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Form 8938 CPA discusses Reporting Requirements | Expat Taxes | Foreign Assets

Form 8938 CPA discusses expat tax issues

Gary Bode, CPA: Form 8938 reports your foreign assets to the IRS. For a free phone consult, please call (910) 399-2705.

The IRS demands to know about your foreign assets. But Form 8938, Statement of Specified Foreign Financial Assets, isn’t strictly for expats. I expect to see it used extensively with our domestic clients too. If you’re required to file Form 8938, just attach it to your annual tax return.

The Foreign Account Tax Compliance Act, or FATCA, was originally promoted as the US coercing foreign banks to release account information on American customers to the IRS. Form 8938 is, in fact, a self disclosing FATCA form. Showing perhaps that FATCA pressure on foreign banks isn’t working.

Why is the IRS so interested in Foreign Assets?

  • Lots of taxable foreign income goes un-reported to the IRS.
  • Foreign income is more common in a global economy.
  • The success of the IRS’s multiple OVDIs (Offshore Voluntary Disclosure Initiatives) implies there are billions of potential taxes hiding in foreign business transactions.

What kinds of Foreign Assets are reported on Form 8938?

Almost everything. The most common is foreign stock. But the IRS has covered most of the bases here. Be careful of schemes that purport not to qualify. A true foreign bank account is still reported on FBAR.

The Biggest Problems Form 8938 CPAs expect to see?

  • Non compliance penalties are stiff. The IRS has gotten serious about expat tax issues; like the $10,000 non filing penalty for Form 5471 for example. So the following three points make Form 8938 CPAs nervous.
  • Folks, whose foreign assets incur no tax liability, may not realize they must file Form 8938. If you are required to file, you must file even if it incurs no additional tax.
  • New tax forms evolve. Form 8938 CPAs expect to see changes in the form itself and the underlying rules, especially in the first few years.
  • Folks being completely unaware of this new reporting requirement.

So, what are the filing requirements for Form 8938?

  • First, you don’t have to file it if you aren’t required to file a true tax return like 1040 or 1120-S.
  • Your foreign assets have to meet a monetary threshold, below which you aren’t required to file.
  • The threshold depends on your filing status e.g. Married, Single, and whether you lived outside the US.
  • The threshold is two-pronged and depends on the foreign asset value on the last day of the tax year and its highest value during the tax year.

We’re an expat CPA firm with a virtual office to accommodate long distance and international clients. Of course, we can handle all your domestic tax work too. We prepare:

  • Form 8938
  • Form 5471
  • Form 2555
  • Form 1116
  • FBAR
  • OVDI

Please read any of the hundreds of postings on this website to gauge our ability and attitude. For a free phone consult, please call (910) 399-2705.


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