The Foreign Account Tax Compliance Act (FATCA) passed in 2010 placed stricter requirements on taxpayers to report foreign assets beginning with the 2011 tax year. FATCA's purpose is to reduce federal revenue losses due to offshore non-compliance. Form 8938 is used to report the taxpayer's "specified foreign financial assets".
Who must file?
Form 8938 is filed if the taxpayer:
- is a specified individual
- having an interest in specified foreign financial assets
- and the value of those assets is greater than the reporting threshold.
What is a specified individual?
A specified individual is any of the following:
- A U.S. citizen.
- A resident alien of the U.S. for any part of the tax year using either the green card test or the substantial presence test, as outlined in IRS Publication 519.
- A nonresident alien who makes an election to be treated as resident alien for the purpose of filing a joint income tax return.
- A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. (See IRS Publication 570 for the definition of a bona fide resident)
What are specified foreign financial assets?
- Any financial account maintained by a foreign financial institution.
- Other foreign financial assets held for investment that are not in an account maintained by a US or foreign financial institution, namely:
- Stock or securities issued by someone other than a U.S. person
- Interest in a foreign entity, and
- A financial instrument or contract that has as an issuer or counterparty that is other than a U.S. person.
What are not specified foreign financial assets?
- An account at a domestic financial institution.
- An account at the domestic branch of a foreign bank or foreign insurance company.
- An account at the foreign branch or subsidiary of a U.S. financial institution.
- An account with a dealer or trader in securities or commodities if the account is subject to mark-to-market rules or an election is made under IRC section 475(e) or (f) to mark to market.
- Any asset subject to mark-to-market rules or an election has been made under IRC section 475(e) or (f) for the asset.
- Foreign government social security or social insurance payments.
What are the reporting thresholds?
Form 8938 must be filed if either of the reporting thresholds is met during the tax year.
| U.S. Residents |
| Filing status | Value of foreign financial asset at the end of the year |
Value of foreign financial asset at ANY time during year |
| Any status other than MFJ | $50,000 | $75,000 |
| Married Filing Joint | $100,000 | $150,000 |
| U.S. Residents living abroad* |
| Filing status | Value of foreign financial asset at the end of the year |
Value of foreign financial asset at ANY time during year |
| Any status other than MFJ | $200,000 | $300,000 |
| Married Filing Joint | $400,000 | $600,000 |
* The term "living abroad" can be defined in either of two ways:
- A U.S. citizen or resident is physically present in a foreign country or countries for 330 days during 12 consecutive months that ends in the tax year being reported.
- A U.S. citizen has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes a full tax year.
To complete Form 8938 in TaxSlayer ProWeb, from the Main Menu of the tax return (Form 1040) select:
- Miscellaneous Forms
- Form 8938 - Foreign Financial Assets Statement - Complete each section as needed.
- Note that the foreign income in the tax return is reported in Part III.
Note: This is a general guide on Form 8938 in the TaxSlayer ProWeb program. It is not intended as tax advice.
Additional Information: