Form 8938 Checklist: 2020 Tax Year
Purpose
Form 8938 is used under the Foreign Account Tax Compliance Act to report specified foreign financial assets that exceed reporting thresholds. It applies to U.S. citizens, resident aliens, and certain specified domestic entities. The form is attached to an income tax return under IRC section 6038D and helps the IRS monitor foreign-held income and assets.
For the 2020 tax year, filers must report maximum values of foreign financial accounts, custodial accounts, and foreign non-account investment assets, along with associated tax items such as interest, dividends, and capital gains. Unlike the Report of Foreign Bank and Financial Accounts filed with the Financial Crimes Enforcement Network, IRS 8938 focuses specifically on specified foreign financial assets as defined under IRC section 6038D and requires attachment to Form 1040 or other applicable tax returns.
The 2020 instructions provide updated guidance on Global Intermediary Identification Numbers, jointly owned assets with spouses, and documentation requirements for currency exchange rates using the Currency Exchange Rates Converter Tool or alternative sources.
Step-by-Step Filing Checklist
Step 1: Determine the filing requirement
Compare the total value of specified foreign financial assets to the reporting threshold, taking into account filing status and residency. Domestic thresholds are generally $50,000 at year-end or $75,000 at any time for unmarried individuals or those filing separately, and $100,000 or $150,000 for married individuals filing jointly. Taxpayers living abroad generally use $200,000 or $300,000 for unmarried individuals or married individuals filing separately, and $400,000 or $600,000 for married individuals filing jointly.
Specified domestic entities use separate tests that focus on passive income and passive assets. Form 8938 is generally required only when an income tax return is needed for the 2020 tax year.
Step 2: Identify reportable assets
Reportable items include foreign bank accounts, foreign brokerage accounts, and other financial accounts maintained by foreign financial institutions. Reportable non-account assets can consist of foreign stock, interests in foreign partnerships, interests in foreign trusts, foreign pension plans, foreign deferred compensation arrangements, and specific financial contracts with foreign counterparties.
Certain items are not reported on IRS Form 8938, including foreign real estate held directly and tangible property held directly. Assets held in accounts at U.S. financial institutions are also excluded, even when the underlying investment is foreign.
Step 3: Apply exception reporting rules
Some assets are treated as excepted assets when reported on other international information returns such as Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8858. When an asset is covered by one of those forms, it is generally not duplicated in the detailed sections of Form 8938.
Even with exception reporting, values often still count when determining whether the reporting threshold is met. Specified domestic entities must also confirm whether exception treatment affects threshold calculations as specified in the instructions.
Step 4: Calculate maximum asset values
For each specified foreign financial asset, determine the maximum fair market value on any day during 2020. Periodic statements may support foreign financial accounts, but the highest balance may require reviewing multiple statements. For non-account assets, such as foreign stocks or interests in foreign entities, use reasonable valuation methods based on available market data.
Convert foreign currency amounts to U.S. dollars using Treasury Bureau of Fiscal Service rates when available, including the Currency Exchange Rates Converter Tool. If another publicly available rate is used, the source should be documented.
Step 5: Complete the form sections
Parts I and II summarize account and non-account assets by number and maximum aggregate value, and they also capture closures, acquisitions, and dispositions that occurred during 2020. Part III links the assets to tax items reported on the income tax return, including interest, dividends, royalties, gains, losses, deductions, and credits. Part IV lists other international forms filed, so assets reported there are not duplicated in later details.
Parts V and VI provide the detailed disclosures. Part V lists each foreign financial account, including institution and value details, while Part VI lists each other foreign asset, providing descriptions, identifying information, and maximum value reporting. When an asset exceeds $200,000, the form generally requires reporting the specific value rather than selecting a bracket.
Step 6: Address joint ownership rules
Joint ownership affects both threshold testing and reporting. Married filing separately filers generally use half the value of jointly owned assets with a spouse when determining whether the reporting threshold is met. If filing is required, each spouse typically reports the full value of jointly owned assets on a separate Form 8938.
Married filing jointly filers generally report jointly owned assets once at full value. Separately owned assets are also reported at their full value to reflect the total value of the household's foreign financial assets.
Step 7: Verify filing and extension procedures
Form 8938 must be attached to the annual income tax return and cannot be filed by itself. Extensions for the primary return generally also extend the due date for Form 8938. E-file rejection codes should be addressed through the tax software workflow before resubmission.
If an omission is discovered after filing, an amended return may be needed. Depending on the facts, some taxpayers who have addressed prior noncompliance may consider disclosure options for their offshore reporting obligations.
2020 Year-Specific Updates
For 2020, GIIN entries in Parts V and VI remain optional, and leaving them blank does not trigger penalties. The instructions also clarify how jointly owned assets are handled, particularly for married individuals filing separately. Threshold testing may use partial values, whereas reporting requires full values once filing is applied.
Currency conversion guidance continues to favor Treasury Bureau of Fiscal Service rates, as well as the Currency Exchange Rates Converter Tool. When those rates are unavailable, an alternative public exchange rate may be used if the source is appropriately documented. Maximum value reporting rules and value brackets remain the same, including a specific dollar amount requirement for any asset above $200,000.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
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.
