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Form 8938: Who is it for and who must file it?

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t’s not uncommon for Americans living or working abroad to acquire different types of foreign financial assets. If you’re a US taxpayer with foreign financial assets, you may be required to disclose those assets on a Form 8938 filed with your tax return. Form 8938 is used to report your specified foreign financial assets in which your interest is higher than the appropriate reporting threshold.

To be more specific, if you’re an American taxpayer who lives abroad and holds a total combined value of specified foreign financial assets worth more than $300,000 at any time during the year (or $200,000 on the last day of the year) you need to report it on Form 8938. If you’re filing a joint return, the thresholds are $600,000 at any time during the year or $400,000 on the last day of the year. Thresholds differ for taxpayers residing in the US.

Specified foreign financial assets include, but are not limited to:

  • Financial accounts maintained by a foreign financial institution.

  • Stock or securities issued by a foreign entity if they are held for investment.

  • Foreign partnership interest.

  • Foreign mutual funds.

  • Foreign issued life insurance or annuity with cash value.

  • Foreign hedge and private equity funds.

You should know that failure to report your financial assets the right way can result in a significant fine and penalty and even criminal charges in cases of fraud. Our advice if you have international complexities: get help from an expert.

Form 8938 Instructions may be found here: https://www.irs.gov/pub/irs-pdf/i8938.pdf

This post may not contain a complete analysis of the tax issues discussed herein and does not represent official conclusions or advice regarding the matter.



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