Form 8938 (FATCA)

Form 8938, Statement of Specified Foreign Financial Assets, is the individual-level FATCA disclosure required by Section 6038D. It attaches to the income tax return and is filed by specified persons whose specified foreign financial assets exceed the applicable threshold. Unlike the FBAR, it is a tax form, it goes to the IRS with the return, and it carries tax-specific consequences when omitted.

The thresholds are a matrix of filing status and residence, and both halves matter. A single filer living in the United States reports when assets exceed $50,000 on the last day of the year or $75,000 at any time during it. Married filing jointly doubles both figures. Filers whose tax home is abroad and who meet the presence tests get substantially higher thresholds, $200,000 and $300,000 for a single filer and double that for a joint return. Specified domestic entities, closely held entities formed or used to hold foreign assets, also file.

The asset definition is broader than the FBAR's in one direction and narrower in another. Broader: it captures foreign stock and securities held directly rather than through an account, interests in foreign partnerships, foreign-issued notes and bonds, interests in foreign trusts and estates, and foreign-issued insurance and annuity contracts. Narrower: it does not reach accounts over which the filer has only signature authority. That single difference is why an employee with authority over a corporate account abroad may have an FBAR obligation and no Form 8938 obligation at all. Assets already reported on Forms 3520, 5471, 8621, 8865, or 8858 do not need duplicate detail on the 8938, but the form still has to identify where they were reported.

Penalties start at $10,000 for a failure to file, with continuation penalties of $10,000 for each 30-day period after IRS notice, capped at $50,000. Two secondary consequences are usually worse than the penalty itself. An understatement attributable to an undisclosed specified foreign financial asset is subject to a 40% accuracy-related penalty. And under Section 6501(c)(8) the statute of limitations on the entire return stays open until the required information is furnished, which converts a forgotten schedule into indefinite exposure on everything else in the return.

For preparers the practical rule is to screen for both reports at once. The client questionnaire that asks only about "foreign bank accounts" will miss foreign stock held directly, foreign pension interests, and the entity-level filings. Neither report substitutes for the other, and neither substitutes for Form 5471, 8865, or 8858 where an ownership interest triggers those.

Related terms: FBAR (FinCEN Form 114), Form 5471, Form 1040, Foreign Tax Credit

Go deeper: Form 5471: Who Must File, Every Schedule, and the Errors That Trigger Penalties

Most 8938 misses are document problems, not judgment problems: the disclosure sits in a statement nobody read. Adopt's agents extract holdings and balances from source documents and match them against the reporting thresholds before the return is signed. Sign up free.