Most people who owe a Form 8938 do not know it exists. They know about the FBAR, or they have heard the phrase "foreign account reporting" somewhere, and they assume one filing covers everything. It does not. Form 8938 is a separate requirement, created by a separate law, filed with a separate agency, on a separate schedule. And the assets it reaches go well beyond a bank account.
This is the form I see missed most often on returns prepared elsewhere. A client moves to the United States, keeps an investment account or a pension back home, files a clean looking 1040, and never learns that a Statement of Specified Foreign Financial Assets should have been attached. Two or three years later a notice arrives, or they try to refinance and a lender asks questions, or they simply want to sleep at night. By then the exposure has compounded.
If you have anything financial outside the United States, this is the article to read before you file. I will walk through what Form 8938 is, who has to file it, what counts as a reportable asset, how it differs from the FBAR, and what the penalties look like when it is skipped.
What Form 8938 Is, and Why FATCA Created It
Form 8938 is titled the Statement of Specified Foreign Financial Assets. It came out of the Foreign Account Tax Compliance Act, known as FATCA, which Congress passed in 2010. The goal of FATCA was straightforward: get U.S. taxpayers to disclose the assets they hold abroad, and get foreign banks to confirm those disclosures by reporting on U.S. account holders directly to the IRS.
That second piece is what makes Form 8938 different from the foreign reporting forms that came before it. Tens of thousands of foreign financial institutions now send the IRS information about accounts held by U.S. persons. When you file Form 8938, you are filling in your side of a ledger the IRS is already building from the bank's side. When you do not file it, you are creating a gap the IRS can see. That is why FATCA reporting carries the weight it does. The matching is automated, and the form attaches to a return that is signed under penalty of perjury.
Form 8938 is filed with your annual income tax return. It is not a standalone submission. If you do not have a filing requirement for a 1040 in the first place, you generally do not have a Form 8938 requirement either, even if your foreign assets are large. But the moment you are filing a return and you cross the thresholds, the form belongs in the package.
Who Must File Form 8938: The FATCA Thresholds
This is where most of the confusion lives, because the thresholds are not one number. They depend on two things: whether you live inside the United States or abroad, and your filing status. The dollar figures are also measured two ways, the value on the last day of the year and the highest value at any point during the year. You file if you cross either one.
If you live in the United States
A single filer or someone married filing separately must file Form 8938 if specified foreign financial assets are worth more than $50,000 on the last day of the tax year, or more than $75,000 at any point during the year. For married taxpayers filing jointly, the thresholds double to $100,000 on the last day or $150,000 at any point during the year.
If you live abroad
The thresholds are much higher for U.S. taxpayers who qualify as living abroad, which generally means meeting a residence or physical presence test similar to the one used for the foreign earned income exclusion. A single filer or married filing separately taxpayer abroad files if assets exceed $200,000 on the last day of the year or $300,000 at any point during the year. For a married couple filing jointly abroad, the figures are $400,000 and $600,000.
Two points trip people up here. First, the "highest at any point" test catches accounts that were briefly large, even if they ended the year small. If you sold a property abroad and the proceeds sat in a foreign account for a month before you wired them to the United States, that peak balance counts. Second, the thresholds are aggregate. You add together every specified foreign financial asset you hold. No single account has to be large. Five modest accounts that total more than $50,000 will put a U.S. resident over the line just as cleanly as one big one.
What Counts as a Specified Foreign Financial Asset
This is the part of FATCA reporting that reaches further than people expect. Form 8938 is not limited to bank accounts. It covers a broad category of financial assets held outside the United States.
Specified foreign financial assets include:
- Foreign bank and financial accounts. Checking, savings, time deposits, and brokerage accounts held at an institution outside the United States.
- Foreign stock and securities not held in an account. If you own shares of a foreign company directly, rather than through a brokerage, those shares are reportable. The same goes for foreign bonds and other securities held directly.
- Interests in foreign entities. An interest in a foreign partnership, a foreign trust, or a foreign estate is a specified asset. Ownership in a foreign corporation can also pull you into related filings.
- Foreign pensions and deferred compensation. Many foreign retirement and pension plans are reportable, and these are routinely missed because people do not think of a pension as a financial asset.
- Foreign life insurance and annuities with cash value. A policy with a surrender or cash value held abroad counts toward the threshold.
What is not reportable matters too. Foreign real estate that you own directly is not a specified foreign financial asset, so a house in another country, held in your own name, does not go on Form 8938. But the moment you hold that real estate through a foreign entity, the interest in the entity becomes reportable. Physical assets like gold, art, or a car held abroad are also outside the form. The line is financial assets, not all assets, and the distinction is easy to get wrong without help. If your situation involves foreign property held through an entity, the international tax detail page walks through how those structures interact with the reporting rules.
Form 8938 vs the FBAR: Two Forms, Different Agencies
The single most common mistake I correct is the belief that filing one foreign reporting form covers the other. It does not. Form 8938 and the FBAR are different filings with different rules, and many people have to file both, every year, reporting overlapping but not identical assets.
The FBAR is FinCEN Form 114. It is filed with the Financial Crimes Enforcement Network, a part of the Treasury Department, not with the IRS, and it is submitted electronically and separately from your tax return. The FBAR threshold is far lower: you file if the aggregate value of your foreign financial accounts exceeds $10,000 at any point in the year. It reaches accounts, and it also reaches accounts you do not own but have signature authority over, such as a foreign business account you can sign on.
Form 8938, by contrast, is an IRS form filed as part of your income tax return, with the higher thresholds described above, and it reaches a wider category of assets including directly held foreign stock, pensions, and entity interests that the FBAR does not capture in the same way. So you can easily be required to file both, where the FBAR captures your foreign bank accounts at the $10,000 line and Form 8938 captures those same accounts plus your foreign pension and your directly held foreign shares once you cross the higher FATCA threshold.
If you have foreign accounts and you are working through which forms apply to you, the page for expats and U.S. citizens abroad lays out how the FBAR and Form 8938 fit together for people living overseas. The short version: assume neither form covers the other until someone confirms which ones you actually owe.
The Penalties for Not Filing Form 8938
The penalty structure is deliberately steep, because FATCA was built to change behavior. The base penalty for failing to file Form 8938 is $10,000. If the IRS notifies you of the failure and you still do not file, the penalty grows by $10,000 for each 30 day period after the notice, up to an additional $50,000. So a single missed form can reach $60,000 in failure to file penalties alone.
There is a second layer that can be worse. If an underpayment of tax is traced to an undisclosed foreign financial asset, the law adds a 40 percent accuracy related penalty on that underpayment. That is double the usual 20 percent substantial understatement penalty. In cases involving fraud, the exposure climbs further.
There is also a statute of limitations consequence that people overlook. Normally the IRS has three years to audit a return. When a required Form 8938 is omitted, the statute of limitations on the entire return can stay open. In some cases the clock does not start running on the whole return until the form is filed. That means a return you assumed was closed and safe can remain open to examination for years, simply because one attachment was missing.
One piece of good news: there is reasonable cause relief. If you can show that the failure to file was due to reasonable cause and not willful neglect, the penalty can be abated. Reasonable cause is a facts and circumstances determination, and it is far easier to establish when you come forward on your own than when the IRS finds the gap first.
How Form 8938 Connects to Your Other International Forms
Form 8938 rarely stands alone. It tends to be the visible tip of a larger set of international obligations, and the way it cross references other forms is intentional. The form itself asks whether the assets you are reporting are also reported on other returns, including Form 5471, Form 8865, Form 3520, and others. That cross referencing is how the IRS confirms the rest of your international filings are in place.
If you own a meaningful stake in a foreign corporation, your interest may be reportable on Form 8938, and the corporation itself likely triggers a Form 5471 filing, which carries its own $10,000 penalty regime. If you own or are part of a foreign owned U.S. business, the entity may owe Form 5472, and our foreign owned U.S. business page covers how that filing works. The point is that a Form 8938 review almost always surfaces other forms that should be filed alongside it. Treating the form in isolation is how people end up compliant on one filing and exposed on three others.
How to Fix Missed Form 8938 Filings
If you read this far and realized you should have been filing Form 8938 and were not, do not panic, and do not quietly start filing it this year while ignoring the prior years. The right move depends on the facts, but there is almost always a path back into compliance, and the paths exist precisely because the IRS would rather have voluntary disclosure than chase everyone.
For taxpayers whose failure to file was not willful, the Streamlined Filing Compliance Procedures are often the cleanest route. They generally involve filing amended or delinquent returns for a set lookback period, attaching the missing forms, and certifying that the conduct was non willful. For people who simply did not know the form existed, which describes the large majority of cases I handle, this is frequently the answer. If there was no unreported income tied to the assets, there may be an even simpler delinquent form procedure available.
What you do not want to do is amend on your own without understanding how the certification, the lookback period, and the income side fit together, because the streamlined process asks you to certify non willful conduct under penalty of perjury, and getting that certification wrong creates a new problem on top of the old one. This is the kind of correction that benefits from a tax professional who handles these filings regularly rather than once in a while.
When to Get a Form 8938 Specialist Involved
You should have someone review your Form 8938 position if any of the following is true: you moved to the United States and kept accounts, investments, or a pension abroad; you are a U.S. citizen living overseas with foreign accounts; you inherited foreign assets; you own foreign stock directly or hold an interest in a foreign partnership, trust, or corporation; or you have been filing the FBAR but have never attached Form 8938 to your return. Any one of those is enough to warrant a look.
FATCA reporting is detailed, the thresholds are easy to misread, and the assets it reaches are broader than almost anyone expects. But it is also entirely manageable once it is mapped correctly. The clients who get into trouble are not the ones who took the form seriously. They are the ones who never knew it applied to them. A short review now is far cheaper than a penalty notice later, and if prior years were missed, coming forward voluntarily is almost always better than waiting for the IRS to match a foreign bank's report against a return where the form is not there.
If you hold financial assets outside the United States and you are not certain your Form 8938 reporting is correct, that is exactly the situation worth a conversation. You can read more about how this fits into a full international tax picture, or about expat tax services if you are living abroad. When you are ready, the consultation is free, and I will tell you plainly which forms you owe and how to fix anything that was missed.