As a U.S. taxpayer, if you have specified foreign financial assets with a value exceeding the Form 8938 threshold, you need to report them on the Form 8938. Whether you’re a green card holder with foreign assets, an expat, or a citizen with retirement accounts in another country, you may need to file Form 8938 (Statement of Specified Foreign Financial Assets).
Ignoring this requirement is expensive, as it can cost you thousands of dollars in penalties.
Stick with us as we break down what Form 8938 really is, who it applies to, which assets need to be reported, and the consequences. This is the only guide you’ll need to figure this out. To get guidance now, contact our international tax attorneys.
Key takeaways
- You must file Form 8938 if your specified foreign financial assets exceed IRS reporting thresholds.
- The Form 8938 thresholds depend on your residential and filing status.
- Form 8938 should be attached to Form 1040
- Failing to file can trigger a $10,000 penalty that multiplies fast if you don’t act.
- You may still have to file FBAR even if you file Form 8938, since they have separate requirements.
What Are the 2026 Asset Thresholds for Form 8938?
Before we get into other details, here are the 2026 thresholds (filing in 2027) to determine if you need to file a Form 8938:
| Filing Status | US Residents | Expatriates |
|---|---|---|
| Single | $50,000 on Dec 31 or $75,000 at any time | $200,000 on Dec 31 or $300,000 at any time |
| Married Filing Jointly | $100,000 on Dec 31 or $150,000 at any time | $400,000 on Dec 31 or $600,000 at any time |
| Married Filing Separately | $50,000 on Dec 31 or $75,000 at any time | $200,000 on Dec 31 or $300,000 at any time |
These thresholds are not indexed to inflation, and they’ve stayed the same for years.
Penalties for Failing to File Form 8938
Ignorance isn’t bliss when it comes to Form 8938; it’s costly. Here’s how it progresses:
- Penalty for failing to file: $10,000
- 30 days later: if you keep ignoring notices, an additional $10,000 will be added every 30 days.
- Maximum penalty: It can go up to $50,000 if you remain non-responsive.
- Willful noncompliance: If the IRS proves that you’re willfully neglecting your tax obligations, you can face criminal penalties.
Also, if the IRS discovers that you didn’t disclose an asset to evade paying your foreign income, you could face accuracy-related penalties.
Not to worry, though, the IRS has relief programs that you can use to get back to compliance if you forgot to file your Form 8938 or simply haven’t been doing it (more on this later).
Penalties for income not reported related to foreign assets
If you have unreported income related to assets that you did not correctly disclose by filing Form 8938, the IRS can assess a 40% underpayment penalty in addition to the non-filing penalty.
For example, say that you earned interest on one of your foreign accounts. You didn’t report the account on Form 8938, and you didn’t report the interest on your tax return. Now, let’s say the tax on the interest would have been $10,000. In this case, the understatement penalty is $4,000.
Form 8938 does not calculate the tax that you owe. It’s just a report of your specified foreign assets. However, when you complete section III of this form, you note any income generated by your foreign assets, and you will also note where you reported that income on your tax return.
What is Form 8938?
Form 8938 (Statement of Specified Foreign Financial Assets) requires taxpayers to report certain foreign assets with aggregate values over a set threshold.
The form requires you to provide your personal information and disclose your:
- foreign deposit accounts and maximum value
- custodial accounts and maximum value
- any closed foreign accounts.
- other specified foreign assets.
In addition to providing a summary of your foreign accounts, you must also list each account in detail.
Why does the IRS require Form 8938?
Established by the Foreign Account Tax Compliance Act (FACTA), Form 8938 is part of the federal government’s growing battle to prevent taxpayers from stashing assets in offshore accounts to avoid paying taxes on them.
Who Should File Form 8938?
Specified individuals and domestic entities must file Form 8938 if their specified foreign assets exceed the threshold for their filing status and location.
If you live in the United States, you must file if your specified foreign assets are worth over $50,000 ($100,000 for joint filers) at the end of the tax year or over $75,000 ($150,000 for joint filers) at any point during the tax year.
What are specified individuals and entities?
Specified individuals include U.S. citizens, resident aliens of the United States for any part of the tax year, nonresident aliens who elect to be treated as resident aliens on a joint tax return, and nonresident aliens who are bona fide American Samoa or Puerto Rico residents.
Specified domestic entities include domestic corporations and partnerships closely held by a specified individual where at least 50% of the organization’s gross income is passive or at least 50% of its assets are held to produce passive income. It also includes domestic trusts with at least one or more specified persons as beneficiaries.
What if I’m not required to file a tax return?
If you are not required to file a tax return – for example, your income is under the reporting threshold for your filing status – you do not need to file Form 8938 even if your assets are over the threshold.
How do you calculate the value of your foreign assets?
All values should be calculated based on the currency exchange rate on the last day of the year. The IRS requires that you use the U.S. Treasury Bureau of the Fiscal Service foreign currency exchange rate. If that exchange rate is unavailable, you should use another publicly accessible exchange rate. You must provide the source of your exchange rate on Form 8938.
What is a taxpayer living abroad?
For the purposes of Form 8938, taxpayers living abroad include U.S. citizens whose tax homes are in another country because they are bona fide residents of another country or countries for the entire tax year, as well as U.S. citizens or residents who were in a foreign country for at least 330 days of a period of 12 consecutive months ending in the tax year.
The tax code does not use the term resident or non-resident to distinguish between the foreign asset value thresholds for Form 8938. Instead, as detailed above, the code refers to taxpayers living in or out of the United States. Be sure that you understand this distinction, as it may determine whether or not you need to file.
Assets That Must Be Reported on Form 8938
You must report the following foreign assets on Form 8938 if the total value of your specified foreign assets is over the threshold for your situation:
- Bank accounts
- Brokerage accounts
- Stocks or securities issued by non-U.S. persons – for example, stocks issued by a foreign corporation or a bond issued by a foreign person.
- Interests in foreign entities – for example, a partnership interest in a foreign partnership, interest in a foreign retirement plan, or interest in a foreign estate.
- Financial instrument or contract from a non-U.S. person issuer – for example, an interest in a foreign-issued insurance contract.
What you don’t need to report on Form 8938
You don’t need to report these assets on this form:
- Assets held in a US-based brokerage, even if the funds are foreign
- Foreign social security-type benefits
- Foreign real estate (direct ownership)
How to File Form 8938
Here are the steps to follow when filing Form 8938:
- Gather all required documents, including foreign account numbers, institutions, countries, balances, etc.
- Calculate your maximum value throughout the year (not just year-end) to avoid underreporting.
- Fill out your Form 8938 and include the detailed sections on the types and value of your assets.
- Attach the form to your tax return and ensure you file by the tax deadline.
We understand that it’s easier said than done, so if you need any guidance, don’t shy away from contacting us; we can do all the heavy lifting on your behalf.
What to Do If You Forgot to File
If you either failed to file Form 8938 for the most recent tax year or you have failed to file for multiple years, it is time to take your concerns to a tax professional. Luckily, if the IRS has not contacted you regarding your failure to file, you may be able to limit your financial losses with a variety of solutions.
Reasonable cause penalty relief
Depending on your circumstances, you may be able to avoid penalties if you can show that your failure to file was due to reasonable cause and not willful neglect. Reasonable cause means that events outside of your control – e.g., death or disasters – prevented you from filing.
Streamlined filing compliance procedures
This process involves gathering information on all your foreign assets, including records for every year you forgot to file Form 8938. You can then move forward with filing your amended tax returns, making sure to attach Form 8938 to each tax return.
Your attorney may also include a statement to explain why you did not previously file the form. Once you have accounted for all of your assets on Form 8938, go ahead and pay any taxes and penalties associated with your newly disclosed assets. This is only available to those who are not the target of an IRS civil examination or audit.
IRS Voluntary Disclosure Practice
If you willfully did not file Form 8938, you may qualify for the Voluntary Disclosure Program. This program is specifically designed for people who may have committed a tax crime and want to get back into compliance while minimizing penalties and criminal exposure. Talk with an attorney before taking this route.
What about quiet disclosures?
In some cases, filing a late or amended return is known as a quiet disclosure or silent disclosure. This should not be considered a viable option. The IRS is very good at collecting the money it’s owed, and taxpayers shouldn’t be surprised to have penalties assessed if they go this route. Working with a tax attorney who can help you craft a strong case for reasonable cause is much safer.
Mistakes to Avoid With Form 8938
The filing requirements for Form 8938 can be confusing, and mistakes can be costly for taxpayers. To protect yourself, avoid these common errors:
- Filing a return just because your assets are over the reporting threshold – If you’re not required to file a tax return, you’re not required to file Form 8938, regardless of the value of your specified foreign assets. Don’t waste your time or give the IRS unnecessary info about your finances.
- Including assets you don’t have an interest in – For example, assets that you’re merely a signatory on. This is a key distinction between Form 8938 and the FBAR, which requires you to report accounts on which you have signatory authority.
- Using the wrong threshold – The thresholds are significantly higher if you live out of the country, even if you’re still considered a U.S. resident for certain purposes.
- Excluding specified assets – If you’re unclear on which assets need to be reported, consult a tax attorney with international tax law experience.
- Filing late or amending without reasonable cause or amnesty – Filing late or amending your return to add Form 8938 is considered a backdoor or quiet disclosure and can expose you to significant penalties or other consequences. If you haven’t filed this form, you are not in compliance and should consult with an attorney.
Form 8938 vs. FBAR: What Are the Differences?
The FBAR, or Report of Foreign Bank and Financial Accounts, is similar to Form 8938 in several ways, but there are significant differences. Here is a breakdown:
- Who must file? Form 8938 may be required for U.S. individuals, trusts, partnerships, and corporations; the FBAR is generally required of U.S. persons with foreign assets.
- Where does the form go? Form 8938 goes to the IRS, and the FBAR goes to FinCEN.
- What about reporting thresholds? FBAR has a standard reporting threshold of $10,000. Form 8938’s filing thresholds are higher, more complicated, and based on filing status and residential status.
- Which types of assets are reported? Your Form 8938 should disclose your foreign financial accounts and certain investment assets or interests. The FBAR generally requires information on your foreign financial accounts.
- When is it due? Form 8938 is due with your annual tax return. The FBAR is due April 15, but filers are granted an automatic extension to October 15 if they miss the initial deadline.
- What are the penalties for failing to file? Penalties for failure to file the FBAR depend on whether the violation is determined to be willful (the greater of $100,000 or 50% of the account balance) or non-willful ($10,000). The penalties are adjusted every year for inflation. The penalty for failing to file Form 8938 is set at $10,000 initially, and it may increase to up to $50,000 if you do not file after the IRS notifies you of your obligation to file.
Here’s a summary table that’s easy to follow:
| Feature to Compare | Form 8938 | FBAR |
|---|---|---|
| Who Files | Taxpayers filing a US tax return | Anyone with foreign account(s) exceeding the stated threshold |
| How it’s filed & where it goes | IRS (attached to Form 1040) | FinCEN (online via BSA e-filing) |
| Filing threshold | Starting from $50,000 (based on filing and residential status) | $10,000 aggregate in foreign accounts |
| Assets to report | Long list including pensions, foreign stocks, and partnerships | Financial accounts such as brokerage and bank |
| Reporting Deadline | Together with your tax return (April 15 or Oct 15 with extension) | April 15 (automatic extension to Oct 15) |
Do I need to file both FBAR and Form 8938?
Yes, you may need to file both of these forms in some cases. If you are required to file Form 8938, which has much higher financial thresholds than the FBAR, the odds are good that you are also required to file an FBAR. If you meet the filing requirements for the FBAR but fall short of the Form 8938 requirements, you likely only have to file the FBAR.
Frequently Asked Questions (FAQs)
Here are the common questions we get on filing Form 8938:
Who must file Form 8938?
If you’re a US citizen, resident alien, or non-resident alien who makes an election to be treated as a resident alien, and you have specified foreign assets that exceed the IRS reporting threshold, you must file Form 8938. The threshold depends on where you live and your filing status. If you don’t have to file a tax return, you’re not required to file Form 8938 even if your assets exceed the thresholds.
What are the Form 8938 thresholds for 2026?
For the year 2026, the Form 8938 thresholds remain the same. U.S. residents are required to file if foreign assets exceed $50,000 year-end or $75,000 at any time (single filers) or $100,000 year-end or $150,000 at any time (joint filers). Taxpayers living abroad file if foreign assets exceed $200,000 end-year or $300,000 any time (single filers) and $400,000 end-year or $600,000 any time (joint filers)—40% underpayment penalty in addition to the non-filing penalty.
What is the penalty for not filing Form 8938?
The failure-to-file penalty starts at $10,000. If you receive IRS notices to file and you ignore them, you pay an extra $10,000 for every 30 days, and the amount can increase up to $50,000. You may also face accuracy-related penalties if you fail to disclose foreign assets, resulting in underreported tax.
Does foreign real estate count for Form 8938?
You do not need to report foreign real estate held directly on Form 8938. For example, a personal home or rental property owned in your own name doesn’t require reporting. However, if the property is owned through a foreign corporation, trust, or partnership, your interest in that entity may be reportable if the foreign assets exceed the Form 8938 threshold.
When It’s Time to Talk to an Attorney
If you’ve submitted an inaccurate Form 8938 or haven’t filed Form 8938 despite meeting the filing requirements, talking to an attorney is the best thing you can do to protect your financial security and your standing with the IRS. The penalties for failing to file Form 8938 are steep, and the sooner you bring in a tax professional, the stronger your chances of getting a favorable outcome.
Are you concerned about your undisclosed foreign assets or income? The team at Wiggam Law can explain your options and help you find the best option for your situation. Schedule a consultation now by calling us at (404) 609-1300 or using our online scheduler. Tax problems can be stressful and overwhelming – don’t let them take over your life. Choose Wiggam Law for the answers and peace of mind you deserve.
