If you're a U.S. taxpayer with foreign bank accounts, investments, or other assets overseas, you may need to file Form 8938 with your tax return. This form, created under the Foreign Account Tax Compliance Act (FATCA), helps the IRS track foreign financial assets. Here's everything you need to know about the 2014 filing requirements in plain English.

What the Form Is For

Form 8938 reports specified foreign financial assets you own when the total value exceeds certain thresholds. Think of it as telling the IRS about your international financial holdings—foreign bank accounts, stocks in foreign companies, partnership interests in foreign businesses, foreign retirement plans, and similar assets held outside the United States.

The form captures critical information: what you own, where it's located, who manages it, its maximum value during the year, and any income it generated. Importantly, this isn't about whether you owe tax on these assets—you must report them even if they produced no taxable income for the year.

Form 8938 differs from the FBAR (FinCEN Form 114), another foreign account reporting requirement. While there's some overlap, they have different filing thresholds, deadlines, and requirements. You may need to file both, one, or neither depending on your circumstances.

When You’d Use Form 8938

Original Filing

Form 8938 attaches to your annual income tax return (Form 1040 or 1040NR) and is due on the same date, including extensions. For 2014, that typically meant April 15, 2015, or October 15, 2015, if you filed for an extension.

Late Filing

If you missed the original deadline, file Form 8938 as soon as possible by attaching it to an amended return (Form 1040X). The penalties increase the longer you wait, so prompt action is essential. If the IRS sends you a notice about failing to file, you have 90 days to submit the form before additional penalties kick in.

Amended Filing

If you filed Form 8938 but later discovered you omitted assets or reported incorrect values, file an amended return with a corrected Form 8938 attached. Include an explanation of what changed and why.

Important: Never send Form 8938 to the IRS by itself. It must be attached to a tax return—either your original return, an amended return, or a delinquent return for the tax year in question.

Key Rules or Details for 2014

Who Must File

You're a "specified individual" required to file if you're a U.S. citizen, U.S. resident alien, or certain nonresident aliens who meet specific criteria. The filing threshold depends on your marital status, whether you file jointly or separately, and whether you lived abroad.

Reporting Thresholds for Taxpayers Living in the U.S.

• Unmarried: File if your assets totaled more than $50,000 on December 31, 2014, OR more than $75,000 at any time during 2014
• Married filing jointly: File if assets exceeded $100,000 on year-end OR $150,000 anytime during the year
• Married filing separately: Same thresholds as unmarried taxpayers ($50,000/$75,000)

Reporting Thresholds for U.S. Citizens/Residents Living Abroad

If you were a bona fide resident of a foreign country for the entire tax year or present abroad for at least 330 days:

• Unmarried: File if assets exceeded $200,000 on year-end OR $300,000 anytime during the year
• Married filing jointly: File if assets exceeded $400,000 on year-end OR $600,000 anytime during the year
• Married filing separately: Same as unmarried ($200,000/$300,000)

What Counts as a Specified Foreign Financial Asset

• Financial accounts at foreign banks or foreign financial institutions
• Stock or securities issued by non-U.S. persons
• Interests in foreign partnerships, corporations, trusts, or estates
• Foreign mutual funds, hedge funds, or private equity funds
• Foreign pension plans and deferred compensation plans
• Financial instruments or contracts with foreign issuers or counterparties

What Doesn’t Count

• Accounts at U.S. banks or financial institutions (even if they hold foreign stocks)
• Foreign real estate held directly (though rental income must be reported elsewhere)
• Foreign currency held personally (not in an account)
• Assets held in U.S. retirement accounts like IRAs or 401(k)s
• Foreign social security or government pension programs

Valuation Rules

Report the maximum value of each asset during 2014—not just the year-end value. Use the U.S. Treasury's foreign exchange rate to convert foreign currency to dollars. You can rely on periodic account statements for maximum value unless you know they're inaccurate.

Step-by-Step (High Level)

Step 1: Determine if You Must File

Calculate the total maximum value of all your specified foreign financial assets during 2014. Include every asset's peak value during the year, even if you sold it before December 31. Compare this total to the threshold for your filing status and location.

Step 2: Gather Documentation

Collect year-end statements and periodic statements throughout 2014 for all foreign accounts and assets. You'll need account numbers, institution names and addresses, asset descriptions, and value information.

Step 3: Calculate Maximum Values

For each asset, determine its highest value during 2014. Convert foreign currencies to U.S. dollars using the Treasury exchange rate from December 31, 2014 (or another publicly available rate if Treasury rates aren't available). For jointly owned assets, special rules apply depending on who owns it and your filing status.

Step 4: Complete the Form

• Part I: Summarize foreign deposit and custodial accounts
• Part II: Summarize other foreign assets
• Part III: Report tax items (interest, dividends, gains) from these assets and where you reported them on your return
• Part IV: List any assets already reported on Forms 3520, 5471, 8621, or 8865 (you don't need to repeat details but must note how many of these forms you filed)
• Parts V and VI: Provide detailed information for each account and asset

Step 5: Attach and File

Attach the completed Form 8938 to your Form 1040 or 1040NR before mailing or e-filing. The form goes with your tax return to your usual IRS processing center.

Common Mistakes and How to Avoid Them

Mistake #1: Not Counting Assets Toward the Threshold That You Report Elsewhere

Many taxpayers report foreign assets on Forms 5471 (foreign corporations), 8621 (passive foreign investment companies), or other information returns. Even though you can reference these forms instead of duplicating information on Form 8938, you still must count these assets when determining if you meet the filing threshold. Solution: Add up all specified foreign assets, regardless of where you report them, to see if you exceed your threshold.

Mistake #2: Using Year-End Value Instead of Maximum Value

Form 8938 requires the highest value during the entire year, not just what the asset was worth on December 31. Solution: Review account statements throughout the year. If your foreign stock portfolio peaked at $180,000 in June but was only $110,000 on December 31, report $180,000.

Mistake #3: Misunderstanding Joint Ownership Rules

How you report jointly owned assets depends on who co-owns it and your filing status. If you and your spouse file jointly and jointly own an asset, report the full value once. If you file separately and jointly own an asset, you each report the full value on separate Forms 8938. Solution: Carefully review the instructions' joint ownership examples that match your situation.

Mistake #4: Forgetting Assets Held by Disregarded Entities

If you own a single-member LLC or other disregarded entity that holds foreign assets, you must report those assets as if you owned them directly. Solution: Look through any disregarded entities you own and report their foreign holdings on your Form 8938.

Mistake #5: Not Filing Because You Don't Owe Tax

Some taxpayers assume they don't need to file Form 8938 if their foreign assets didn't generate taxable income or if they're claiming foreign tax credits that eliminate U.S. tax. Solution: If your assets exceed the threshold, you must file Form 8938 regardless of whether you owe tax.

Mistake #6: Confusing Form 8938 with FBAR

Form 8938 and the FBAR have different thresholds, deadlines, and filing procedures. Having to file one doesn't automatically mean you must file the other. Solution: Check requirements for both forms separately.

Mistake #7: Incorrectly Converting Foreign Currency

Using the wrong exchange rate or wrong date's rate creates valuation errors. Solution: Use the U.S. Treasury Bureau of Fiscal Service exchange rate from December 31, 2014.

What Happens After You File

IRS Processing

The IRS processes Form 8938 along with your tax return. Unlike the FBAR (filed separately with FinCEN), Form 8938 becomes part of your tax return record.

Extended Statute of Limitations

Filing Form 8938 affects how long the IRS can audit your return. If you fail to file Form 8938, the statute of limitations for your entire return remains open for three years after you eventually file the form. If you omit more than $5,000 of foreign asset income from your return, the IRS has six years to assess additional tax.

Matching Program

The IRS receives information from foreign financial institutions under FATCA. They match this information against Forms 8938 to identify non-filers or those who under-reported asset values.

No Immediate Response Expected

Unless there's a problem, you typically won't hear from the IRS about your Form 8938. No news is good news.

If You Made an Error

If you later discover an error or omission, file an amended return promptly. The reasonable cause exception may protect you from penalties if you can show your failure wasn't due to willful neglect.

FAQs

Q1: Do I need to file Form 8938 if I already file the FBAR?

Not necessarily. These are separate requirements with different thresholds and rules. Many taxpayers must file both, but filing one doesn't satisfy the other. Check each form's requirements independently. Form 8938 has higher thresholds and only applies to specified individuals, while FBAR has a lower threshold ($10,000) but broader applicability.

Q2: I own foreign real estate worth $500,000. Do I report it on Form 8938?

No. Foreign real estate held directly isn't a specified foreign financial asset. However, if you own the property through a foreign corporation or foreign partnership, you may need to report your interest in that entity. Also, rental income from the property must be reported on Schedule E of your tax return.

Q3: What are the penalties if I don't file Form 8938 when required?

The initial penalty is $10,000 for failing to file a complete and correct form by the due date. If you don't file within 90 days after the IRS notifies you of the failure, you face an additional $10,000 penalty for each 30-day period (or part thereof), up to a maximum of $50,000. If you underpay your taxes due to unreported foreign assets, you may face a 40% accuracy-related penalty on the underpayment. Criminal penalties may also apply in serious cases.

Q4: My spouse is not a U.S. citizen or resident. Do we file one Form 8938 or two?

If your spouse is not a specified individual (not a U.S. citizen or resident), and you file a joint return, you file one Form 8938 reporting your specified foreign financial assets. If your spouse jointly owns assets with you, report the entire value of those jointly owned assets. Your non-resident spouse doesn't file a separate Form 8938.

Q5: I'm a college student studying abroad with $60,000 in a foreign bank account. Do I need to file?

It depends on your filing status and where you're considered to live. If you're single and your parents claim you as a dependent, you still might need to file Form 8938 if you're otherwise required to file a tax return and your assets exceed $50,000 on December 31 or $75,000 anytime during the year (assuming you're not considered living abroad). If you don't need to file an income tax return, you don't need to file Form 8938, even if your assets exceed the threshold.

Q6: Can I file Form 8938 electronically?

Yes, if you e-file your income tax return, Form 8938 can be e-filed as part of that return. Most tax preparation software for 2014 supported Form 8938. If you file a paper return, attach a paper Form 8938.

Q7: I reported my foreign corporation on Form 5471. Do I need to report it again on Form 8938?

You must complete Part IV of Form 8938 indicating how many Forms 5471 you filed, but you don't need to duplicate the detailed information in Parts V or VI of Form 8938. However, you must still count the value of the foreign corporation when determining whether you meet the filing threshold for Form 8938.

Sources

Sources: All information is sourced from official IRS materials:

• Instructions for Form 8938 (Rev. December 2014)
• About Form 8938, Statement of Specified Foreign Financial Assets
• Update to 2014 Instructions to Form 8938