Basic Questions and Answers on Form 8938

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Specified Foreign Financial Assets - Overview

Specific Examples:

Cash or foreign currency, real estate, precious metals, art and collectibles
Foreign stocks or securities
Safe deposit box
Foreign Financial Institution Investment Account
U.S.-Based Financial Accounts (including U.S. mutual funds, IRAs, 401 (k) plans, etc.)
Foreign pensions, deferred compensation plans, or  foreign "social security"
Reporting, filing and valuation requirements

Specified Foreign Financial Assets - Overview

If you are required to file Form 8938, you must report your financial accounts maintained by a foreign financial institution.  Examples of financial accounts include:

  • Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer.

And, to the extent held for investment and not held in a financial account, you must report stock or securities issued by someone who is not a U.S. person, any other interest in a foreign entity, and any financial instrument or contract held for investment with an issuer or counterpart that is not a U.S. person.  Examples of these assets that must be reported if not held in an account include:

  • Stock or securities issued by a foreign corporation;
  • A note, bond or debenture issued by a foreign person;
  • An interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar agreement with a foreign counterpart;
  • An option or other derivative instrument with respect to any of these examples or with respect to any currency or commodity that is entered into with a foreign counterpart or issuer;
  • A partnership interest in a foreign partnership;
  • An interest in a foreign retirement plan or deferred compensation plan;
  • An interest in a foreign estate;
  • Any interest in a foreign-issued insurance contract or annuity with a cash-surrender value. 

The examples listed above do not comprise an exclusive list of assets required to be reported.

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Specific Examples:

Cash or foreign currency, real estate, precious metals, art and collectibles

Foreign currency is not a specified foreign financial asset and is not reportable on Form 8938.

Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938.  For example, a personal residence or a rental property does not have to be reported.

If the real estate is held through a foreign entity, such as a corporation, partnership, trust or estate, then the interest in the entity is a specified foreign financial asset that is reported on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.  The value of the real estate held by the entity is taken into account in determining the value of the interest in the entity to be reported on Form 8938, but the real estate itself is not separately reported on Form 8938.  

No.  Directly held tangible assets, such as art, antiques, jewelry, cars and other collectibles, are not specified foreign financial assets.

No.  Directly held precious metals, such as gold, are not specified foreign financial assets.  Note, however, that gold certificates issued by a foreign person may be a specified foreign financial asset that you would have to report on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.

The contract with the foreign person to sell assets held for investment is a specified foreign financial asset investment asset that you have to report on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.

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Foreign stocks or securities

Foreign stock or securities, if you hold them outside of a financial account, must be reported on Form 8938, provided the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.  If you hold foreign stock or securities inside of a financial account, you do not report the stock or securities on Form 8938.  For more information regarding the reporting of the holdings of financial accounts, see FAQs under Foreign Financial Institution Investment Account and U.S.-Based Financial Accounts (including U.S. mutual funds, IRAs, 401 (k) plans, etc.).

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Safe deposit box

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Foreign Financial Institution Investment Account

If you have a financial account maintained by a foreign financial institution and the value of your specified foreign financial assets is greater than the reporting threshold that applies to you, you need to report the account on Form 8938.  A foreign account is a specified foreign financial asset even if its contents include, in whole or in part, investment assets issued by a U.S. person.  You do not need to separately report the assets of a financial account on Form 8938, whether or not the assets are issued by a U.S. person or non-U.S. person.     

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U.S.-Based Financial Accounts (including U.S. mutual funds, IRAs, 401 (k) plans, etc.)

A financial account, such as a depository, custodial or retirement account, at a U.S. branch of a foreign financial institution is an exception to the general rule that a financial account maintained by a foreign financial institution is specified foreign financial asset.  A financial account maintained by a U.S. branch or U.S. affiliate of a foreign financial institution does not have to be reported on Form 8938 and any specified foreign financial assets in that account also do not have to be reported. 

You do not need to report a financial account maintained by a U.S. financial institution or its holdings.  Examples of financial accounts maintained by U.S. financial institutions include:

  • U.S. Mutual fund accounts
  • IRAs (traditional or Roth)
  • 401 (k) retirement plans
  • Qualified U.S. retirement plans
  • Brokerage accounts maintained by U.S. financial institutions

If a financial account, such as a depository, custodial or retirement account, is held through a foreign branch or foreign affiliate of a U.S.-based financial institution, the foreign account is not a specified foreign financial asset and is not required to be reported on Form 8938.

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Foreign pensions, deferred compensation plans, or foreign "social security"

If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.

Payments or the rights to receive the foreign equivalent of social security, social insurance benefits or another similar program of a foreign government are not specified foreign financial assets and are not reportable.

Generally, an interest in a foreign estate is a specified foreign financial asset that is reportable on Form 8938 if the total value of all of your specified foreign financial assets is greater than the reporting threshold that applies to you.

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Reporting, filing and valuation requirements

Taxpayers who are not required to file an income tax return are not required to file Form 8938. 

If you meet the applicable reporting threshold, you must report all of your specified foreign financial assets, including the specified foreign financial assets that have a de minimis maximum value during the tax year.  For exceptions to reporting, see Exceptions to Reporting in the instructions for Form 8938.

If you omitted Form 8938 when you filed your income tax return, you should file Form 1040X, Amended U.S. Individual Income Tax Return, with your Form 8938 attached.

The filing of Form 8938 does not relieve you of the separate requirement to file the FBAR if you are otherwise required to do so, and vice-versa.  Depending on your situation, you may be required to file Form 8938 or the FBAR or both forms, and certain foreign accounts may be required to be reported on both forms. 

If you have more than one account or asset to report in Part I or Part II of Form 8938, or more than one issuer or counterparty to report in Part II of Form 8938, copy as many blank Parts I and/or II as you need to complete, and attach them to Form 8938.  Check the “If you have attached additional sheets, check here” box at the top of Form 8938.

You may determine the fair market value of a foreign financial account for the purpose of reporting its maximum value based on periodic account statements unless you have reason to know that the statements do not reflect a reasonable estimate of the maximum value of the account during the tax year.  For a specified foreign financial asset not held in a financial account, you may determine the fair market value of the asset for the purpose of reporting its maximum value based on information publicly available from reliable financial information sources or from other verifiable sources.  Even if there is no information from a reliable financial information source or other verifiable source, you do not need to obtain an appraisal by a third party in order to reasonably estimate the asset’s maximum value during the tax year.

In general, the value of your interest in the foreign pension plan or deferred compensation plan is the fair market value of your beneficial interest in the plan on the last day of the year.   However, if you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension or deferred compensation plan on the last day of the year, the maximum value is the value of the cash and/or other property distributed to you during the year.  This same value is used in determining whether you have met your reporting threshold. 

If you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension plan or deferred compensation plan on the last day of the year and you did not receive any distributions from the plan, the value of your interest in the plan is zero.  In this circumstance, you should also use a value of zero for the plan in determining whether you have met your reporting threshold.  If you have met the reporting threshold and are required to file Form 8938, you should report the plan and indicate that its maximum is zero. 

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