FATCA Form 8938 Questions Answered — Valuable Info Expats Need to Know

One of the things schools missed out on teaching is how to pay taxes properly. This complication is further exacerbated when you must pay taxes as an expat in a foreign country. This is especially true if you have assets, accounts, or shares, and are required to file the IRS Form 8938.

The IRS Form 8938 is one of the most important forms you must complete as an expat. If you’re unsure what IRS Form 8938 is or how to file it, don’t worry. This article will answer the most frequently asked questions about the form.

Common Questions About FATCA Form 8938

What is IRS Form 8938?

You use the IRS Form 8938 or the Statement of Specified Foreign Financial Assets to report your specified foreign financial assets if their total value exceeds the appropriate reporting threshold.

While there is some overlap between that and the foreign financial accounts to report on the FBAR (Report of Foreign Bank and Financial Accounts or FinCen Form 114), Form 8398 is more extensive. Failure to comply can result in more penalties. Form 8938 includes information not included on the FBAR, such as:

• The exchange rate you used
• The type and quantity of income
• Whether or not you established the asset or account during the tax year
• Whether or not you closed the asset or account during the fiscal year
• Whether or not you jointly owned the asset or account with your spouse

Who should file IRS Form 8938?

You must file Form 8938 if you are a specified individual or certain domestic entities and your specified foreign financial assets exceed the reporting thresholds.

A specified individual includes:

• U.S. citizens.
• Resident aliens under the green card test or substantial presence test.
• Nonresident aliens who elect to be treated as residents for joint return purposes.
• Nonresident aliens who are bona fide residents of American Samoa or Puerto Rico.

Specified domestic entities (like certain U.S. corporations, partnerships, or trusts) may also need to file if they hold foreign assets worth more than $50,000 at any point during the year.

Reminder: If you do not have to file an income tax return for the tax year, you do not have to file Form 8938 either, even if the value of your specified foreign financial assets reaches or exceeds the reporting threshold.

Read more about Publication 519 or the U.S. Tax Guide for Aliens to give you more information about tax status and whether or not you have to file taxes.

What are the reporting thresholds for Form 8938?

The filing threshold depends on your filing status and whether you live inside or outside the U.S.

Living in the U.S.

• Single or married filing separately: More than $50,000 on the last day of the year, or more than $75,000 at any time.
• Married filing jointly: More than $100,000 on the last day of the year, or more than $150,000 at any time.

Living abroad (tax home in a foreign country and meet the presence abroad test)

• Single or married filing separately: More than $200,000 on the last day of the year, or more than $300,000 at any time.
• Married filing jointly: More than $400,000 on the last day of the year, or more than $600,000 at any time.

Which assets must be reported?

You must report foreign financial accounts and other specified assets, such as:

• Checking, savings, deposit, or brokerage accounts held with foreign institutions.
• Stocks, securities, or bonds issued by a non-U.S. person.
• Interests in foreign partnerships, corporations, or estates.
• Interests in foreign retirement or deferred compensation plans.
• Foreign-issued insurance or annuity contracts with cash value.
• Certain derivative contracts (swaps, options, etc.) with foreign counterparties.

Not reportable:

• Foreign real estate held directly (though real estate held through a foreign entity is reportable).
• Tangible personal property like jewelry, art, or cars.
• Precious metals or foreign currency held directly.
• Payments or rights to foreign social security–type benefits.

How do I complete Form 8938?

Form 8938 is attached to your tax return. It includes:

• Part I & II: Details of your foreign deposit accounts, custodial accounts, and other assets.
• Part III: Income items such as interest, dividends, royalties, or capital gains.
• Part IV: Disclosure of assets already reported on other IRS forms.
• Parts V & VI: Detailed descriptions of each account or asset, including maximum value and valuation method.

What will happen if I forget to file or don’t file IRS Form 8938?

Failure to complete and file a correct Form 8938 by the due date, including extensions, could mean a $10,000 penalty.

The IRS will then mail you a notice of failure to file. If you still do not make any move 90 days after the notice, you may be subject to an additional $10,000 penalty for each 30-day period (or part of a period) during which you fail to file Form 8938 after the 90 days have expired. 

A continuing failure to file Form 8938 carries a maximum additional penalty of $50,000.

When Should I File It?

Attach Form 8938 to your individual tax return and file by the due date (including extensions). The deadline usually falls on the Tax Day of the year, or April 15.

Is there a statute of limitations for Form 8938?

Normally, the statute of limitations is three years after filing. But if you omit more than $5,000 of income related to foreign assets, the IRS can assess tax up to six years later.

If you fail to file Form 8938 entirely, the statute of limitations for your entire tax return may remain open indefinitely until you file.

How do Form 8938 and FBAR differ?

	Form 8938	FBAR (FinCEN Form 114)
Who files	U.S. citizens, resident aliens, some nonresident aliens, and certain domestic entities	U.S. citizens, resident aliens, some nonresident aliens, and certain domestic entities
Threshold	U.S. citizens, resident aliens, some nonresident aliens, and certain domestic entities	U.S. citizens, resident aliens, some nonresident aliens, and certain domestic entities
Due date	With your tax return (April 15, with extensions)	April 15 (automatic extension to Oct 15)
Where filed	With your IRS tax return	Electronically via FinCEN’s BSA E-Filing system
Penalties	$10,000 minimum; up to $50,000 for continued failure; criminal penalties possible	Up to $10,000 (non-willful) or greater of $100,000/50% of account balance (willful); criminal penalties possible

Last But Not Least, do I need professional help with Form 8938?

Form 8938 can be one of the trickiest IRS filings for expats. The reporting thresholds, overlapping rules with FBAR, and severe penalties for mistakes make it risky to handle on your own. Working with an experienced expat tax professional ensures your assets are reported accurately, your return is complete, and you avoid unnecessary fines.

At Tax Samaritan, we help expats like you simplify FATCA compliance and stay on the IRS’s good side. Click the link below to request a free 30-minute consultation today and get peace of mind knowing your taxes are in expert hands.