Form 8938 Checklist: 2018 Tax Year
Purpose
IRS Form 8938 is used to report specified foreign financial assets when their total value exceeds the reporting thresholds established under the Foreign Account Tax Compliance Act. Specified individuals and certain domestic entities must attach Form 8938 to their annual income tax return when required under Internal Revenue Code Section 6038D. The form enables the Internal Revenue Service to monitor offshore financial activity and ensure proper reporting of income associated with foreign accounts and foreign financial institutions.
Reporting applies to foreign bank accounts, foreign brokerage accounts, foreign stock, foreign mutual funds, interests in foreign entities, and other specified foreign financial assets. Certain foreign retirement accounts, foreign pension plans, and foreign life insurance policies with cash value may also be reportable depending on ownership and structure. Form 8938 works alongside, but separately from, the Report of Foreign Bank and Financial Accounts, which is filed with the Financial Crimes Enforcement Network, creating a broader compliance framework for U.S. taxpayers with international financial holdings.
Step-By-Step Filing Checklist
Step 1: Confirm Filing Status and Reporting Thresholds
For tax year 2019, the filer must confirm whether IRS Form 8938 is filed as a specified individual or specified domestic entity to apply the correct FATCA thresholds for specified foreign financial assets. U.S. citizens and resident aliens living in the United States generally file when assets exceed $50,000 at year's end or $75,000 at any time, while married filing jointly applies $100,000 or $150,000 thresholds. Taxpayers living abroad use higher Form 8938 thresholds of $200,000 for single filers and $400,000 for married filing jointly, with exceptional IRS guidance applying to taxpayers with possession-based or military status.
Step 2: Complete Header and Identification Information
Enter tax year 2019 at the top of Form 8938 and provide the taxpayer’s name and identification number exactly as shown on the associated income tax return. Select the appropriate filer classification to indicate whether an individual, partnership, corporation, or trust files the form. When a domestic entity is required to file due to ownership by a specified individual, that individual’s identifying information must also be disclosed.
Step 3: Report Foreign Deposit Accounts in Part I
Identify all foreign deposit accounts maintained at foreign financial institutions, including checking, savings, and time deposit accounts. Enter the total number of such accounts and calculate the maximum aggregate value during the year. Currency conversion must be completed using a consistent exchange rate method, such as the year-end Treasury rate or another publicly available exchange source. Indicate whether any accounts were opened or closed during the tax year to support coordination with FBAR reporting.
Step 4: Report Foreign Custodial Accounts in Part I
Summarize foreign custodial accounts, including foreign brokerage accounts that hold securities or investment assets. Provide the total number of custodial accounts and the maximum combined value during tax year 2019 after converting foreign currency to U.S. dollars. Disclose whether any custodial accounts were closed during the year, which may be relevant if future amendments or compliance reviews arise.
Step 5: Report Other Specified Foreign Financial Assets in Part II
Include specified foreign financial assets not held in financial accounts, such as directly owned foreign stock, partnership interests, foreign trust interests, or financial instruments with foreign counterparties. Report the total number of these assets and their maximum aggregate value during the year. Directly owned foreign real estate is excluded unless held through a foreign entity, in which case the ownership interest may still be reportable.
Step 6: Attribute Related Income and Tax Items in Part III
Identify where income associated with specified foreign financial assets is reported on the income tax return. This includes interest and dividends reported on Schedule B, foreign tax credits claimed on Form 1116, and income from foreign entities reported on related international information returns. Accurate cross-referencing allows the IRS to match Form 8938 disclosures with reported income and credits.
Step 7: Identify Excepted Assets in Part IV
Disclose assets already reported on other international forms, such as Form 5471, Form 3520, or Form 8621. These assets are still counted toward the filing threshold but do not require duplicate detailed reporting in later sections of Form 8938. Coordination with the FBAR filing process remains essential, as overlapping reporting requirements apply under different legal authorities.
Step 8: Provide Detailed Account Information in Part V
Complete a separate Part V section for each foreign deposit or custodial account. Provide the name and address of the foreign financial institution, the country of location, and the account number or identifying designation. Report the maximum account value in U.S. dollars for tax year 2019 and disclose the exchange rate source used for currency conversion. Include a Global Intermediary Identification Number when available.
Step 9: Provide Detailed Information for Other Assets in Part VI
Describe each specified foreign financial asset not held in a financial account with sufficient detail to allow verification. Identify the asset type, issuer or entity name, and country of organization. Select the appropriate maximum value range or report the exact value when required. Document the currency conversion method consistently with other sections of the form.
Step 10: Complete Foreign Entity Ownership Details
When reporting ownership interests in foreign entities, provide complete entity identification information, including entity type and country of incorporation or formation. Indicate whether the entity is classified as a foreign corporation, partnership, trust, or other structure. This information supports IRS coordination with other international reporting obligations under the Internal Revenue Code.
Step 11: Disclose Issuer or Counterparty Information
Report identifying details for issuers of foreign securities or counterparties to derivative contracts and similar financial instruments. Clarify whether each issuer or counterparty is a U.S. or foreign person. Attach continuation statements when necessary to ensure complete disclosure for assets involving multiple parties.
Step 12: Attach Form 8938 to the Annual Return
Attach the completed Form 8938 to Form 1040, Form 1040NR, or the applicable income tax return for tax year 2019. The form must be filed with the return and cannot be submitted separately. Retain supporting documentation, including account statements and exchange rate calculations, in case of IRS inquiry.
Year-Specific 2019 Notes
For tax year 2019, Form 8938 reporting adheres to the established FATCA framework, with no changes to filing thresholds or asset definitions. Threshold amounts remain consistent with those of prior years, and no legislative changes have altered the scope of specified foreign financial assets for 2019. Taxpayers should ensure consistency between Form 8938, FBAR filings, and other international information returns submitted for the same year.
Special care is required when evaluating foreign retirement accounts, pension arrangements, and insurance products, as reporting depends on whether the account qualifies as a foreign financial account under applicable regulations. Taxpayers living abroad or holding dual citizenship should confirm residency status under IRS guidance before applying for filing thresholds.
Important Reminders
Failure to file Form 8938 when required can result in penalties starting at $10,000, with additional penalties for continued noncompliance after receiving an IRS notice. Accuracy-related penalties may also apply if income from foreign assets is omitted from the tax return. Taxpayers who identify prior-year reporting failures should consider corrective filing options before the IRS examination.
Electronic filing options are available for Form 8938 when submitting an electronically filed return, though complex international tax situations may warrant professional review. Maintaining complete records and ensuring consistency across all international tax forms remains essential for long-term compliance with foreign asset reporting requirements.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
