Form 8938: FATCA Reporting Guide for Americans Abroad

What Is Form 8938?

Form 8938, Statement of Specified Foreign Financial Assets, is the IRS form used to report foreign financial assets under the Foreign Account Tax Compliance Act (FATCA). Unlike the FBAR, which is filed with FinCEN, Form 8938 is filed with your annual federal income tax return (Form 1040) and submitted to the IRS.

FATCA was enacted in 2010 to combat tax evasion by US persons holding assets outside the United States. It significantly expanded reporting requirements beyond the FBAR by requiring foreign financial institutions to identify US account holders and share their information directly with the IRS.

For Americans abroad, Form 8938 creates a second layer of reporting. Understanding both the FBAR and FATCA is essential because they have different thresholds, cover different assets, and carry separate penalties.

Who Must File Form 8938

Form 8938 filing depends on your filing status, whether you live abroad, and the value of your specified foreign financial assets.

Thresholds for Americans Living Abroad

You only need to meet one threshold. If your assets ever exceeded $300,000 during the year, you must file—even if they dropped below $200,000 by year-end.

Thresholds for US Residents

If you do not qualify as living abroad, the thresholds are lower:

What Counts as "Living Abroad"

You are considered to live abroad if:

• You are a US citizen with a tax home in a foreign country and you meet the bona fide residence test or physical presence test, or
• You are a bona fide resident of a US territory.

What Is a "Specified Foreign Financial Asset"?

This is broader than "foreign financial accounts" and includes assets that the FBAR does not require you to report.

Reportable Assets

• Foreign financial accounts: Bank accounts, brokerage accounts, and securities accounts maintained by a foreign financial institution. (Overlaps with FBAR.)
• Foreign stock and securities: Stock or securities issued by a non-US person, even if not held in a financial account.
• Interests in foreign entities: Financial interests in foreign partnerships, corporations, trusts, and estates.
• Foreign financial instruments: Any financial instrument or contract held for investment with a non-US issuer or counterparty.
• Foreign-issued life insurance: Policies with a cash surrender value issued by a foreign insurance company.
• Foreign pension and retirement plans: Plans maintained by a foreign employer or foreign institution.
• Foreign mutual funds: Shares in foreign pooled investment vehicles, even if not held in a brokerage account.

Generally Not Reportable

• Foreign real estate held directly: Property in your own name is generally not a specified foreign financial asset. However, property held through a foreign entity is reportable.
• Currency and precious metals held directly.
• Social Security and government benefits.
• Accounts at US military banking facilities.

Key Difference from FBAR

• FBAR: You have a foreign brokerage account → report the account.
• FATCA: You have a foreign brokerage account → report the account and any foreign stock held outside an account.

If you hold stock certificates of a foreign company in a safe deposit box, the FBAR likely does not require reporting, but Form 8938 does.

How to File Form 8938

Form 8938 is filed with your Form 1040. It is not a standalone filing.

Step 1: Determine If You Meet the Threshold

Calculate the maximum value and year-end value of all specified foreign financial assets. Convert foreign currency to US dollars using the Treasury's end-of-year exchange rates.

Step 2: Gather Asset Information

For each reportable asset, collect:

• Description (account number, stock name, entity name)
• Maximum value during the year
• Year-end value
• Currency
• Name of foreign institution or issuer
• Income generated (interest, dividends, capital gains)
• Whether also reported on other forms (FBAR, 3520, 8621, 5471)

Step 3: Complete the Form

Part I — Summary of Foreign Deposit and Custodial Accounts: Lists foreign financial accounts (overlaps with FBAR).

Part II — Summary of Other Foreign Assets: Lists specified foreign financial assets that are not deposit or custodial accounts.

Part III — Summary of Tax Items: Reports income, deductions, gains, losses, and credits related to the assets.

Part IV — Excepted Assets: Identifies assets reported on other forms to avoid double-reporting.

Parts V and VI — Detailed Information: Line-item reporting for each account and asset.

Step 4: Attach to Your Tax Return

File Form 8938 with your Form 1040 by the tax return due date (including extensions). If you extend to October 15, Form 8938 extends with it.

Form 8938 Penalties

FATCA penalties are serious and separate from FBAR penalties.

Failure-to-File Penalty

$10,000 per return if you are required to file and do not.

Continued Failure Penalty

If the IRS notifies you and you do not file within 90 days, an additional $10,000 applies for each 30-day period (or fraction thereof), up to a maximum of $50,000 in additional penalties.

Tax Underpayment Penalty

A 40% penalty applies to any underpayment of tax attributable to non-disclosed foreign financial assets. This is one of the most severe accuracy-related penalties in the tax code.

Fraud and Criminal Penalties

Criminal penalties may apply in cases of fraud, including fines and imprisonment.

Reasonable Cause

The IRS may waive penalties if you demonstrate reasonable cause. However, simple unawareness is generally not sufficient.

FATCA and Foreign Financial Institutions

Under FATCA, foreign financial institutions (FFIs) must identify US account holders and report their information to the IRS. Most countries have signed intergovernmental agreements (IGAs) to facilitate this.

How FFIs Identify US Persons

Foreign banks typically ask for:

• US citizenship or permanent residency status
• US birthplace
• US address or telephone number
• US person as signatory or beneficiary
• Standing instructions to transfer funds to a US account

What Information Is Shared

Under Model 1 IGAs, the foreign bank reports to its local tax authority, which forwards to the IRS:

• Name, address, and US TIN (SSN or ITIN)
• Account number
• Account balance or value
• Income (interest, dividends, gross proceeds)

The IRS often already knows about your foreign accounts before you file. Form 8938 is your opportunity to report them voluntarily.

Special Situations

Cryptocurrency

• Held on a foreign exchange: Reportable on both FBAR and Form 8938 (if thresholds met).
• Held in a private wallet: May not be a specified foreign financial asset, but this area is evolving.
• Income is always reportable on your tax return regardless of FATCA status.

Foreign Pensions

Foreign pension plans are reportable on Form 8938 if thresholds are met. Many also require additional forms:

• Form 3520/3520-A (foreign trusts)
• Form 8621 (PFICs)

Foreign Real Estate

Directly held foreign real estate is generally not reportable. However:

• Property held through a foreign corporation, partnership, or trust is reportable.
• Rental income and capital gains are reportable on your tax return.

Foreign Businesses

Interests in foreign partnerships, corporations, and LLCs are reportable. You may also need:

• Form 5471 (foreign corporation)
• Form 8621 (PFIC)
• Form 8865 (foreign partnership)
• Form 8858 (foreign disregarded entity)

How FileAbroad Helps With Form 8938

FileAbroad screens and prepares Form 8938 within accepted engagements when your asset profile creates a reporting requirement.

• Threshold analysis: Reviewing your assets to determine if Form 8938 is required.
• Asset identification: Determining which assets are "specified foreign financial assets."
• Form coordination: Coordinating with FBAR, Form 5471, Form 8621, and other foreign reporting forms.
• Valuation and conversion: Calculating maximum and year-end values using correct Treasury exchange rates.
• Penalty review: Screening catch-up options if prior filings were missed.

Form 8938 preparation is quoted as part of a complex return or screened catch-up engagement. Start with the free intake to discuss your foreign asset profile.

Frequently Asked Questions

What is the Form 8938 threshold for Americans living abroad?

For single filers living abroad, Form 8938 is required if specified foreign financial assets exceed $200,000 at year-end or $300,000 at any time during the year. For married couples filing jointly, the thresholds are $400,000 (year-end) and $600,000 (anytime). These are significantly higher than the FBAR's $10,000 aggregate threshold.

Is Form 8938 the same as the FBAR?

No. Form 8938 (FATCA) is filed with your IRS tax return and covers specified foreign financial assets with higher thresholds ($200,000+ for single expats). The FBAR (FinCEN 114) is filed separately with FinCEN when foreign accounts exceed $10,000 aggregate. Form 8938 covers a broader range of assets, including foreign stock held directly and interests in foreign entities. Many expats must file both.

What assets must be reported on Form 8938?

Specified foreign financial assets include: foreign bank and brokerage accounts; foreign stocks and securities not held in a financial account; interests in foreign partnerships, corporations, trusts, and estates; foreign-issued life insurance with cash value; foreign pension and retirement accounts; and foreign financial instruments with a non-US issuer. Directly held foreign real estate is generally not reportable, but real estate held through a foreign entity is.

What are the penalties for not filing Form 8938?

The initial penalty for failure to file Form 8938 is $10,000. If the IRS notifies you and the failure continues, additional penalties of up to $50,000 may apply. A 40% penalty can apply to underpayments of tax attributable to non-disclosed foreign financial assets. These penalties are separate from and in addition to FBAR penalties.

Do I report cryptocurrency on Form 8938?

Cryptocurrency held in an account at a foreign financial institution is generally reportable as a specified foreign financial asset. Cryptocurrency held directly in a private wallet (not associated with a foreign exchange) may fall outside the reporting net, but this area continues to evolve. Regardless of FATCA status, cryptocurrency income is reportable on your tax return.