In this article, we’re discussing Form 8938 instructions and answering questions that Americans with offshore accounts tend to ask about their reporting obligations.
Not surprisingly, this is an important read for US persons with reportable FATCA assets, which we’ll discuss in detail below.
Also, it’s worth noting that this article is part of our free series on foreign bank accounts for US citizens, which you can access right now by clicking the link above.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Form 8938 Instructions
- How to File Tax Form 8938 With the IRS
- Form 8938 vs FBAR
- Frequently Asked Questions
- Ready to Explore Your Options?
Form 8938 Instructions
Form 8938 instructions are available from the IRS. Importantly, both resident and non-resident US taxpayers with reportable foreign financial assets must comply. Importantly, Form 8938 is a separate filing requirement from the FBAR and has different reporting thresholds.
Also, it’s important to note that under FATCA, all foreign financial accounts held by Americans will be reported by foreign financial institutions. This means that even when a US person fails to report their accounts themselves, the IRS still receives this information from the bank, broker, insurance company, or other financial institution where the accounts are held.
So, needless to say, if you’re a US person with reportable foreign financial accounts, it’s important to understand the electronic filing instructions. This includes knowing how to correctly report Form 8938 and the FBAR.
Do I Have to Claim Foreign Assets on Form 8938?
You have to claim foreign assets on Form 8938 if they meet the reporting requirements of the IRS. This may include reporting foreign shares and securities in addition to foreign financial accounts. To ensure you’re correctly reporting your financial assets, consult a qualified tax professional who is familiar with Form 8938 and the FBAR.
How to File Tax Form 8938 With the IRS
To file tax Form 8938 with the IRS, the taxpayer must attach the completed form to their annual return. Then, submit both by the relevant filing deadline. If Form 8938 was omitted, Form 1040x must be filed as an amended annual return with Form 8938 included as an attachment.
Form 8938 vs FBAR
The main difference between Form 8938 and the FBAR is that Form 8938 is filed with the International Revenue Service (IRS). While the FBAR is filed with the Department of Treasury via the Financial Crimes Enforcement Network (FinCEN). Additionally, Form 8938 has significantly higher reporting thresholds (starting at USD 50,000) than the FBAR (USD 10,000).
That said, there are other differences as well, including how reportable assets are defined and how (and where) Form 8938 and the FBAR are both filed. But also, even who is required to file each form.
Here are a few examples of the differences between Form 8938 and the FBAR:
Form 8938 vs FBAR Reportable Assets
Form 8938 is filed when a US person owns an interest in a reportable foreign asset.
FBAR is filed when a US person owns or has signing authority over foreign financial accounts.
It’s also important to note that there are several differences in the types of foreign financial accounts that are considered reportable under Form 8938 and FBAR. However, you should speak directly with a tax professional. This way, you can determine which accounts are relevant to report for your unique situation.
Who Needs to File Form 8938 vs FBAR
The filing requirements for Form 8938 are determined by residency status (US resident vs US non-resident), marital status (single vs married), and filing status (jointly vs separately). Additionally, in certain instances, US entities (corporations, partnerships, and trusts) are also required to file Form 8938.
On the other hand, the filing requirements for FBAR are broader. This applies to any US person or entity that has an interest or signing authority over reportable foreign financial accounts.
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Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into the Form 8938 instructions for filing with the IRS. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Must Be Reported on Form 8938?
The assets that must be reported on Form 8938 include interest in foreign financial assets like bank accounts, brokerage accounts, investment funds, mutual funds, insurance policies, annuities, and certain foreign entities.
Do I Have to File Both 8938 and FBAR?
Yes, you have to file both Form 8938 and FBAR if you have reportable foreign assets and/or financial accounts that meet the reporting thresholds for both forms. That said, it is possible for an individual to be required to file the FBAR but not be required to file Form 8938 and vice versa. This depends on the specific foreign assets that you hold.
What If I Forgot to File 8938?
If you forgot to file Form 8938 you will need to submit Form 1040x. Form 1040x allows US taxpayers to amend their submitted annual tax returns. The amendment should be submitted with the completed Form 8938 attached in order to meet the reporting requirements.
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