What is Form 8938?
Form 8938 (Statement of Specified Foreign Financial Assets) Form 8938 is the FATCA (Foreign Account Tax Compliance Act) reporting form for individuals. It reports specified foreign financial assets including bank accounts, investment accounts, foreign stocks, interests in foreign entities, and financial instruments issued by non-US persons.
| Detail | Information |
|---|---|
| Official Name | Statement of Specified Foreign Financial Assets |
| Filing Deadline | Due with your income tax return (Form 1040, 1040-NR). Extensions follow the underlying return. |
| Penalty for Non-Filing | $10,000 for failure to file, plus up to $50,000 for continued failure after IRS notice. 40% accuracy-related penalty on underpayments attributable to undisclosed foreign financial assets. Potential criminal penalties. |
| Filed With | IRS |
Who Needs to File Form 8938?
US persons (citizens, residents, and certain nonresidents who elect to file jointly) with specified foreign financial assets exceeding the filing thresholds. For unmarried taxpayers living in the US: $50,000 on the last day or $75,000 at any point during the year.
Non-Resident Relevance
If you are a non-resident entrepreneur with a US LLC or US-source income, Form 8938 may be a critical part of your US tax compliance. Consult with a qualified tax professional to determine if this form applies to your situation.
Filing Deadline
Due with your income tax return (Form 1040, 1040-NR). Extensions follow the underlying return.
Filing on time is critical. If you need more time, file Form 7004 for an automatic 6-month extension before the original due date. Note that an extension of time to file is not an extension of time to pay.
Penalties for Non-Compliance
Penalty Warning
$10,000 for failure to file, plus up to $50,000 for continued failure after IRS notice. 40% accuracy-related penalty on underpayments attributable to undisclosed foreign financial assets. Potential criminal penalties.
The IRS enforces these penalties strictly, especially for information returns related to foreign-owned entities. In many cases, there is no reasonable cause exception, making timely filing essential.
How to Complete Form 8938
Here is a section-by-section breakdown of Form 8938:
Part I – Foreign Deposit Accounts
Report foreign bank accounts including the financial institution name, address, account number, currency, and maximum value during the year.
Part II – Other Foreign Financial Assets
Report foreign stocks, securities, interests in foreign entities, and other financial instruments not held in a financial account.
Part III – Tax Items
Report income, gains, losses, deductions, and credits attributable to the reported foreign financial assets.
Part IV – Excepted Assets
List any assets that qualify for reporting exceptions.
Filing Tip
Given the complexity and steep penalties associated with Form 8938, we strongly recommend working with a qualified tax professional who has experience with non-resident tax filings. Errors or omissions can trigger significant penalties.
Common Mistakes to Avoid
These are the most frequent errors we see when clients attempt to file Form 8938 on their own:
- Confusing Form 8938 with FBAR (FinCEN 114) — they are separate requirements with different thresholds
- Not filing because assets are below the threshold in one year (check both end-of-year and any-point-during-year thresholds)
- Not reporting interest in a foreign entity (like a foreign corporation you own)
- Double-counting assets reported on other forms
- Using wrong valuation method for non-cash assets
- Not reporting assets held jointly with a non-US person
Need Help Filing Form 8938?
Our tax experts specialize in preparing and filing Form 8938 for non-resident entrepreneurs. Avoid costly penalties — let us handle it.
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