What Form 8938 (2014) Is For
IRS Form 8938 (2014), the Statement of Specified Foreign Financial Assets, is used by the Internal Revenue Service to monitor foreign financial assets held by U.S. citizens, resident aliens, and certain domestic entities. Created under the Foreign Account Tax Compliance Act (FATCA), it helps ensure compliance with U.S. tax laws and financial transparency. Taxpayers must file Form 8938 if the aggregate value of their foreign financial accounts and other foreign assets exceeds the reporting thresholds for their filing status.
The form requires the reporting of specified foreign financial assets, including foreign bank accounts, mutual funds, shares in foreign corporations, partnerships, and trusts. Assets must be converted to USD using official foreign currency rates to report the maximum value on the income tax return.
For a detailed breakdown of filing requirements, eligibility rules, and step-by-step instructions, see our comprehensive guide for Form 8938: Statement of Specified Foreign Financial Assets (2014).
Who Must File
Individuals must file IRS Form 8938 (2014) if they hold specified foreign financial accounts or assets with an aggregate value exceeding the required threshold during the calendar year. This includes U.S. citizens, resident aliens, and certain nonresident aliens considered specified individuals. Filing is necessary whether the assets are held in a foreign bank, partnership, or trust, and all amounts must be accurately converted to USD using the Treasury’s mid-market rate.
When You’d Use Form 8938
Taxpayers use IRS Form 8938 (2014) to report foreign financial accounts and assets when the aggregate value exceeds the filing threshold for the calendar year. The form must be filed with the individual’s income tax return, either original or amended, to ensure accurate reporting of foreign currency and financial interest. It is also used when correcting or updating prior filings to provide revised currency data or meet updated FATCA requirements.
Key Rules or Details for 2014
IRS Form 8938 (2014) applies to individuals who meet specific foreign asset thresholds based on filing status and residence. Taxpayers must report the maximum aggregate value of all foreign financial accounts, including those in foreign banks, investment funds, or partnerships, during the calendar year. All foreign currency values must be converted to USD using the Treasury’s mid-market rate to ensure accuracy. Assets such as precious metals held directly or personal property are not considered reportable, while financial interests held through a partner, trust, or corporation must be included.
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 if Filing Is Required
Calculate the total aggregate value of all foreign assets held during 2014 and compare it to the filing thresholds for the taxpayer’s status and residence.
Step 2: Gather Documentation
Collect all records needed to file, including:
- Account statements showing balances during the year
- Details of institutions holding the financial accounts
- Evidence of ownership, signature authority, or partnership interests
- Currency data used for USD conversion
Step 3: Convert and Record Values
Convert each account’s highest balance to USD using the official Treasury mid-market rate for December 31, 2014. Record all conversions clearly and accurately.
Step 4: Complete the Form
Provide the following:
- Personal information and tax return details
- Descriptions and maximum values of each asset
- Income derived from the assets, and where it was reported
- Notes for any assets already disclosed on other forms, such as 5471 or 8621
Step 5: Attach and File
Attach the completed Form 8938 to the taxpayer’s income tax return. For more information or IRS assistance, file electronically or by mail, ensuring that all figures are accurate and all required forms are included.
Common Mistakes and How to Avoid Them
- Not including all assets: Count all specified foreign financial assets when determining whether you meet the filing threshold, even if they’re already reported on other forms.
- Using year-end instead of maximum value: Report the highest value of each account during the tax year, not just the December 31 balance.
- Incorrect currency conversion: Use the official U.S. Treasury mid-market exchange rate for the correct date and year when converting foreign amounts.
- Ignoring joint ownership rules: Each spouse filing separately must report the full value of all jointly owned foreign accounts.
- Confusing Form 8938 with FBAR (FinCEN Form 114): These forms serve different purposes and have separate thresholds—some taxpayers must file both.
- Filing Form 8938 separately: Always attach Form 8938 to your income tax return; filing it alone does not meet the IRS requirement.
Following these steps ensures accurate reporting, full compliance, and avoidance of costly IRS penalties related to Form 8938.
What Happens After You File
After filing IRS Form 8938 (2014), the IRS reviews the reported foreign financial accounts and compares them with FATCA and FBAR data for accuracy. If discrepancies appear, the IRS may send a notice requesting additional information or currency data. Taxpayers should keep all records secure for several years to ensure quick access if further review is required.
FAQs
Who is required to file IRS Form 8938 (2014)?
Individuals must file Form 8938 (2014) if they own specified foreign financial assets or foreign financial accounts whose aggregate value exceeds the reporting thresholds for their filing status. This includes U.S. citizens, resident aliens, and certain specified domestic entities with foreign assets.
Does Form 8938 include foreign real estate or retirement accounts?
Directly owned foreign real estate or personal property is not a reportable foreign financial asset. However, if these assets are held through a foreign corporation, partnership, or trust, they must be reported on the tax return. Retirement accounts held by foreign financial institutions may also require disclosure.
What are the reporting thresholds for foreign financial assets?
Reporting thresholds vary depending on filing status and residency. For U.S. residents, the aggregate value of foreign financial accounts and assets must exceed $50,000 on the last day of the tax year or $75,000 at any time. Higher thresholds apply for those living abroad.
How are foreign financial assets valued and reported in USD?
Taxpayers must determine the maximum value of each foreign financial account or asset during the tax year and convert the total value to U.S. dollars using the Treasury’s official foreign currency exchange rate. This ensures compliance with Internal Revenue Service reporting requirements.
What happens if Form 8938 is not filed as required?
Failure to file Form 8938 when required can result in severe civil and criminal penalties under federal tax laws. The Internal Revenue Service may assess fines for underreporting foreign assets and initiate enforcement actions to ensure complete financial transparency and compliance.
For more resources on filing or understanding other IRS forms, visit our Form Summaries and Guides Library.
