What Is Form 8938? A Guide to Reporting Foreign Assets

If you hold financial assets outside the U.S., you might feel a spike of anxiety when tax season rolls around. That’s completely normal. International tax reporting is complex, and Form 8938 is often a source of confusion for many taxpayers. However, understanding the basics of this form can save you from costly mistakes and minimize your stress.

Briefly put, IRS Form 8938 is the “Statement of Specified Foreign Financial Assets.” It is a requirement under FATCA regulations for taxpayers who hold assets above certain values. While it sounds technical, reporting foreign assets doesn’t have to be a headache.

In this guide, we’ll explain exactly what the 8938 tax form is, help you determine if you need to file, and show you how Gordon Tax can make the process straightforward.

What Is Form 8938?

Form 8938 is the IRS form for reporting specified foreign financial assets if the total value of those assets exceeds the applicable reporting threshold. This form was introduced as part of the Foreign Account Tax Compliance Act (FATCA). Congress passed FATCA in 2010 to create better transparency regarding offshore financial holdings held by U.S. taxpayers.

You should know that IRS Form 8938 is an information-reporting form. This means that filing it doesn’t calculate or create additional tax on the assets themselves.

But if you are required to file a U.S. income tax return, you must file Form 8938 accurately and on time to remain compliant. Essentially, it is a way for the IRS to cross-check the information it receives from foreign banks against your tax return.

Who Needs to File Form 8938?

You must file Form 8938 if you are a specified individual (a U.S. citizen, resident alien, or certain non-resident alien) and your interest in specified foreign financial assets exceeds the reporting threshold. These thresholds vary significantly based on whether you live in the U.S. or abroad and your filing status.

Here is how to identify if Form 8938’s filing requirements apply to you:

Taxpayers Living in the U.S.

The following thresholds apply to taxpayers residing in the United States:

Unmarried (or married filing separately): You must file IRS Form 8933 if your specified foreign financial assets exceed $50,000 on the last day of the tax year or $75,000 at any time during the year.
Married filing jointly: You must file the form if your combined assets exceed $100,000 on the last day of the tax year or $150,000 at any time during the year.

Taxpayers Living Abroad

If you meet the presence abroad test, the thresholds are higher:

Unmarried (or married filing separately): You must file if your assets exceed $200,000 on the last day of the tax year or $300,000 at any time during the year.
Married filing jointly: You must file Form 8933 if combined assets exceed $400,000 on the last day of the tax year or $600,000 at any time during the year.

Form 8938 Example Scenarios

We’ve collected some examples to serve as guidance for determining whether you have to file Form 8938:

Example 1: A U.S. expat living in the Netherlands has a local savings account and a Dutch pension plan. If the combined value of these assets crosses the applicable Form 8938 threshold for expats, both assets likely need to appear on the form.
Example 2: A single filer living in Texas inherited stock in a foreign corporation from a relative abroad. If the stock’s value exceeds $50,000 at year-end or $75,000 at any point during the year, these inherited assets must be reported.
Example 3: A married couple filing jointly who live in the U.S. hold a joint foreign brokerage account valued at $110,000. Because they meet the $100,000 year-end threshold, they must file Form 8938 with their joint return.

Not all assets are reportable. Foreign real estate held directly (not through a foreign entity), foreign currency held directly, and assets held in U.S.-based financial institutions generally do not need to be reported on this form.

Form 8938 vs. FBAR

It is very common for taxpayers to confuse Form 8938 with the FBAR (FinCEN Form 114), especially as both forms report on foreign assets. However, they have distinct requirements for taxpayers, including:

The FBAR and Form 8938 often overlap. Filing one does not satisfy the obligation to file the other. You may need to file both.
The FBAR is triggered if you have an aggregate of $10,000 in foreign accounts at any point during the year. Form 8938’s thresholds are much higher and depend on your residency and filing status.
Form 8938 is filed with the IRS attached to your tax return. The FBAR is filed separately with the Financial Crimes Enforcement Network (FinCEN).
While FBAR focuses on accounts, Form 8938 includes foreign stock not held in an account, interests in foreign entities, and foreign pensions.

Pro Tip: If you’re unsure about the form or whether you need to file one or both, working with an experienced accountant is the fastest way to get clarity and avoid missing a required form.

Form 8938 Penalties and Due Dates

When reporting foreign assets, accuracy is key. Foreign financial institutions report account information to the IRS under FATCA regulations, meaning the IRS may already have data on your financial assets abroad. Accurate filing ensures your return matches what they know.

Moreover, the IRS can treat an incomplete Form 8938 as a failure to file. Getting it right the first time is far easier and less stressful than amending a return later or responding to an IRS notice.

Form 8938 Penalty

While the goal is stress-free compliance, it’s important to know why foreign assets reporting is taken so seriously. The IRS imposes significant penalties to ensure taxpayers disclose their offshore holdings. However, you should view this as an incentive to file accurately rather than a reason to panic.

Form 8938’s penalties include the following:

An annual $10,000 initial penalty for failure to file a complete and correct Form 8938 by the due date.
If the failure continues after the IRS sends you a notice, you may face an additional $10,000 for each 30-day period of continued failure, up to a maximum additional $50,000. This brings the potential total to $60,000 per year.
A 40% penalty on any underpayment of tax related to undisclosed specified foreign financial assets.

These penalties generally won’t apply if you can show that the failure to file was due to reasonable cause and not willful neglect.

Form 8938 Penalty Relief

If you’ve missed prior filings, don’t worry—there are solutions. The IRS offers options for taxpayers to get back into compliance, such as the Streamlined Domestic Offshore Procedures. These programs require meeting specific criteria and are best navigated with professional help.

When to File Form 8938?

Form 8938 is filed with your annual tax return and is due on the same date, including extensions. For most filers living in the U.S., the due date for Form 8938 is April 15. This deadline can be optionally expanded to October 15 via Form 4868.

If you’re a U.S. citizen and resident who lives abroad, you can also take advantage of an automatic two-month extension to June 15. You can also request a further extension to October 15 in this case as well.

But whether you reside in the U.S. or abroad, remember that Form 8938 cannot be filed on its own—it must be attached to your annual return.

Form 8938 Instructions: How to File?

Filing Form 8938 involves multiple steps to ensure your statement of specified foreign financial assets is accurate. Here is a practical overview of how to file Form 8938:

Step 1: Confirm the Threshold

You must add up the maximum value of all your specified foreign financial assets during the year—not just the year-end balance. You must convert foreign currencies to U.S. dollars using the U.S. Treasury Bureau of the Fiscal Service exchange rate for the last day of the tax year.

Step 2: Gather Your Documents

You will need account numbers, the names and addresses of financial institutions, maximum asset values, joint ownership details, and records of any income (interest, dividends, royalties) generated from each asset.

Step 3: Complete the Form

Next, it’s time to fill out the form:

Part I covers foreign deposit and custodial accounts.
Part II covers other foreign assets not held in a financial account (like stock certificates or partnership interests).
Part III summarizes the income derived from these assets.
Part IV allows you to note assets already reported on other forms (like Form 3520, 5471, or 8865) so you don’t have to duplicate the details.

Step 4: Attach and File

Once you’ve filled out Form 8938, attach it to Form 1040. You can also file Form 8938 electronically as part of your electronic tax return submission.

Step 5: Keep Your Records

Always retain account statements and supporting documentation in case the IRS has questions later. This step is just as important as the others to remain compliant with the IRS’s rules.

Between identifying all your reportable assets, converting currencies, and making sure everything lines up with the rest of your return, there is a lot to get right—and that’s where Gordon Tax comes in.

Get Help With Form 8938

As you can see, Form 8938 has a lot of moving parts. Between identifying every reportable asset, calculating maximum values, converting currencies, and coordinating the form with the rest of your return, it’s easy to make mistakes without professional guidance.

Gordon Tax’s experienced accountants have been helping clients navigate complex international filings, including Form 8938, since 2014. We take the paperwork off your plate, make sure every asset is correctly reported, and file your complete return accurately and on time. You can file with confidence knowing that we handle the details for you.