What the Form Is For

Form 8938, Statement of Specified Foreign Financial Assets, is used to report certain foreign financial assets to the Internal Revenue Service. Think of it as the government's way of keeping track of Americans' investments and accounts held outside the United States. The form was introduced as part of FATCA to combat offshore tax evasion and ensure that U.S. taxpayers properly report income from their worldwide assets. IRS.gov

Unlike simply having a foreign bank account, Form 8938 applies to a broader range of assets. You must report financial accounts maintained by foreign financial institutions (like savings or brokerage accounts), as well as certain foreign investments held outside of accounts—including foreign stocks, securities, partnership interests, interests in foreign retirement plans, and even some foreign insurance policies with cash value. However, you don't need to report physical assets like foreign real estate you directly own, precious metals, art, or collectibles. IRS.gov

The form attaches to your regular income tax return (Form 1040, 1040-NR, etc.) and requires you to list each asset, its maximum value during the tax year, and information about the foreign institution or issuer.

When You’d Use Form 8938

Late Filing

Ideally, you file Form 8938 with your original tax return by the standard tax deadline (typically April 15, or October 15 if you file an extension). But life isn't always ideal, and you may realize after filing that you forgot to include the form or made errors on it.

If you discover you should have filed Form 8938 but didn't, you need to file an amended return using Form 1040-X (Amended U.S. Individual Income Tax Return) with Form 8938 attached. The IRS has established procedures for delinquent international information returns, and acting proactively to correct the oversight shows good faith. IRS.gov

Amended Returns

Similarly, if you filed Form 8938 but later discover errors—such as missing assets, incorrect valuations, or wrong account information—you should file Form 1040-X with a corrected Form 8938. Don't wait for the IRS to contact you; voluntary disclosure typically results in more favorable treatment than being caught in an audit.

It's worth noting that penalties can be steep for failure to file or for filing incomplete or inaccurate forms, so correcting mistakes as soon as you discover them is crucial.

Key Rules for 2024

Who Must File

You must file Form 8938 if you're a "specified person"—which includes U.S. citizens, resident aliens, certain nonresident aliens, and some domestic entities—and your specified foreign financial assets exceed certain thresholds. IRS.gov

Reporting Thresholds

• Unmarried taxpayers living in the U.S.: More than $50,000 on the last day of the tax year OR more than $75,000 at any time during the year
• Married filing jointly (living in the U.S.): More than $100,000 on the last day OR more than $150,000 at any time during the year
• Married filing separately (living in the U.S.): More than $50,000 on the last day OR more than $75,000 at any time during the year
• Taxpayers living abroad: Higher thresholds apply—$200,000/$300,000 for single filers and $400,000/$600,000 for joint filers (last day/any time during the year) IRS.gov

What Counts as “Living Abroad”

You qualify as living abroad if you're a U.S. citizen whose tax home is in a foreign country and you're a bona fide resident of that country for an entire tax year, or if you're physically present in a foreign country for at least 330 days during a 12-month period ending in the tax year.

Important Exception

If you're not required to file a U.S. income tax return, you don't need to file Form 8938, regardless of how much your foreign assets are worth.

Relationship to FBAR

Form 8938 is separate from FinCEN Form 114 (Report of Foreign Bank and Financial Accounts, commonly called FBAR). You may need to file one, both, or neither depending on your circumstances. While there's overlap, they have different thresholds, due dates, and filing locations. Form 8938 goes to the IRS with your tax return, while FBAR is filed separately with the Financial Crimes Enforcement Network. IRS.gov

Step-by-Step (High Level)

Step 1: Determine if you must file.

Calculate the total value of your specified foreign financial assets on the last day of the tax year and the maximum value at any point during the year. If either exceeds your applicable threshold, you must file.

Step 2: Gather documentation.

Collect year-end statements from all foreign financial institutions, records of foreign stock holdings, documentation of interests in foreign partnerships or trusts, and information about foreign retirement plans or insurance contracts.

Step 3: Determine asset values.

For financial accounts, use the value reported on periodic account statements unless you have reason to believe they're inaccurate. For assets not in accounts, use publicly available financial information or other verifiable sources. You don't need to hire professional appraisers. IRS.gov

Step 4: Convert foreign currency.

Use the Treasury Department's yearly average exchange rate or the exchange rate on the last day of the year for end-of-year values. The IRS provides a currency converter tool on its website.

Step 5: Complete the form.

Part I covers financial accounts maintained by foreign institutions. Part II covers other foreign financial assets not held in accounts. Part III is a summary of all assets. Part IV lists any exceptions if you're reporting the same assets on other forms like Form 5471 or Form 8621.

Step 6: Attach to your tax return.

Form 8938 must be filed electronically with your tax return if you e-file, or mailed with a paper return.

Common Mistakes and How to Avoid Them

Mistake #1: Confusing Form 8938 with FBAR.

Many taxpayers assume filing one form satisfies all foreign asset reporting requirements. Understanding that these are two distinct obligations with different rules prevents non-compliance. Check both sets of requirements independently.

Mistake #2: Not reporting assets because they didn't generate income.

Form 8938 requires reporting based on asset value thresholds, not whether the assets produced income. Even dormant accounts or non-income-producing investments must be reported if they push you over the threshold.

Mistake #3: Forgetting to report foreign retirement accounts.

Many Americans working abroad don't realize their foreign pension or deferred compensation plan counts as a reportable asset. If you have an interest in a foreign retirement plan and meet the filing threshold, it must be reported. IRS.gov

Mistake #4: Incorrectly reporting assets held in U.S. accounts.

Foreign stocks or securities held in an account at a U.S. financial institution (including IRAs or 401(k) plans) don't need to be reported on Form 8938. Only assets held by foreign institutions or held directly outside of any account require reporting.

Mistake #5: Using the wrong valuation date.

You must report both the maximum value at any time during the year AND the value on the last day of the tax year. Don't just use year-end statements—review your accounts throughout the year to determine the highest balance.

Mistake #6: Missing the “living abroad” threshold adjustment.

U.S. taxpayers living overseas often don't realize they qualify for higher reporting thresholds. Make sure you properly determine whether you meet the criteria for living abroad to avoid unnecessary reporting.

What Happens After You File

Processing

Once you file Form 8938 with your tax return, it becomes part of your official tax record. The IRS uses this information to verify that you've properly reported foreign income and paid appropriate taxes.

Potential Follow-up

The form is processed along with your tax return. The IRS may use the information to cross-check against third-party reporting from foreign financial institutions, which are also required to report on U.S. account holders under FATCA. If the IRS identifies discrepancies between your Form 8938 and other information they receive, or if they believe you should have filed but didn't, you may receive correspondence requesting additional information or assessing penalties.

Penalties for non-compliance

Failure to file Form 8938 when required can result in a $10,000 penalty. If you don't file after IRS notification, an additional penalty of up to $50,000 can apply. Beyond these penalties, any tax underpayment attributable to non-disclosed foreign assets may be subject to an additional 40% substantial understatement penalty. Criminal penalties are also possible in cases of willful non-compliance. IRS.gov

Record retention

Keep copies of your Form 8938 and supporting documentation. The IRS generally has three years to audit returns, but this period can be extended to six years for substantial understatements of income (more than $5,000 from foreign sources), and there's no statute of limitations if you fail to file required forms.

FAQs

Q: Do I need to report foreign real estate I own on Form 8938?

A: No. Directly owned foreign real estate is not a specified foreign financial asset. However, if you own real estate through a foreign entity (like a foreign corporation or partnership), your interest in that entity is reportable if you meet the filing threshold. IRS.gov

Q: I have a foreign bank account with a U.S. bank's foreign branch. Do I report it?

A: Generally no. Financial accounts maintained by a foreign branch of a U.S. financial institution don't need to be reported on Form 8938. However, you may still need to file an FBAR for this account.

Q: What if my foreign assets were just over the threshold for one day during the year?

A: You still must file. The reporting requirement is triggered if your total specified foreign assets exceed the threshold at any time during the tax year, even for a single day.

Q: Can I estimate the value of assets if I don't have exact figures?

A: Yes, within reason. For assets without readily available market prices, you can use publicly available financial information or other verifiable sources to make a reasonable estimate. You're not required to hire professional appraisers. IRS.gov

Q: I'm already reporting some foreign assets on Form 5471 or Form 8621. Do I duplicate the information on Form 8938?

A: Not exactly. If an asset is reported on another form (like Form 3520, 5471, 8621, or 8865), you don't need to provide all the details again on Form 8938, but you must identify on Part IV of Form 8938 which forms report those assets. You still include those assets' values when determining whether you meet the filing threshold. IRS.gov

Q: I received foreign Social Security benefits. Are these reportable?

A: No. Foreign Social Security or similar social insurance benefits are not specified foreign financial assets and don't need to be reported on Form 8938.

Q: What if I only have signature authority over an account but don't own it?

A: Signature authority alone doesn't create an interest requiring Form 8938 reporting. However, you may still have FBAR filing requirements, so check those rules separately.

Form 8938 compliance is an important part of being a U.S. taxpayer with international financial interests. While the rules can seem complex, taking time to understand your obligations, gathering proper documentation, and filing accurately will help you avoid penalties and stay in good standing with the IRS. When in doubt, consult a tax professional experienced in international tax matters.

Sources: All information in this guide comes from official IRS.gov resources, including Form 8938 instructions, FATCA information pages, and IRS FAQs on foreign asset reporting.