In this guide
What Form 8938 is
Form 8938 — Statement of Specified Foreign Financial Assets — is the IRS form created by the Foreign Account Tax Compliance Act (FATCA) in 2010. It requires U.S. persons with foreign financial assets above certain thresholds to disclose those assets to the IRS as part of their annual federal tax return.
Form 8938 is filed with your Form 1040. It is part of your tax return, attached by your software, your CPA, or by hand if you paper-file. It is not filed separately the way FBAR is.
Who has to file Form 8938
U.S. citizens, green card holders, and resident aliens (collectively "specified persons") must file Form 8938 if the total value of their specified foreign financial assets exceeds the reporting thresholds for their filing status and residence.
"Specified domestic entities" — certain U.S. corporations, partnerships, and trusts — also have Form 8938 obligations. Most individual expats do not need to worry about that branch of the rule.
Thresholds (high level)
Form 8938 uses two pairs of thresholds — one for taxpayers living in the U.S., one for taxpayers living abroad. Within each, single filers and joint filers have different numbers. Both apply a "year-end value or peak value during the year" test — exceeding either triggers the filing requirement.
The expat (living-abroad) thresholds are substantially higher than the U.S.-resident ones, which is why some expats file FBAR every year but only file Form 8938 in larger-asset years. The IRS publishes the current dollar thresholds in the Form 8938 instructions; verify the exact numbers there before filing, because they have been updated by the IRS in past guidance.
What counts as a specified foreign financial asset
Reportable on Form 8938:
- Foreign bank accounts (checking, savings, fixed deposits, etc.)
- Foreign brokerage and investment accounts
- Foreign mutual funds (note: these are usually PFICs with their own Form 8621 problem on top)
- Foreign-issued stocks and bonds held outside a financial account (e.g., paper share certificates)
- Interests in foreign entities — foreign partnerships, foreign corporations, certain foreign trusts
- Certain foreign pensions and deferred-compensation arrangements (with carve-outs for some country-specific products under treaty)
- Cash-value foreign life insurance and annuities
Generally not reportable on Form 8938:
- Foreign real estate held directly in your name (real estate is not a financial asset)
- Personal-use foreign property — your apartment, your car
- Financial accounts maintained at a U.S. branch of a foreign bank (these are U.S. accounts)
- Foreign social security and equivalent government benefits that are not personally controlled
Real estate held through a foreign corporation or LLC can bring you back into Form 8938 territory because the interest in the entity is reportable.
Form 8938 vs FBAR side by side
| Feature | Form 8938 (FATCA) | FBAR (FinCEN 114) |
|---|---|---|
| Agency | IRS | FinCEN (U.S. Treasury) |
| Filed with | Your Form 1040 | Separate filing on FinCEN BSA E-Filing |
| Threshold (broad) | Higher; differs by filing status and U.S./abroad residence | $10,000 aggregate peak balance, single threshold |
| Scope | Broader — accounts plus equity interests, foreign pensions, certain insurance | Foreign financial accounts only |
| Real estate | Direct holdings excluded; interest via entity is reportable | Direct holdings excluded |
| Penalty starting point | $10,000 failure-to-file | $10,000 non-willful per violation; willful penalties much higher |
| Statute of limitations | Can extend to 6 years for substantial omissions of foreign-asset income | 6 years for civil; varies for willful |
| Filing one satisfies the other? | No — separate obligations | No — separate obligations |
See also: FATCA vs FBAR comparison and the FBAR & FATCA combined guide.
How to file Form 8938
Form 8938 is attached to your federal income tax return. The process:
- Inventory every specified foreign financial asset and identify peak value (or year-end value) in U.S. dollars.
- Convert to U.S. dollars using the Treasury year-end exchange rate (or another reasonable consistent method, as documented in the instructions).
- Determine your threshold based on filing status and residence; if peak or year-end aggregate exceeds the threshold, file the form.
- List each asset, account number, financial institution, address, peak value, and any income generated.
- Attach to your Form 1040 and file by the regular tax-return deadline (with extensions if applicable).
Tax software built for expats — like MyExpatTaxes — handles Form 8938 generation. Consumer products often do not, or they generate the form but leave gaps.
Penalties
Form 8938 penalties are substantial:
- $10,000 failure-to-file penalty as the starting point.
- Additional $10,000 increments after IRS notice if non-compliance continues, up to a maximum specified in the statute.
- 40% accuracy-related penalty on tax underpayments attributable to undisclosed foreign assets.
- Criminal penalties for willful failures, in addition to civil penalties.
The penalty floor is high enough that fixing past non-compliance through Streamlined is almost always cheaper than waiting to be discovered.
Common Form 8938 mistakes
- Treating Form 8938 as duplicative of FBAR. It is not. Skipping 8938 because you already filed FBAR is a $10,000 mistake waiting to happen.
- Missing foreign pension reporting. Many foreign workplace pensions, deferred-compensation accounts, and "voluntary" foreign retirement vehicles fall under Form 8938 even when no taxes are owed.
- Missing interests in family-held foreign LLCs. A minority stake in a foreign company — including one held through inheritance — is reportable.
- Year-end-only valuation. The test is year-end or peak. Many expats only track year-end and miss mid-year spikes.
- Wrong exchange rate. Use the Treasury reporting rate consistently. Mixing year-end vs. monthly average across assets invites IRS scrutiny.
Behind on Form 8938 — catch-up path
If you have failed to file Form 8938 (and likely FBAR) for prior years, the Streamlined Foreign Offshore Procedures are usually the right correction path for non-willful non-compliance. The program lets expats file 3 years of returns and 6 years of FBARs with a signed certification of non-willfulness, avoiding the penalties listed above. See the Streamlined Filing guide and the Streamlined Filing Checklist.
Frequently asked questions
What is Form 8938?
The IRS form used under FATCA to report specified foreign financial assets. Filed with your Form 1040 when you exceed the reporting thresholds for your filing status and residence.
How is Form 8938 different from FBAR?
Different agencies (IRS vs FinCEN), different filing mechanism (with your tax return vs. separately on the FinCEN portal), broader scope on Form 8938 (entity interests, certain pensions, life insurance), and different thresholds. Most expats with significant foreign holdings file both.
What counts as a specified foreign financial asset?
Foreign accounts, foreign brokerage holdings, foreign mutual funds, foreign-issued stocks and bonds held outside a financial account, interests in foreign entities, certain foreign pensions, and cash-value foreign life insurance. Directly held real estate is excluded.
If I file Form 8938 do I still need to file FBAR?
Yes — separate obligations under separate statutes. Filing one does not satisfy the other.
What are the Form 8938 penalties?
Starting at $10,000 for a failure to file, with additional $10,000 increments after IRS notice, plus a 40% accuracy-related penalty on underpaid tax attributable to undisclosed assets.
