FATCA (Form 8938) – Statement of Specified Foreign Financial Assets

$75 for up to 5 accounts

Form 8938 should be filed to report the ownership of foreign financial assets if the total value of those assets exceeds a pre-established amount. The reporting threshold varies depending on whether you live in the United States, are married, or file a joint income tax return with your spouse.

 

Foreign financial assets include any financial account maintained by a foreign financial institution as well as investments in stocks, securities, or any other interest in a foreign entity and any financial instrument or contract with an issuer or counterparty that is not a U.S. person.

 

Form 8938 must be attached to the taxpayer’s annual income tax return and it is due the same day as your income tax return: April 15th for taxpayers living in the US and June 15th for US citizens living abroad.

If you do not have to file an income tax return for the tax year, you do not need to file Form 8938, even if the value of your specified foreign assets is more than the reporting threshold.

 

Filing Requirements

Form 8938 must be filed if the following 3 requirements are met.

  1. You are:
  • A U.S. citizen
  • A resident alien of the United States for any part of the tax year
  • A nonresident alien who makes an election to be treated as resident alien for purposes of filing a joint income tax return
  • A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico
  1. You have an interest in a specified foreign financial asset.
A specified foreign financial asset is:
    • Any financial account maintained by a foreign financial institution
    • Other foreign financial assets held for investment that are not in an account maintained by a US or foreign financial institution, namely:
    • Stock or securities issued by someone other than a U.S. person
    • Any interest in a foreign entity, and
    • Any financial instrument or contract that has as an issuer or counterparty that is other than a U.S. person.
  1. The total value of your specified foreign financial assets is more than the reporting thresholds that apply to you. The threshold amount will depend if you live abroad or in the United States.
The thresholds for Taxpayer Living Abroad:
  • Taxpayers not Filing a Joint Return : The total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year
  • Married taxpayers filing a joint income tax return: The total value of your specified foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the tax year.
Thresholds for Taxpayer Living in the US
  • Unmarried taxpayers living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.
  • Married taxpayers filing a joint income tax return and living in the US: The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year
  • Married taxpayers filing separate income tax returns and living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.
If you are required to file Form 8938, you do not have to report financial accounts maintained by:
  • a U.S. payer (such as a U.S. domestic financial institution),
  • the foreign branch of a U.S. financial institution, or
  • the U.S. branch of a foreign financial institution.

Form 8938 Penalty

Failure to report foreign financial assets on Form 8938 may result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

 

Form 8938 Late Filing

The FATCA form is part of your income tax return. Form 8938 must be submitted to the IRS with your annual income tax return and file by the due date (including extensions) for that return.

If for any reason, Form 8938 was required and it was not included with your income tax return, file an amended return and attach Form 8938 to that amended return for the appropriate tax year.

Types of Foreign Assets and Whether They are Reportable on Form 8936
Financial (deposit and custodia) accounts held at foreign financial institutions Yes
Financial account held at a foreign branch of a U.S financial institution No
Financial account held at a U.S. branch of a U.S branch of a foreign financial institution No
Foreign financial account for which you have signature authority No, unless any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the account or asset are or would be required to be reported, included, or otherwise reflected on your income tax return
Foreign stock or securities held in a financial account at a foreign financial institution The account itself is subject to reporting, but the contents of the account do not have to be separately reported
Foreign stock or securities not held in a financial account Yes
Foreign partnership interests Yes
Indirect interests in foreign financial assets through an entity No
Foreign mutual funds Yes
Domestic mutual fund investing in foreign stocks and securities No
Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor Yes, as to both foreign accounts and foreign non-account investment assets
Foreign-issued life insurance or annuality contract with a cash-value Yes
Foreign hedge funds and foreign private equity funds Yes
Foreign real estate held directly No
Foreign real estate held through a foreign entity No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate
Foreign currency held directly No
Precious Metals held directly No
Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles. No
‘Social Security’ – type program benefits provided by a foreign government