What Form 8938 (2019) Is For
IRS Form 8938 (2019) is used to report specified foreign financial assets to the Internal Revenue Service. It was introduced under the Foreign Account Tax Compliance Act to improve financial transparency and reduce tax evasion through offshore accounts. The form requires U.S. taxpayers to disclose certain foreign financial accounts and other foreign assets held outside the United States.
This statement of specified foreign financial assets applies to individuals and certain domestic entities that own or hold interests in foreign financial institutions, foreign bank accounts, or other foreign assets exceeding the reporting thresholds. These may include interests in foreign partnerships, foreign corporations, or foreign pensions. The goal is to ensure accurate reporting of income from foreign sources and maintain compliance with federal tax return requirements.
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 (2019) — A Complete Guide for U.S. Taxpayers.
When You’d Use Form 8938
A U.S. taxpayer must file Form 8938 if they have specified foreign financial assets exceeding the IRS reporting thresholds. Individuals filing an annual income tax return must attach Form 8938 when filing Form 1040, Form 1040-NR, or other applicable IRS forms.
Who Must File
- A U.S. citizen with ownership or signature authority over foreign financial accounts
- A resident alien or certain nonresident aliens who meet filing status and presence requirements
- A specified domestic entity, such as a closely held corporation, trust, or partnership, meeting value or income tests
Late or Amended Filing
For taxpayers filing late or amending a return, the form must be submitted with Form 1040-X. The IRS does not accept Form 8938 on its own. Late filers should complete an amended return and attach Form 8938 to ensure compliance with the tax law. If a person is not required to file an income tax return, they do not need to file Form 8938, even if their foreign asset value exceeds the thresholds.
Key Rules or Details for 2019
The 2019 filing thresholds are based on both the value of specified foreign financial assets and filing status:
- Unmarried or married filing separately: More than $50,000 on the last day of the tax year or over $75,000 at any time during the year
- Married filing jointly: More than $100,000 on the last day of the tax year or over $150,000 at any time during the year
- Taxpayers living abroad: Higher thresholds apply, up to $600,000 for joint filers
Reportable Assets
- Foreign bank and financial accounts
- Foreign mutual funds, stocks, or securities not held in a U.S. account
- Interests in foreign pensions, annuity contracts, or insurance products
- Ownership in foreign corporations, partnerships, or trusts
Nonreportable Assets
- Foreign real estate held directly
- Tangible assets or currency held outside a financial account
- U.S.-based brokerage accounts containing foreign investments
However, ownership interests in foreign entities holding real estate must be reported. 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 you are a specified person
Review your filing status, residency, and ownership of foreign financial accounts or assets.
Step 2: Identify all specified foreign financial assets
Include accounts, foreign corporations, or contracts held through a foreign financial institution.
Step 3: Calculate the maximum value
Use bank statements or other financial documents to determine the highest and year-end values for each asset, converted to U.S. dollars using Treasury exchange rates.
Step 4: Check the reporting threshold
Compare the aggregate value of all foreign assets to the threshold that applies to your filing status.
Step 5: Complete Form 8938 accurately
List each account or asset in the correct section, noting type, maximum value, and any related income.
Step 6: Attach and file
Submit Form 8938 with your income tax return or amended return by the due date, including any extensions.
Learn more about federal tax filing through our IRS Form Help Center or explore IRS assistance options.
Common Mistakes and How to Avoid Them
Many taxpayers confuse Form 8938 with the FBAR, which is filed separately through the BSA E-Filing System.
- Reporting only income-producing assets: Report all specified foreign financial assets exceeding the filing threshold, even if they did not generate income.
- Omitting foreign pension plans or mutual funds: Include foreign retirement plans, mutual funds, and similar investment accounts that meet reporting criteria.
- Reporting U.S.-based brokerage accounts: Do not report accounts held at U.S. institutions, even if they contain foreign investments.
- Using incorrect exchange rates or valuation dates: Convert asset values using the Treasury Department’s year-end exchange rate for the applicable tax year.
- Failing to report jointly owned foreign accounts: Report the full value of jointly owned accounts under the correct filing status to ensure complete disclosure.
To prevent errors, taxpayers should carefully review reporting instructions and maintain documentation, such as bank statements and valuation records, for each foreign financial asset.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The IRS reviews Form 8938 as part of the taxpayer’s overall income tax return. The data is compared with information from foreign financial institutions received under the Foreign Account Tax Compliance Act to confirm accurate foreign asset reporting and compliance with U.S. tax laws.
If Form 8938 is filed completely and accurately, the IRS usually takes no further action. However, if the form is incomplete, inaccurate, or missing, penalties may apply. Filing corrections quickly through an amended return can help avoid additional fines or criminal penalties related to undisclosed foreign financial assets.
FAQs
What is IRS Form 8938 (2019) used for?
IRS Form 8938 (2019) is the statement of specified foreign financial assets required for U.S. taxpayers with foreign financial assets exceeding the IRS reporting threshold. It ensures compliance with foreign asset reporting requirements as part of an annual income tax return.
Who must file Form 8938?
Any U.S. citizen, resident alien, or specified domestic entity must file Form 8938 if the aggregate value of their foreign financial accounts or other foreign assets exceeds the IRS reporting thresholds based on filing status and residence.
What foreign financial assets are reportable?
Foreign bank and financial accounts, foreign mutual funds, foreign partnership interests, annuity contracts, and foreign pensions are reportable. These specified foreign financial assets include interests maintained by a foreign financial institution or entity.
How do reporting thresholds for Form 8938 work?
Reporting thresholds depend on filing status and location. The total value and maximum value of all specified foreign financial assets are compared to IRS limits. Married filing jointly taxpayers living abroad generally have higher thresholds.
What are the penalties for not filing Form 8938?
Failure to file Form 8938 when required may result in a penalty of $10,000, with additional fines up to $50,000 for continued noncompliance. Criminal penalties can apply for willful violations or false reporting of foreign financial assets.
How is Form 8938 different from the FBAR?
Form 8938 is attached to a federal tax return and sent to the IRS, while the FBAR is filed separately through the BSA E-Filing System with the Financial Crimes Enforcement Network. Many taxpayers are required to complete both filings for full compliance.
