Contents
What is Form 8938
What is Form 8938
What is Form 8938? The 8938 Form is one of the newer IRS international information reporting forms required by US Taxpayers with certain specified foreign financial assets. Each year, when a US Person has foreign assets, they may have to report the maximum value of the assets on the 8938 — when the total annual aggregate balance exceeds the reporting threshold requirements for the year (Threshold will vary based on the country and filing status). The failure to report the Form 8938 may lead to offshore penalties, but the penalties may be avoided or abated with reasonable cause or offshore voluntary disclosure.
5 Things to Know about the 8938 Form
We have prepared a more detailed FAQ about the Top 25 things to know about filing — but here is a condensed version for those of you just looking for the key ingredients.
Which Taxpayers Must File the Form?
US Persons, including US citizens, Legal Permanent Residents, and Foreign Nationals who meet the substantial presence test — or otherwise make an election to be treated part year as a US resident — may have a Form 8938 filing requirement. In addition, certain domestic entities such as corporations, partnerships, and trusts may also have to file this form in order to report their specified foreign financial assets.
What is the Filing Due Date?
The form is due at the same time the tax return is due. In addition, if a person is on extension for filing their tax return, then the Form 8938 goes on extension as well. Unlike other reporting forms that require filing an extension on Form 7004 (such as 3520-A) — this is not required to extend the filing date.
Where/How is this FATCA Form Filed?
The form is filed with the tax return. In other words, if you are using commercial software such as TurboTax or Tax Act, then the Form 8938 should be included when you print or electronically submit the tax return. This is different than several other international reporting forms that are either not part of the commercial software package and/or require the filer to submit the document to a different location from their tax return.
Is Foreign Income Included with Reporting?
Another distinction between the FBAR and Form 8938 is that for Form 8938, the filer must include the income generated by the foreign assets.
On the more recent versions of the form, the first page of the form requires a taxpayer to parse out and gross-up the different categories of income and where that income is reflected on the US tax return being filed – such as Schedule B for foreign interest.
Amnesty Programs
Currently (as of December 2020), the main options for amnesty are the following:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Reasonable Cause
- DFSP
- DIIRSP (ended in November 2020 and is now essentially a reasonable cause submission)
Golding & Golding: About Our Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS disclosure & compliance.
Contact our firm today for assistance.
