What Form 8938 Is For
IRS Form 8938 (2013), Statement of Specified Foreign Financial Assets, is used by U.S. taxpayers to report foreign financial accounts and assets held outside the United States. It was introduced under the Foreign Account Tax Compliance Act (FATCA) to help the IRS identify foreign assets that may generate taxable income and ensure compliance with U.S. tax reporting rules.
U.S. citizens, resident aliens, and certain domestic entities must file Form 8938 if they hold specified foreign financial assets exceeding the reporting thresholds. These assets include bank accounts, brokerage accounts, foreign stocks, and other economic interests maintained with foreign financial institutions.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive guide for Form 8938: Statement of Specified Foreign Financial Assets (2013).
When You’d Use Form 8938
A taxpayer would use Form 8938 when required to report specified foreign financial assets that exceed the filing thresholds for the tax year. This applies when holding foreign financial accounts, foreign bank accounts, brokerage accounts, investment accounts, or other foreign assets with a foreign financial institution. Form 8938 must also be filed when certain foreign assets are discovered after filing the income tax return, requiring an amended submission to ensure accurate reporting.
Key Rules or Details for 2013
For the 2013 tax year, IRS Form 8938 (2013) required a U.S. person or specified domestic entity to report specified foreign financial assets when the aggregate value of foreign financial accounts exceeded the reporting threshold. Reportable items included foreign bank accounts, brokerage accounts, investment accounts, foreign stocks, and other foreign assets held with foreign financial institutions. All financial interests had to be valued using the maximum value for the calendar year, including jointly owned accounts and certain foreign assets reported on other IRS forms.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for Individual Tax Forms.
Step-by-Step Filing Instructions
Step 1: Determine Filing Requirement
Identify whether the filer is a specified individual or a specified domestic entity. Verify the filing status and residency for 2013.
Step 2: Identify Foreign Financial Assets
List all bank accounts, brokerage accounts, investment accounts, and other reportable foreign assets, including foreign real estate held through entities.
Step 3: Calculate Aggregate Value
Determine the total value of all specified foreign assets using the December 31, 2013, Treasury exchange rate for foreign currency conversions.
Step 4: Address Joint Ownership
Include the entire value of jointly owned accounts if filing jointly, or half if married filing separately.
Step 5: Complete Form 8938 Sections
- Part I: Report foreign deposit and custodial accounts.
- Part II: Report other specified foreign assets
- Part III: Include income, gains, or losses from these assets
- Part IV: Reference assets reported on other forms
- Part V–VI: Provide detailed information for each account or asset
Step 6: Attach and Submit
Attach Form 8938 to the income tax return and file by the regular or extended deadline. Retain all supporting documentation for at least six years.
Common Mistakes and How to Avoid Them
- Filing Form 8938 separately: Always attach Form 8938 to your annual income tax return; filing it alone does not meet IRS requirements.
- Forgetting to include assets reported elsewhere: Include all foreign financial assets when calculating total value, even if they’re listed on other forms.
- Using incorrect exchange rates: Convert foreign currency using the U.S. Treasury rate as of December 31 for the relevant tax year.
- Reporting only income-generating accounts: Report all specified foreign assets, regardless of whether they produced income during the year.
Accurate reporting, proper currency conversion, and complete disclosure help taxpayers avoid IRS penalties and ensure full compliance with Form 8938 requirements.
Penalties and Enforcement
Failure to file Form 8938 can result in a penalty of up to $10,000, increasing to $50,000 for continued noncompliance. The IRS may also impose a 40% penalty on any underreported tax related to undisclosed foreign assets. Coordinated enforcement with the Financial Crimes Enforcement Network (FinCEN) helps identify offshore accounts and ensure compliance with reporting requirements.
Key Differences Between Form 8938 and FBAR
Form 8938 and FinCEN Form 114 (FBAR) both require reporting of foreign financial accounts, but serve different purposes. Form 8938 is filed with the income tax return and covers a broader range of specified foreign financial assets, including foreign stocks and interests in foreign entities. The FBAR, filed through the BSA E-Filing System, applies to foreign bank and financial accounts with an aggregate value exceeding $10,000. Many U.S. persons are required to file both forms if they meet the separate reporting thresholds.
Frequently Asked Questions
What is IRS Form 8938 (2013) used for?
IRS Form 8938 (2013) is used to report specified foreign financial assets held by a U.S. person or domestic entity. It helps the IRS track foreign financial accounts, investments, and other reportable foreign assets for the applicable tax year.
Who must report foreign financial accounts and assets?
U.S. persons, including specified domestic entities, must report foreign financial accounts and specified foreign financial assets if their total value exceeds reporting thresholds. The requirement applies to accounts held in foreign financial institutions and certain foreign countries.
How is Form 8938 different from FinCEN Form 114 (FBAR)?
Form 8938 is filed with the income tax return, while FinCEN Form 114 is submitted through the BSA E-Filing System. Both forms require reporting of foreign bank and financial accounts, but have different reporting thresholds and filing procedures.
What foreign assets are required to be reported on Form 8938?
Specified foreign financial assets include bank accounts, brokerage accounts, investment accounts, and ownership interests in foreign corporations or partnerships. Foreign stocks, mutual funds, and assets held through foreign financial institutions must also be included when determining total value.
What are the penalties for failing to report foreign accounts?
Failure to report foreign accounts or file Form 8938 may result in a penalty of $10,000, increasing to $50,000 for continued noncompliance. Additional penalties apply for underreporting taxable income or engaging in offshore accounts to evade tax liability.
Do jointly owned accounts and retirement accounts need to be reported?
Jointly owned accounts must be reported based on the filer’s ownership interest in the account. Foreign retirement accounts and certain investment accounts also contribute to the aggregate value thresholds if they qualify as specified foreign financial assets under FATCA reporting requirements.
How do delinquent FBAR submission procedures work?
Taxpayers who missed the FBAR or Form 8938 filing deadline can use the delinquent FBAR submission procedures through the BSA E-Filing System. Voluntary reporting of foreign financial accounts often reduces penalties and demonstrates good-faith compliance with IRS and FinCEN regulations.
