What Form 8938 Is For

Form 8938, officially titled "Statement of Specified Foreign Financial Assets," is a tax form created under the Foreign Account Tax Compliance Act (FATCA) to help the IRS identify U.S. taxpayers who hold financial assets abroad. Think of it as a disclosure document that tells the government about your foreign investments, bank accounts, and other financial holdings outside the United States.

The form was enacted in 2010 as part of broader efforts to combat tax evasion by Americans hiding money and investments in foreign countries. While the law was passed in 2010, the reporting requirement applies to tax years beginning after March 18, 2010, meaning most individual taxpayers first filed this form with their 2011 tax returns in 2012. IRS.gov

Form 8938 captures a wide range of foreign holdings, including foreign bank accounts, stocks issued by foreign companies, interests in foreign partnerships, foreign pension plans, and certain financial instruments or contracts with foreign counterparties. Importantly, this form is attached to your regular income tax return—it's not a standalone filing. If you're not required to file a tax return, you don't need to file Form 8938 either, regardless of how much you have in foreign assets. IRS.gov

When You’d Use Form 8938 (Including Late/Amended Filings)

You would file Form 8938 along with your annual income tax return if your specified foreign financial assets exceed certain dollar thresholds. The form is due on the same date as your tax return, including any extensions you've requested.

If you realize after filing your tax return that you should have included Form 8938 but didn't, you need to take corrective action. The IRS instructs taxpayers who omitted Form 8938 from their original return to file Form 1040X (Amended U.S. Individual Income Tax Return) with the completed Form 8938 attached. This amended return process allows you to correct the oversight and come into compliance. IRS.gov

For taxpayers who have never filed Form 8938 in prior years when they should have, the IRS has established streamlined filing compliance procedures. These procedures, announced in 2012, are designed for U.S. taxpayers (particularly those living abroad) who were unaware of their filing obligations but now want to get current with their requirements. The streamlined procedures can help minimize penalties for non-willful failures to report. IRS.gov

There's also an important timing consideration: if you fail to file Form 8938 or properly report an asset, special statute of limitations rules come into play. The statute of limitations for your entire tax return extends to three years after you provide the required information. If you omit more than $5,000 of income attributable to a foreign financial asset, the statute extends to six years after you file your return—giving the IRS much more time to audit you. IRS.gov

Key Rules or Details for 2010

The key thing to understand about 2010 is that this was the transition year. The FATCA legislation was enacted in March 2010, specifically applying to tax years beginning after March 18, 2010. For calendar-year taxpayers (the vast majority of individuals), this meant the 2010 tax year itself was actually not subject to Form 8938 reporting. The requirement kicked in starting with the 2011 tax year, filed in 2012. IRS.gov

Who Must File

You must be a "specified individual"—essentially a U.S. citizen, resident alien, or certain nonresident aliens who elect to file jointly or are bona fide residents of U.S. territories like Puerto Rico or American Samoa. Later regulations (effective for tax years after 2015) extended filing requirements to certain domestic corporations, partnerships, and trusts, but in the 2010-2011 period, only individuals were required to file. IRS.gov

Threshold Requirements

The reporting thresholds established in 2010 remain important. For unmarried taxpayers living in the U.S., you must file if your specified foreign assets total more than $50,000 on the last day of the tax year OR more than $75,000 at any point during the year. For married couples filing jointly and living in the U.S., the thresholds double: more than $100,000 on the last day OR more than $150,000 at any time during the year.

Higher thresholds apply to taxpayers living abroad. An unmarried person living abroad must file if assets exceed $200,000 on the last day of the year or $300,000 at any time. For married couples living abroad filing jointly, the thresholds are $400,000 on the last day or $600,000 at any time. IRS.gov

What Assets Count

Specified foreign financial assets include financial accounts at foreign banks or brokers, foreign stocks or securities held outside an account, interests in foreign partnerships or corporations, foreign pension plans, and financial contracts with foreign counterparties. Importantly, what you don't have to report includes: accounts at U.S. financial institutions (even if they hold foreign stocks), foreign real estate held directly, foreign currency held directly, precious metals, art, and collectibles. IRS.gov

Relationship to FBAR

Form 8938 does not replace the long-standing FBAR (FinCEN Form 114) requirement. These are two separate reporting obligations with different thresholds, rules, and filing locations. Some foreign accounts must be reported on both forms, while others appear on only one. The FBAR has a lower threshold—just $10,000 in aggregate foreign account balances—and covers only financial accounts, not other foreign assets. IRS.gov

Step-by-Step (High Level)

Step 1: Determine If You Must File a Tax Return

If you're not required to file an income tax return for the year, you don't need Form 8938—period. This is true even if your foreign assets exceed the thresholds.

Step 2: Identify Your Specified Foreign Financial Assets

Make a list of all your foreign financial accounts (foreign banks, brokers, etc.) and other foreign assets held for investment. Remember to exclude U.S.-based accounts, directly held real estate, and physical assets like precious metals or art.

Step 3: Calculate Total Asset Values

For each asset, determine its maximum value during the tax year. For financial accounts, you can use periodic account statements (at least annual). For other assets, use fair market value based on publicly available information or reasonable estimates. Convert all foreign currency amounts to U.S. dollars using the Treasury Department's exchange rate for the last day of your tax year. IRS.gov

Step 4: Apply Your Reporting Threshold

Add up the maximum values of all specified foreign financial assets. Compare this total to the threshold that applies to your filing status and whether you live in the U.S. or abroad. If you're below the threshold, you don't need to file Form 8938 (though you may still need to file an FBAR).

Step 5: Complete Form 8938

If you exceed the threshold, obtain Form 8938 and its instructions from IRS.gov. The form has multiple parts: Part I for foreign deposit and custodial accounts, Part II for other foreign assets (stocks, partnerships, etc.), Part III for summary information, and Part IV to identify assets already reported on other forms like Form 5471 or 8621. If you need more space, copy the relevant parts and attach additional sheets.

Step 6: Check for Duplicate Reporting Exceptions

If you're already reporting certain foreign assets on other IRS forms (Forms 3520, 5471, 8621, 8865, etc.), you don't have to provide all the details again on Form 8938. Instead, you simply indicate on Part IV which forms you're filing and how many assets are reported there. However, you still include those asset values when determining whether you meet the filing threshold. IRS.gov

Step 7: Attach to Your Income Tax Return

Form 8938 is not filed separately. Attach it to your Form 1040 (or other applicable income tax return form) and file according to the instructions for your return. The form goes to the IRS service center where you normally file your return, not to FinCEN like the FBAR.

Common Mistakes and How to Avoid Them

Mistake 1: Confusing Form 8938 with FBAR

Many taxpayers think these forms are the same or that filing one eliminates the need for the other. They're completely separate requirements with different agencies (IRS versus FinCEN), different thresholds, different covered assets, and different filing locations. Always check whether you need to file both. IRS.gov

Mistake 2: Reporting Accounts at U.S. Financial Institutions

You do not report accounts held at U.S. banks, brokers, or financial institutions on Form 8938, even if those accounts contain foreign stocks or securities. Similarly, accounts at the U.S. branch of a foreign bank are not reportable. Only accounts maintained by foreign financial institutions located outside the U.S. need to be reported. IRS.gov

Mistake 3: Reporting Foreign Real Estate Directly Owned

If you directly own a vacation home or rental property in another country, you don't report it on Form 8938. However, if you own that property through a foreign corporation or partnership, your interest in that foreign entity is reportable (and the real estate value factors into valuing your interest in the entity).

Mistake 4: Using Year-End Values Instead of Maximum Values

The reporting threshold has two tests: the value on the last day of the year AND the maximum value at any time during the year. Some taxpayers only check the year-end value and miss that they should file because their assets exceeded the threshold at some point earlier in the year (perhaps before selling investments or closing accounts).

Mistake 5: Not Filing When Required Due to Misunderstanding Thresholds

The thresholds vary based on filing status and whether you live abroad. Make sure you're applying the correct threshold to your situation. Married couples filing jointly have higher thresholds, and taxpayers living abroad have significantly higher thresholds than those living in the U.S.

Mistake 6: Failing to Report Foreign Pensions

Many U.S. taxpayers with interests in foreign pension or deferred compensation plans don't realize these are reportable specified foreign financial assets. If you have an interest in such a plan and your total assets exceed the threshold, you must report it. The value is the fair market value of your interest, or if that's unknown, the cash/property distributed to you during the year (or zero if no distributions and value is unknown). IRS.gov

Mistake 7: Not Keeping Good Records

You need documentation to support the maximum values you report. Keep copies of account statements, valuation information, and currency conversion calculations. Without proper records, you may struggle to defend your reported values if audited.

What Happens After You File

Once you file Form 8938 attached to your tax return, it undergoes the same processing as your return. The IRS uses the information to verify that you're properly reporting income from foreign sources and to cross-check against information they receive directly from foreign financial institutions under FATCA.

If everything is in order, you simply continue with your normal tax obligations. You'll need to file Form 8938 again in subsequent years if you continue to meet the reporting thresholds.

If the IRS identifies issues with your Form 8938, you may receive correspondence asking for clarification or additional information. Respond promptly and completely to these requests. The IRS compares Form 8938 information with income reported on your return. Discrepancies—such as having a foreign account but no foreign income—may trigger inquiries or audits.

The penalties for non-compliance are substantial and were designed to encourage voluntary reporting. If you fail to file Form 8938 when required, you face a $10,000 penalty. If the IRS notifies you of the failure and you still don't file within 90 days, you can be assessed an additional penalty of up to $10,000 for each 30-day period of continued non-filing, up to a maximum additional penalty of $50,000. IRS.gov

Beyond failure-to-file penalties, if you have an understatement of tax attributable to an undisclosed foreign asset, you can face a 40 percent penalty on that understatement—significantly higher than normal accuracy-related penalties. IRS.gov

There is relief available if you can show reasonable cause for the failure to file and that it wasn't due to willful neglect. Reasonable cause determinations are made case-by-case considering all facts and circumstances. Additionally, the streamlined filing procedures offer a path forward for taxpayers who were non-willfully non-compliant and want to come into compliance.

Remember the extended statute of limitations: if you fail to properly report assets on Form 8938, the IRS has three extra years (beyond the normal three-year statute) to examine your entire return. This means they could audit you up to six years after filing. IRS.gov

FAQs

1. Do I need to file Form 8938 if my only foreign asset is a small bank account I opened while traveling abroad?

It depends on the value and your filing status. If you're unmarried and living in the U.S., you only need to file if your total specified foreign assets exceed $50,000 on the last day of the year or $75,000 at any time during the year. A small account by itself probably won't trigger the requirement, but you need to count all your foreign assets together to determine if you exceed the threshold.

2. I already file the FBAR for my foreign bank accounts. Do I still need Form 8938?

Possibly yes. Form 8938 and the FBAR are separate requirements. While some foreign financial accounts must be reported on both forms, they have different thresholds and cover different types of assets. Form 8938 has higher dollar thresholds but covers assets beyond just bank accounts. Review both sets of requirements independently. IRS.gov

3. I own shares in a U.S. mutual fund that invests in foreign stocks. Does this need to be reported on Form 8938?

No. Shares of a U.S. mutual fund—even one that holds entirely foreign investments—are not specified foreign financial assets because the mutual fund itself is a U.S. entity. You would only report this if you held shares of a foreign mutual fund directly. IRS.gov

4. How do I determine the value of my foreign assets if I don't have professional appraisals?

You're not required to hire appraisers or actuaries. For financial accounts, use periodic statements (at least annual). For other assets, use publicly available information from reliable financial sources or other verifiable sources. Even if exact valuation information isn't available, a reasonable estimate is sufficient for reporting purposes. IRS.gov

5. I inherited foreign stocks from a relative who lived abroad. Do I need to report these?

Yes, if you hold them outside a financial account and your total specified foreign assets exceed the applicable threshold. Foreign stocks or securities must be reported on Form 8938 when held directly (not through a U.S. brokerage account). If they're held in a foreign brokerage account, you report the account itself rather than the individual holdings. IRS.gov

6. What if I discover I should have filed Form 8938 for several past years but didn't?

File amended returns (Form 1040X) with Form 8938 attached for each year you should have filed. Consider consulting a tax professional, especially if you're dealing with multiple years of non-compliance. The IRS's streamlined filing compliance procedures may be available if your failures were non-willful, potentially reducing penalties. IRS.gov

7. Do foreign pension plans or "Social Security" from another country need to be reported?

Foreign pension and deferred compensation plans are specified foreign financial assets that must be reported if your total assets exceed the threshold. However, foreign social security or social insurance benefits are specifically excluded from Form 8938 reporting requirements. IRS.gov