 6662(j) applies to any understatement of tax that is attributable to an undisclosed specified foreign financial asset. If fraud is involved, the penalty rises to 75 percent.
Extended statute of limitations: Under Section 6501(c)(8), the IRS clock on your entire return can stay open until three years after you finally file the missing Form 8938. If you omit more than $5,000 of income attributable to a foreign financial asset, a six-year statute applies under Section 6501(e).
There is a reasonable-cause exception, but it is narrow. Courts and the IRS have consistently held that not knowing about the requirement, or relying on a foreign country's own privacy or disclosure laws, does not establish reasonable cause. Documented, good-faith reliance on a qualified adviser is the more credible path.
What Are the Most Common Form 8938 Mistakes?
The recurring errors are not exotic. They come from treating Form 8938 as interchangeable with the FBAR, or assuming that reporting an asset on one form covers it everywhere.
Filing the FBAR but skipping Form 8938
The FBAR and Form 8938 have different thresholds, definitions, and destinations. Filing the FBAR does not satisfy Form 8938, and a taxpayer over both thresholds who files only the FBAR is still exposed to the $10,000 Form 8938 penalty. Check both every year.
Reporting a foreign fund on 8938 but omitting Form 8621
Most foreign funds are PFICs. Listing the fund on Form 8938 does not satisfy the separate Form 8621 requirement, and a missing 8621 keeps your return open under the statute of limitations rules. The same fund can require both forms plus the FBAR.
Using the wrong threshold from abroad
The $200,000 and $300,000 thresholds only apply if your tax home is abroad and you pass the bona fide residence or physical presence test. Claiming the higher threshold when you do not qualify, or failing to claim it when you do, both lead to filing errors. Confirm your residence status before you decide.
How Do You Catch Up on a Missed Form 8938?
If you have unfiled Form 8938 filings from prior years, do not quietly amend and hope. The IRS offers structured programs that can reduce or eliminate penalties for non-willful taxpayers, and choosing the right one is fact-specific.
| Program | Best for | Outcome |
|---|---|---|
| Streamlined Domestic Offshore Procedures | Non-willful U.S. residents with unreported foreign income | 5 percent miscellaneous penalty on the highest aggregate asset balance |
| Streamlined Foreign Offshore Procedures | Non-willful taxpayers living abroad | Often no penalty if eligible |
| Delinquent international information return procedures | Missed forms with all income already reported | Penalty relief with a reasonable-cause statement |
| Voluntary Disclosure Practice | Willful conduct with possible criminal exposure | Criminal protection in exchange for civil penalties and full disclosure |
Filing under the Streamlined procedures when the conduct was actually willful can be worse than not filing at all, because it certifies non-willfulness under penalty of perjury. This is a decision to make with an international tax professional, not alone.
Bottom Line
Form 8938 is not optional paperwork for anyone with meaningful foreign investments. The thresholds are higher than the FBAR's, but the definitions are broader, the penalties attach directly to your income tax return, and a missing form can hold your entire return open for years. If you own foreign accounts, funds, pensions, or entity interests, confirm each year whether you cross the line, and file Form 8938 alongside the FBAR and any Form 8621 rather than assuming one covers the rest.
Our international tax team can confirm whether you need to file, prepare Form 8938 correctly with your return, and fix prior-year gaps through the right disclosure program. Have questions about Form 8938 or foreign asset reporting? Contact TS CPA for a free consultation. We respond within the same day.