Effective for tax year 2011 reporting, unmarried taxpayers living in the U.S. with foreign assets valued at more than $50,000 on the last day of the tax year, (December 31st), or more than $100,000 at any time during the tax year will be required to file Form 8938 annually. For taxpayers living in the U.S. filing a joint return, thresholds are $100,000 on the last day of the tax year or more than $200,000 during the tax year. Form 8938 is filed with the taxpayer's Form 1040; failure to file could result in up to a $10,000 penalty.
Foreign financial assets that are reported on Form 8938 are:
- Any financial account maintained by a foreign financial institution
- Stock or security issued by a non-U.S. person
- Financial interest or contract held for investment that has a non-U.S. counterparty
- Any interest in a foreign entity
It is anticipated the IRS will be issuing regulations that will require a U.S. entity to file Form 8938 if the entity owns foreign financial assets, and the value of the assets exceeds the reporting threshold. Until such regulations are issued, only individuals are required to file Form 8938.
Compliance with Form 8938 filing does not relieve the taxpayer of the responsibility to file Form TD F 90-22.1, "Report of Foreign Bank and Financial Accounts" (FBAR), if the FBAR is otherwise required to be filed. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, and if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year, is required to file FBAR. Any "U.S. person" for FBAR filing purposes, includes individuals, domestic business entities, domestic trusts and estates. FBAR is not filed with the taxpayer's income tax returns. The FBAR form must be received by the IRS at its Detroit office no later than June 30th.
If you need assistance filing Form 8938 please contact Liting Mitchell, Senior Tax Manager at Berntson Porter at 425-289-7625 or firstname.lastname@example.org.