Form 8938 Foreign Financial Assets Checklist – 2023
Tax Year
Overview of Form 8938 for the 2022 Tax Year
Form 8938 requires certain U.S. citizens and resident aliens to report specified foreign financial assets when total values exceed defined thresholds. These thresholds depend on your filing status and whether you live in the United States. For taxpayers living abroad, married filing jointly thresholds generally use higher dollar limits based on the year-end and the highest annual values.
Form 8938 applies only to specified foreign financial assets, not all foreign property. You must carefully evaluate ownership, asset type, and aggregate value. Accurate reporting depends on understanding which assets qualify, how values are calculated, and how the form integrates with your annual income tax return.
Determining Whether You Must File Form 8938
Your filing obligation depends on whether the total value of all specified foreign financial assets exceeded the applicable threshold at any point during 2023 or on the last day of the year. The thresholds vary by filing status and residency, and they apply to the combined value of all reportable assets.
You must include assets you own directly or indirectly when required by the instructions.
Personal-use property does not count toward the threshold. You should evaluate asset ownership carefully before deciding whether Form 8938 applies to your return.
Step-by-Step Checklist
Step 1: Confirm Your Filing Requirement Based on 2023 Thresholds
Determine whether the combined value of your specified foreign financial assets exceeded the applicable reporting threshold for 2023. The threshold depends on your filing status and whether you were inside or outside the United States during the year. You must apply the threshold to the aggregate value of all reportable assets, not to individual accounts.
Do not include foreign property held for personal use when calculating threshold amounts. You should confirm residency status using the instructions’ definition before selecting the correct threshold. Accurate threshold determination establishes whether you must complete the form.
Step 2: Identify All Specified Foreign Financial Assets for 2023
Identify every specified foreign financial asset you owned or held during 2023. These assets include foreign bank accounts, brokerage accounts, certain foreign securities, and financial instruments issued by non-U.S. individuals. Joint filers must consider assets held by either spouse when required.
Foreign real estate held directly does not qualify as a specified foreign financial asset. An interest in a foreign entity that owns foreign real estate may qualify, and the entity’s value may reflect the underlying real estate. Asset classification affects both reporting and valuation.
Step 3: Calculate Year-End Values December 31, 2023 Exchange Rates
Convert each foreign asset’s value to U.S. dollars using the exchange rate in effect on the last day of the 2023 tax year. You must maintain a consistent currency conversion method across all assets. Each converted value must reflect the correct currency rate for December 31.
If you use an exchange rate source other than the U.S. Treasury, you must identify that source on the form. You should document the exchange rate used for each asset to support the reported value.
Step 4: Determine Maximum Value During the 2023 Tax Year
Determine the highest value each specified foreign financial asset reaches at any point during the calendar year 2023. Form 8938 generally requires reporting this maximum value for each account or asset. You must review statements or records covering the entire year.
Maximum value reporting applies even when the year-end value falls below the threshold. You should retain documentation showing how you identified the highest balance or value during the year.
Step 5: Complete Part I With Specified Foreign Financial Assets Information
Complete Part I to summarize your foreign deposit and custodial accounts. This section requires the number of accounts and the combined maximum values. You must ensure that totals reported in Part I accurately reflect the detailed information provided later in the form.
Provide account-by-account details in Part V for deposit and custodial accounts. You must report other specified foreign financial assets in Part VI when applicable. Consistency across all sections prevents processing issues.
Step 6: Verify Exceptions and Exclusions Under 2023 Guidance
Review the list of assets excluded from Form 8938 reporting. Excluded items include U.S.
property, accounts held by certain tax-exempt organizations, and specific retirement arrangements. Treasury regulations also exclude certain property interests.
Claiming the Foreign Earned Income Exclusion does not remove the requirement to report specified foreign financial assets. You should retain documentation supporting any exclusion you apply. Exclusion criteria are outlined in the instructions.
Step 7: Address Jointly Owned and Community Property Assets
If you file a joint return, include the value of jointly owned assets only once when calculating the total value of specified foreign financial assets. You must still report full asset details where required by the form. Community property filers must report the full value of community assets under joint ownership to prevent duplicate reporting and incorrect threshold calculations.
Step 8: Prepare Required Attachments and Supporting Documentation
Gather bank statements, brokerage confirmations, account summaries, and currency conversion records for each specified foreign financial asset. These records support both year-end and maximum value calculations. You should organize documentation by asset and reporting section.
Follow general IRS recordkeeping rules when deciding how long to retain documents. Some situations require longer retention periods. You may attach schedules or explanations when asset descriptions exceed available space.
Step 9: Report Form 8938 With Your 2023 Tax Return
Attach Form 8938 to your 2023 Form 1040 or Form 1040-SR when filing your federal income tax return. You cannot file Form 8938 separately from your return. Submission must occur with the same filing package.
Do not send Form 8938 to any FBAR filing address. Filing it incorrectly or separately may result in penalties or processing delays.
Step 10: Understand 2023 Penalty Consequences for Failure to File
Failure to file Form 8938 when required results in a $10,000 penalty for each taxable year. If the
IRS notifies you of the failure and you do not file within 90 days, additional penalties apply for continued noncompliance. The additional penalty is 30 days or 30 days after notice, up to a maximum of $50,000 per failure. Penalties apply to incomplete or unsigned forms as well as missing filings.
Step 11: Distinguish Between Form 8938 and FBAR Requirements
Form 8938 serves as an attachment to your income tax return, while FinCEN Form 114, known as the FBAR, is filed separately with the Financial Crimes Enforcement Network. Each form has different thresholds and reporting purposes. You may need to file both forms when requirements overlap. Meeting one filing obligation does not satisfy the other. You must evaluate each requirement independently.
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Step 12: Ensure Accurate Signature and Return Assembly for 2023
Form 8938 does not include a separate signature line. Your signature on the income tax return covers the attached Form 8938. You must confirm that the return is signed before submission.
Attach Form 8938 securely to the return before filing. Unsigned or incomplete forms may trigger penalties even when reported asset values are accurate.
Key 2023-Specific Instructional Updates
The 2023 instructions emphasize the correct application of reporting thresholds based on filing status and residency. Married taxpayers living outside the United States generally use higher threshold amounts calculated using both year-end and maximum values.
Form 8938 requires reporting each asset’s maximum value during the tax year. Part III reports income and tax items related to reported assets and does not report asset values. Assets held in revocable living trusts remain reportable when you retain control.
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
