How do I file Form 8938, Statement of Specified Foreign Financial Assets? (2024)

FAQs

How do I submit Form 8938? ›

Attach Form 8938 to your annual return and file by the due date (including extensions) for that return. You must specify the applicable calendar year or tax year to which your Form 8938 relates in the appropriate space(s) at the top of the form. An annual return includes the following returns. Form 1040.

Can Form 8938 Be E-Filed? You can e-file Form 8938 with the rest of your annual tax return using your tax filing software of choice. Just be sure to do it by the tax deadline, usually April 15, unless you file for an extension.

More In Forms and Instructions

Use Form 8938 to report your specified foreign financial assets if the total value of all the specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold.

Generally, the IRS has explained that a specified foreign financial asset includes any financial account maintained by a foreign financial institution; Other foreign financial assets, which include stock or securities issued by someone other than a U.S. person,any interest in a foreign entity, and any financial ...

A financial asset that is reported on Form 8938 (FATCA) does not necessarily need to be reported on your FBAR form and vice versa.

Foreign Bank Accounts for FBAR & FATCA

When a Taxpayer has foreign bank accounts, they are required to be filed on both the FBAR and FATCA Form 8938. Depending on which country the Taxpayer has overseas accounts, this may include several different types of accounts: Checking Accounts.

What happens if you forget to file? If you're supposed to file Form 8938 and you don't you may be slapped with a fine of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification).

You do not need to separately report the assets of a financial account on Form 8938, whether or not the assets are issued by a U.S. person or non-U.S. person.

Under most circ*mstances, the Treasury Department exchange rates are preferred. In fact, on some of the IRS forms (such as Form 8938) it refers to the Treasury Department exchange rate -- so by using a different exchange rate you are already calling out information that could lead to further scrutiny.

Under the India Income tax (IT) law, there is a requirement to report all foreign assets in the ITR if the individual qualifies as 'resident and ordinarily resident'(ROR) of India during the relevant financial year. My son is a non-resident indian. He is thinking of buying a house in his resident country.

How does IRS know about foreign accounts? ›

The Foreign Account Tax Compliance Act (FATCA) requires foreign banks to report account numbers, balances, names, addresses, and identification numbers of account holders to the IRS.

Unlike Form 8938, the FBAR (FinCEN Form 114) is not filed with the IRS. It must be filed directly with the office of Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury, separate from the IRS.

If you are required to file a Form 8938 and you have a specified foreign financial asset reported on Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8891, you do not need to report the asset on Form 8938.

Financial accounts, such as a depository, custodial or retirement account, held through a foreign branch or foreign affiliate of a U.S.-based financial institution. Payments or the rights to receive the foreign equivalent of Social Security.

That law aims to combat money laundering and tax evasion by requiring U.S. citizens and residents to file reports disclosing their foreign bank accounts. Non-willful violations of the law are subject to a maximum penalty of $10,000 per violation.

Who Must File the FBAR? A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.

A person required to file an FBAR must report all of his or her foreign financial accounts, including any accounts with balances under $10,000.

Criminal FBAR Penalty (Willful Violations)

Willful failure to file: A fine up to $250,000, 5 years in prison, or both. Willful failure to file in concurrence with another crime (such as tax evasion): A fine up to $500,000, 10 years in prison, or both.

Who is required to file the FBAR? All U.S. persons that have a financial interest in or signature authority over a foreign financial account are required to file a FBAR if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

When reporting foreign financial accounts on FinCEN Form 114 (FBAR), you must convert the balance of each account to US dollars. You do not need to convert the funds in the account to US dollars.

What is the maximum account value for FBAR? ›

Who Must File the FBAR? A United States person is required to file an FBAR if that person has a financial interest in or signature authority over any financial account(s) outside of the United States and the aggregate maximum value of the account(s) exceeds $10,000 at any time during the calendar year.

Penalties for failure to file a Foreign Bank Account Report (FBAR) can be either criminal (as in you can go to jail), or civil, or some cases, both. The criminal penalties include: Willful Failure to File an FBAR. Up to $250,000 or 5 years in jail or both.

In general, criminal FBAR penalties are rare – and they typically only rear their ugly head in situations in which other crimes have been committed, such as money laundering, structuring, smurfing, etc. Let's take a look at what the FBAR penalties may look like in 2023 and beyond.

You can use a bank or currency broker to exchange large amounts of currency. The cost is a combination of exchange rates and transfer fees. Currency brokers can normally beat the banks in terms of cost.

You can calculate an exchange rate by dividing the amount of the currency you start with by the amount of the foreign currency you'll get back. For example, if you have $100 and you get €80 back, your exchange rate would be 100 divided by 80, or 1.25 Euros per dollar.

Filing Form 8938 is only available to those using TurboTax Deluxe or higher. To get to the 8938 section in TurboTax, refer to the following instructions: Open or continue your return if you're not already in it. Search for 8938 and select the Jump to link at the top of the search results.

As per the Income Tax law, the disclosure of foreign assets in ITR is mandatory for resident taxpayers who own specified foreign assets at any time during the entire accounting year. However, non-resident or resident but not ordinarily resident taxpayers do not have to disclose their foreign assets in ITR.

You must report the maximum value of the foreign financial assets or financial accounts with foreign financial institutions, and certain other foreign non-account investment assets. The assets are reported in U.S. dollars using the end of the taxable year exchange rates.

It consists of the country's balance of trade, plus or minus foreign investment returns or earnings paid to foreign investors, plus or minus net current transfers.

The Short Answer: Yes. Share: The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there.

Will the IRS find your foreign bank account? ›

Yes, eventually the IRS will find your foreign bank account. When they do, hopefully your foreign bank accounts with balances over $10,000 have been reported annually to the IRS on a FBAR “foreign bank account report” (Form 114).

Per the Bank Secrecy Act, every year you must report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts.

Foreign assets, property and investments

Different from earned income, foreign wealth must be disclosed on your taxes if you're a green card holder.

In general, yes — Americans must pay U.S. taxes on foreign income. The U.S. is one of only two countries in the world where taxes are based on citizenship, not place of residency. If you're considered a U.S. citizen or U.S. permanent resident, you pay income tax regardless where the income was earned.

Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets. Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form.

The U.S. net international investment position was –$18.10 trillion at the end of 2021, compared to –$14.01 trillion at the end of 2020. The net investment positions and components of assets and liabilities are presented in table 2.

There are two basic types of forfeiture actions that can be initiated by the United States against foreign assets. One would be against assets that are located in a foreign country; the other would be against foreign assets located within this country.

Form 8288-B and other applications for a withholding certificate must be sent to Internal Revenue Service, P.O. Box 409101, Ogden, UT 84409.

If you are required to file Form 8938, you must report your financial accounts maintained by a foreign financial institution. Examples of financial accounts include: Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer.

What happens if I forgot to file form 8938? ›

The penalty for failing to file Form 8938 may be up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply.

Forms 8288 and 8288-A are required in all cases, while Form 8288-B is only required if you are applying for a withholding certificate for an exemption or reduction from the statutory amount of withholding prescribed by the IRS.

Foreign persons use this form to apply for a withholding certificate to reduce or eliminate withholding on dispositions of U.S. real property interests.

A transferee must file Form 8288 and transmit the tax withheld to the IRS by the 20th day after the date of transfer. You must withhold even if an application for a withholding certificate is or has been submitted to the IRS on the date of transfer.

Owning Foreign Real Estate as an Individual

Assets required to be reported on Form 8938 are stocks and securities that are issued by a foreign corporation, contact, or investment with an issuer or counterparty that is not a U.S.-based person.

If you don't disclose your offshore accounts, you may be caught through an IRS audit and your foreign accounts may be frozen. The IRS may also impose penalties for failure to comply with offshore account disclosures.

A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report: a financial interest in or signature or other authority over at least one financial account located outside the United States if.

Who Must File the FBAR? A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.

For example, Form 8938 is required if the total foreign-held asset value was $50,000 on the last day of the tax year, or $75,000 at any time during the tax year. If you are married and file jointly with your spouse, the threshold is $100,000 on the last day of the year or $150,000 at any time during the tax year.