Frequently Asked Form 8938 Questions

What is Form 8938?

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

Who needs to file Form 8938?

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.

What is the difference between FBAR and Form 8938?

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 largely duplicative.

Do I need to file both FBAR and 8938?

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

What happens if you forget to file Form 8938?

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.

What is the penalty for not filing 8938?

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

Does filing Form 8938 trigger an audit?

Generally not, but it depends. Form 8938 itself is not an audit trigger. If you follow the rules and report foreign assets, you will generally not be audited. The failure to file may result in an audit and penalties.

Is Form 8938 mandatory?

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 last day of the year or greater than $75,000 at any time during the year (filing jointly the limit is $100,000).

Can the IRS check foreign bank accounts?

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

Should I engage legal counsel?

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