What is form 8938?
Form 8938 is utilized to report foreign financial assets. The form is filed as an attachment to your personal income tax return and is due with your personal tax return.
What constitutes a foreign financial asset?
A foreign financial asset is any assets included in a foreign financial account. It also includes many directly held foreign assets. For example, if you directly own shares of a foreign company, then these assets would need to be included on the form. Another example would be if you owned an interest in a foreign partnership, or foreign trust, these assets would need to be included on the form.
When is it required to file?
The form is only required if your foreign financial assets reach a certain level and is based upon various asset amounts (see table below). Many of the foreign assets are required to be reported on other special forms; however, these assets still need to be included in determining if you are required to file. This form is very similar to form 114 Report of Foreign Bank and Financial account. But, filing one of the forms does not alleviate the requirement to file the other. To compare differences between the form, visit Comparison of Form 8938 and FBAR Requirements.
| Filing individual(living in the U.S.) | > $50,000 in foreign assets on the last day of the year |
| > $75,000 in foreign assets at any point during the year | |
| Filing jointly(living in the U.S.) | > $100,000 in foreign assets on the last day of the year |
| > $150,000 in foreign assets at any point during the year | |
| Filing individual(living abroad) | > $200,000 in foreign assets on the last day of the year |
| > $300,000 in foreign assets on the last day of the year | |
| Filing jointly (living abroad) |
> $400,000 in foreign assets on the last day of the year |
| > $600,000 in foreign assets on the last day of the year |
Failing to file brings significant penalties
A person can be assessed a penalty of $10,000 for not filing a complete and accurate return by the due date of the personal return (including extensions). In addition, you can be assessed another $10,000 for each 30 day period that you do not reply to an Internal Revenues Service notice.
It is important to take a full inventory of all assets held overseas and review each one to determine if it is required to be reported, or you may face serious consequences. Contact Patrick Mutchler at 231-726-5870 or pmutchler@brickleydelong.com for questions or assistance on this subject.