Frequently Asked Form 8938 Questions

Question 1

Answer

Form 8938 is designed to be used by the Internal Revenue Service for combat international tax evasion and request information about foreign assets.

Question 2

Who needs to file Form 8938?

Answer

Certain U.S. individual taxpayers holding specified foreign financial assets with an aggregate value exceeding $50,000 ($100,000 if filing jointly) must report information about those assets on Form 8938, which must be attached to the taxpayer’s annual income tax return. Form 8938 started in 2011.

Question 3

What is the difference between FBAR and Form 8938?

Answer

Form 8938 requests information about foreign financial assets (like stocks, bonds, life insurance policies, etc.) and accounts, while the FBAR requests information only about foreign financial accounts. The information reporting is duplicative.

Question 4

Do I need to file both FBAR and 8938?

Answer

Yes, most people have to file both. Married individuals filing jointly and residing in the United States must file Form 8938 if their foreign financial assets are valued at greater than $100,000 on the last day of the year or greater than $150,000 at any point during the year.

Question 5

What happens if you forget to file Form 8938?

Answer

If you are required to file Form 8938 but do not by the due date, you may be subject to a penalty of $10,000 per year. There are IRS voluntary disclosure programs, like the DIIRSP, to cure the failure to file without penalties.

Question 6

What is the penalty for not filing 8938?

Answer

There is a $10,000 penalty for failing to file Form 8938 by the due date.

Question 7

Does filing Form 8938 trigger an audit?

Answer

Form 8938 is not an audit trigger. You will not be audited if you follow the rules and report foreign assets. Failure to file may result in an audit.

Question 8

Is Form 8938 mandatory?

Answer

Yes, if you are required to report foreign financial assets. It is not optional. For example, unmarried individuals residing in the United States are required to file Form 8938 if the market value of their foreign financial assets is greater than $50,000 on the last day of the year or greater than $75,000 at any time during the year (filing jointly the limit is $100,000).

Question 9

Can the IRS check foreign bank accounts?

Answer

Yes, the IRS can check foreign bank accounts via FATCA reporting by foreign banks.

Question 10

Should I engage legal counsel?

Answer

Sometimes legal counsel is not necessary to correct Form 8938 errors. In some cases, legal counsel is strongly recommended. Unsure? Contact us.