What Form 8938 (2012) Is For
IRS Form 8938 (2012), Statement of Specified Foreign Financial Assets, is used by certain U.S. taxpayers to report foreign financial assets under the Foreign Account Tax Compliance Act. It is an informational filing that helps the Internal Revenue Service verify that taxpayers are correctly reporting worldwide income.
This form is separate from the FBAR (FinCEN Form 114). While both require disclosure of foreign accounts, they have different thresholds, filing locations, and covered assets. A taxpayer may need to file one, both, or neither, depending on individual circumstances.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive Form 8938: Statement of Specified Foreign Financial Assets (2012) — A Complete Guide for U.S. Taxpayers.
When You’d Use Form 8938
Form 8938 must be attached to an annual income tax return, such as Form 1040 or Form 1040NR. For the 2012 tax year, taxpayers were required to file by April 15, 2013, or by the extended due date if an extension was granted. Form 8938 cannot be filed separately from the income tax return.
If a taxpayer failed to include Form 8938 with a 2012 return, an amended return must be filed. This requires completing Form 1040X and attaching the completed Form 8938 to it. A transitional rule applied to certain 2011 filers whose tax years began after March 18, 2010, but before January 1, 2011, allowing attachment of the 2011 Form 8938 to the 2012 return.
Key Rules or Details for 2012
For the 2012 tax year, Form 8938 was required for U.S. citizens, resident aliens, and certain nonresidents who held specified foreign financial assets exceeding reporting thresholds. These thresholds varied by filing status and residence, ranging from $50,000 for single filers in the United States to $600,000 for married taxpayers living abroad.
Reportable assets included foreign bank accounts, stocks, and interests in foreign partnerships or trusts, whereas assets such as U.S. accounts, retirement plans, and directly owned foreign real estate were excluded. All values had to be reported in U.S. dollars using the Treasury exchange rate as of December 31, 2012.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide for Individual Tax Forms.
Step-by-Step (High Level)
Step 1: Determine filing requirements
Review all specified foreign financial assets held during 2012 and compare their total value to the applicable thresholds for filing status and residence.
Step 2: Gather asset details
Collect account numbers or identifying information, institution names and addresses, maximum values during the year, year-end values, dates opened or closed, and any income generated.
Step 3: Value the assets
Use fair market value in U.S. dollars and convert foreign currency using the Treasury exchange rate as of December 31, 2012, even for assets sold earlier in the year.
Step 4: Complete the form
Enter taxpayer information and complete Part I for foreign deposit or custodial accounts, Part II for other foreign assets, Part III for related tax items, and Part IV for assets reported on different forms, adding continuation sheets as needed.
Step 5: Attach and file
Attach Form 8938 to the 2012 Form 1040 or to Form 1040X for an amended filing and submit by the due date, including any approved extension.
Common Mistakes and How to Avoid Them
- Confusing Form 8938 with the FBAR: File both forms when required—each has its own reporting thresholds, filing process, and agency.
- Forgetting to include assets reported elsewhere: When calculating total asset value, include all foreign assets, even if they appear on other tax forms.
- Using the wrong currency conversion rate: Always use the U.S. Treasury exchange rate as of December 31 of the tax year for all value conversions.
- Reporting only the taxpayer’s share of a joint asset: Report the full value of jointly owned foreign financial assets, not just your ownership percentage.
- Filing Form 8938 separately from the tax return: Attach Form 8938 to your annual income tax return; filing it alone does not meet the requirement.
- Excluding assets that earned no income: Report all specified foreign assets regardless of whether they produced income during the year.
Careful attention to thresholds, valuation rules, and filing procedures ensures full compliance and helps taxpayers avoid penalties related to Form 8938.
What Happens After You File
After filing Form 8938, the IRS processes it along with the taxpayer’s income tax return. The information is used to verify accurate reporting of foreign income and assets. If discrepancies are found, the IRS may request additional documentation or clarification to verify the information. Failure to file or report properly can extend the audit period and lead to penalties.
FAQs
What is IRS Form 8938 (2012) and who must file it?
IRS Form 8938 (2012) is the Statement of Specified Foreign Financial Assets required for certain taxpayers who hold foreign financial assets above reporting thresholds. It must be attached to a federal income tax return for the 2012 tax year.
What are specified foreign financial assets?
Specified foreign financial assets include financial accounts held at foreign financial institutions, foreign stocks, partnerships, and other foreign assets not held through U.S. financial institutions. These assets determine whether taxpayers are required to file Form 8938.
How are foreign financial accounts reported?
Foreign financial accounts are reported on Form 8938 when the aggregate value exceeds the IRS reporting thresholds. Each account number, institution name, and maximum value during the year must be included on the statement of specified foreign financial assets.
Do domestic entities or specified domestic entities need to file Form 8938?
Specified domestic entities must file Form 8938 if they hold foreign financial assets exceeding the reporting thresholds. Domestic corporations, partnerships, or trusts are required to file when their foreign accounts meet the IRS definition of reportable assets.
How is the total value of foreign assets calculated?
The total value is determined by combining the maximum value of all foreign assets during the calendar year. Taxpayers must use the fair market value in U.S. dollars and convert it using the Treasury exchange rate as of the last day of the tax year.
What are the potential penalties for failure to file Form 8938?
Failure to file Form 8938 can result in penalties starting at $10,000, with additional penalties for continued noncompliance. The IRS may also extend the statute of limitations and impose further tax liability based on unreported income from foreign assets.
Are foreign real estate or personal property included in Form 8938?
Foreign real estate held directly is not reportable. However, suppose a taxpayer owns foreign real estate through a corporation or partnership. In that case, that interest is considered a foreign asset and must be disclosed on Form 8938 when filing an income tax return.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
