Form 8938: Statement of Specified Foreign Financial Assets

Who Files Form 8938

US persons whose specified foreign financial assets exceed the IRS thresholds, measured by filing status and residence. US-resident filers: single or married filing separately, $50,000 end-of-year or $75,000 at any time; married filing jointly, $100,000 / $150,000. Filers whose tax home is abroad use much higher thresholds: single, $200,000 / $300,000; joint, $400,000 / $600,000. Specified domestic entities (certain closely held US corporations, partnerships, and trusts formed or used to hold foreign assets) may also need to file. Unlike the FBAR, signature authority alone over an account you do not own is generally not reportable on Form 8938.

What Form 8938 Reports

Reportable specified foreign financial assets include foreign bank and brokerage accounts, foreign stock or securities held outside an account, foreign mutual funds and PFIC interests, interests in foreign partnerships, trusts, and estates, foreign-issued life insurance and annuities with cash value, and foreign pension and deferred-compensation interests. Directly held foreign real estate and physical assets (art, gold) are not reportable. Form 8938 supplements but does not replace the FBAR (FinCEN 114), and a foreign mutual fund reported here as a PFIC must still be reported separately on Form 8621. A non-willful failure to file carries a $10,000 penalty, rising by up to $50,000 if not corrected after IRS notice, and an accuracy-related penalty of 40% can apply to tax understatements tied to unreported assets.

Key Deadlines

• Filed with Form 1040 by April 15
• Automatic six-month extension to October 15 when Form 4868 is filed for the personal return
• Failure to file keeps the statute of limitations on the entire return open under Section 6501(c)(8) until three years after the form is filed

Common Mistakes

• Filing the FBAR but missing Form 8938 (or vice versa): they have different thresholds, definitions, and filing destinations
• Reporting a foreign mutual fund on Form 8938 but omitting the required Form 8621 PFIC return
• Using the lower US-resident threshold when you actually qualify for the higher tax-home-abroad threshold (or vice versa)
• Missing reporting on foreign retirement and pension accounts (401(k)-equivalents in foreign jurisdictions)
• Penalty stacking when Form 8938, Form 5471, and Form 5472 are all missed for the same structure

Best Practices

• File Form 8938 in addition to the FBAR when both apply. Many taxpayers think one replaces the other; they do not.
• Use the higher residency-based threshold if your tax home is abroad. Single overseas filers do not file Form 8938 until $200K end-of-year or $300K anytime.
• Report foreign mutual funds and ETFs as PFICs on Form 8621 too. Form 8938 reporting alone does not satisfy the PFIC obligation.
• Track value in USD using year-end exchange rates from the Treasury Reporting Rates of Exchange (the IRS-preferred source).
• For foreign retirement accounts (UK SIPP, Canadian RRSP, Australian Super), confirm whether and how to report the underlying funds and whether a treaty election is available.

Source: Official Form 8938 information at IRS.gov