Form 8938 FATCA Form Foreign Asset Reporting

By | February 11, 2015

FATCA Form 8938 is used to report your specified foreign financial assets if the total value exceeds different thresholds.


Who must file the FATCA Form 8938?

Form 8938 is applicable to U.S. citizens, U.S. individual residents, and a very limited number of nonresident individuals who own certain foreign financial accounts or other offshore assets (specified foreign financial assets) must report those assets. This form is one of the common expat tax forms and must also be filed along with. Form 8938 for 2014 must be filed with the taxpayers tax returns. The FBAR form is filed at another time.


What is FATCA Form 8938?

The Form 8938 is required if a person has at least US$50,000 in total foreign financial assets at any time during the year. (There are higher thresholds for taxpayers who are living outside the US.) The Form 8938 is similar in concept to the foreign bank account report. But there are some differences. Form 8938 asks about foreign financial assets. A foreign account (such as a checking, savings or investment account) is a foreign financial asset. Any financial assets that are not held through an account (such as stock owned directly) may also need to be reported on the Form 8938. This could happen when you receive share certificates.


Difference between FBAR and Form 8938

Many people ask what the difference is between the FBAR and Form 8939. Both are closely are different, but more people will probably file the FBAR than Form 8938 in 2014. One report is the foreign bank account report (TD F 90.22-1). The other report is Form 8938. The foreign bank account report is filed with the US Treasury, the Form 8938 is filed with the IRS along with the rest of the tax return.

IRS form 8938 is a filing that goes with your return, and lists any foreign assets you have over $50k at the end of the year (or over $75k at any point during the year). Those amount are raised to 100k / 150k for married filing joint. This includes stock, loans to foreign individuals, foreign estates, bank accounts, etc.


What is FinCEN 114?

The FinCEN 114 is filed with the treasury department in June, and is a listing of all foreign bank accounts you have signature authority over, even if you do not have any rights to the money. Form 8938 is only required for certain foreign financial assets, including bank accounts and interests in entities. You don’t have to file the 8938 if you own certain assets like land or gold directly.

There are also exceptions to filing form 8938 made for certain trusts and assets held by bona fide residents of U.S. possessions. One important exception applies to an interest in a social security, social insurance, or other similar program of a foreign government. If you have any questions about the types of assets that are excluded from the definition of specified foreign financial asset, please contact our office.

Beyond the FBAR and Form 8938, American expats may be able exclude some or all of their wages from US taxes using the foreign earned income exclusion (see Form 2555 and Publication 54).


IRS Resources for 2014 Form 8938

The IRS anticipates issuing regulations that will require a domestic entity to file Form 8938 if the entity is formed or used to hold specified foreign financial assets and the total asset value exceeds the appropriate reporting threshold. Until the IRS issues such regulations, only individuals must file Form 8938. For more information about domestic entity filing, see Notice 2013-10.

How to Value Foreign Financial Assets for FATCA Form 8938

Taxpayers will need to determine the value of their specified foreign financial assets. Generally, the IRS has explained that specified individuals may rely on periodic account statements for the tax year to report a financial account’s maximum value unless the taxpayer knows or has reason to know that the statements do not reflect a reasonable estimate of the maximum account value during the tax year. The IRS has provided guidance on valuing other types of specified foreign financial assets.


Failure to File Form 8938?

Remember, failure to file Form 8938 can lead to large penalties. There is a failure to file (Form 8938) penalty of $10,000 and an additional penalty of up to $50,000 for continued failure to file after notification by the IRS.