What Form 8938 Is For

Form 8938, Statement of Specified Foreign Financial Assets, is an information return that certain U.S. taxpayers must file to report their foreign financial assets to the Internal Revenue Service. This form was introduced as part of the Foreign Account Tax Compliance Act (FATCA) and became required starting with the 2011 tax year, though many taxpayers filed it for the first time with their 2012 returns. (IRS.gov)

The form requires you to disclose foreign bank accounts, stocks in foreign companies, interests in foreign partnerships or trusts, and certain other financial assets held outside the United States. It's important to understand that Form 8938 is an information-only report—you're not paying tax through this form itself, but rather alerting the IRS to assets that may generate taxable income. The IRS uses this information to verify that you're properly reporting all your worldwide income on your tax return.

Form 8938 is separate from the FBAR (FinCEN Form 114), another foreign account reporting requirement. While there's overlap between the two, they have different thresholds, different filing locations, and cover different types of assets. You may need to file one, both, or neither depending on your specific situation. (IRS.gov)

When You’d Use Form 8938 (Late or Amended Filing)

Regular Filing

Form 8938 must be attached to your annual income tax return (Form 1040, 1040NR, etc.) and filed by the same due date, including extensions. For the 2012 tax year, this meant filing by April 15, 2013, or by your extended deadline if you filed for an extension.

Late or Missed Filing

If you were required to file Form 8938 with your 2012 return but failed to do so, you need to file an amended return. You cannot simply mail Form 8938 separately to the IRS—it must be attached to a return. Prepare Form 1040X (Amended U.S. Individual Income Tax Return) for 2012 and attach the completed Form 8938 to it. (IRS.gov)

Transitional Rule for 2011

The IRS provided a special transitional rule for taxpayers who had a tax year beginning after March 18, 2010, but before January 1, 2011. If you met certain conditions, you could defer filing your 2011 Form 8938 and attach it along with your 2012 Form 8938 to your 2012 tax return. This transitional relief helped taxpayers adjust to the new reporting requirements during the first year of implementation.

Important: Do not send Form 8938 to the IRS unless it is attached to an annual or amended return. The form is meaningless without the accompanying tax return. (IRS.gov)

Key Rules for 2012

Who Must File

You must file Form 8938 if you're a “specified individual”—which includes U.S. citizens, resident aliens, and certain nonresidents—and your foreign financial assets exceed specific thresholds. The thresholds depend on your filing status and where you live:

For Taxpayers Living in the United States

• Single or Married Filing Separately: More than $50,000 on the last day of the tax year OR more than $75,000 at any time during the year
• Married Filing Jointly: More than $100,000 on the last day of the tax year OR more than $150,000 at any time during the year

For Taxpayers Living Abroad (meeting certain presence tests)

• Single or Married Filing Separately: More than $200,000 on the last day of the tax year OR more than $300,000 at any time during the year
• Married Filing Jointly: More than $400,000 on the last day of the tax year OR more than $600,000 at any time during the year (IRS.gov)

What Assets to Report

“Specified foreign financial assets” include:

• Financial accounts at foreign banks (savings, checking, brokerage accounts)
• Stock or securities issued by foreign corporations
• Interests in foreign partnerships, trusts, or estates
• Foreign mutual funds and hedge funds
• Financial instruments with foreign counterparties (swaps, options, derivatives)

What NOT to Report

You don't need to report:

• Accounts held at U.S. financial institutions, even if they contain foreign stocks
• Assets held in U.S. retirement accounts (401(k), IRA)
• Foreign real estate held directly
• Assets already disclosed on Forms 3520, 5471, 8621, 8865, or 8891

However, you must still count these assets when determining if you meet the filing threshold. (IRS.gov)

Step-by-Step Filing Instructions (High Level)

Step 1: Determine if You Must File

Calculate the total value of all your specified foreign financial assets on December 31, 2012, and determine the highest total value at any point during 2012. Compare these amounts to the thresholds for your filing status and location. Remember to include assets you report on other forms when making this calculation.

Step 2: Gather Asset Information

For each reportable asset, collect:

• Account numbers or identifying information
• Name and address of the foreign institution or entity
• Maximum value during the year
• Value on December 31
• Dates opened or closed (if applicable)
• Any income generated by the asset

Step 3: Value Your Assets

Use fair market value for each asset. For foreign bank accounts, you can rely on periodic statements unless they’re inaccurate. Convert all foreign currency amounts to U.S. dollars using Treasury exchange rates as of December 31, 2012—even for assets sold earlier. (IRS.gov)

Step 4: Complete the Form

1. Fill in your identifying information at the top
2. Complete Part I for each foreign deposit or custodial account
3. Complete Part II for other foreign assets (stocks, partnership interests, etc.)
4. Complete Part III to summarize tax items related to the assets
5. Complete Part IV to identify assets reported on other forms (3520, 5471, etc.)
6. Attach continuation sheets if needed

Step 5: Attach and File

Attach Form 8938 to your 2012 tax return (Form 1040, etc.) and file by the due date, including extensions. Send it to the same IRS service center where you file your income tax return.

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Form 8938 with the FBAR

These are different forms with different thresholds and filing locations. Form 8938 attaches to your tax return and goes to the IRS; the FBAR files separately with the Financial Crimes Enforcement Network. You may need to file both. (IRS.gov)

Mistake #2: Forgetting to Count Assets for the Threshold Test

Even if an asset is reported elsewhere, you must still include its value when determining whether you exceed the filing threshold. (IRS.gov)

Mistake #3: Using Incorrect Valuation Methods

All values must be in U.S. dollars using the December 31 exchange rate, even for assets sold earlier. Report the maximum value, not just year-end. (IRS.gov)

Mistake #4: Reporting Only Your Share of Jointly Owned Assets

If you jointly own an asset, you must report the entire value, not just your portion, unless your spouse files jointly. (IRS.gov)

Mistake #5: Filing Form 8938 Separately

Form 8938 must be attached to a tax or amended return. Filing it alone doesn’t count. (IRS.gov)

Mistake #6: Ignoring Assets That Generated No Income

You must still report qualifying assets even if they produced no income. (IRS.gov)

What Happens After You File

Routine Processing

The IRS processes your Form 8938 along with your tax return. There’s no separate acknowledgment for receiving the form.

IRS Verification

The IRS may use the information to verify that you’ve reported all foreign income. If discrepancies appear, you might receive a notice requesting clarification. (IRS.gov)

Statute of Limitations Impact

Failing to file Form 8938 can extend or suspend the statute of limitations on IRS audits—especially if you omitted more than $5,000 in income from unreported foreign assets.

No Immediate Tax Bill

Filing Form 8938 doesn’t directly cause a tax bill, but unreported income from disclosed assets could result in tax, interest, and penalties.

FAQs

Q1: I already filed my FBAR. Do I still need to file Form 8938?

Yes, possibly. The two have different thresholds and purposes. You may need to file both. (IRS.gov)

Q2: What are the penalties for not filing Form 8938?

• Base penalty: $10,000
• Additional penalty: $10,000 per 30 days after 90-day notice (up to $50,000)
• Possible 40% accuracy-related penalty on unreported income
• Criminal penalties may apply in severe cases. (IRS.gov)

Q3: My foreign bank account is worth $60,000. Do I need to report it?

It depends on your filing status and residency. Singles in the U.S. exceed the threshold; married joint filers may not. (IRS.gov)

Q4: Can I claim “reasonable cause” to avoid penalties if I missed the filing deadline?

Possibly—if you can show the failure was not willful and due to reasonable cause. Each case is evaluated individually. (IRS.gov)

Q5: I sold all my foreign assets in October 2012. Do I still need to file?

Yes, if your total value exceeded the “at any time” threshold during the year. (IRS.gov)

Q6: Do I need to report my foreign rental property?

No, not if owned directly. However, property owned through a foreign entity may be reportable. (IRS.gov)

Q7: I already reported my foreign accounts on Form 5471. Do I have to report them again?

No. If reported properly on Forms 3520, 5471, 8621, 8865, or 8891, you can reference them in Part IV of Form 8938. You must still count their value toward your filing threshold. (IRS.gov)

For More Information

Visit www.irs.gov/form8938 for the latest updates, instructions, and resources related to Form 8938.
Consult a qualified tax professional if you have complex foreign holdings or missed filing deadlines.