2011-2025 Form

What is the 8938 Form

The 8938 Form, officially known as the Statement of Specified Foreign Financial Assets, is a tax form required by the Internal Revenue Service (IRS) for certain U.S. taxpayers. This form is used to report specified foreign financial assets if the total value exceeds certain thresholds. It is essential for individuals who have foreign bank accounts, investment accounts, or other foreign assets to ensure compliance with U.S. tax laws. The form is part of the IRS's efforts to combat tax evasion and ensure transparency regarding foreign financial holdings.

How to use the 8938 Form

Using the 8938 Form involves several steps to ensure accurate reporting of foreign financial assets. Taxpayers must first determine if they meet the reporting requirements based on their filing status and the total value of their specified foreign financial assets. If required to file, taxpayers will need to complete the form by providing detailed information about each asset, including the type of asset, the maximum value during the tax year, and the income generated from these assets. It is crucial to provide accurate information to avoid penalties for non-compliance.

Steps to complete the 8938 Form

Completing the 8938 Form involves a systematic approach:

• Determine your filing obligation based on your total foreign financial assets.
• Gather necessary information about each specified foreign financial asset, including account numbers and financial institution details.
• Fill out the form, ensuring all required fields are completed accurately.
• Review the form for any errors or omissions before submission.
• File the completed form with your annual tax return.

Legal use of the 8938 Form

The legal use of the 8938 Form is governed by U.S. tax laws, specifically under the provisions of the Foreign Account Tax Compliance Act (FATCA). Taxpayers must file this form to disclose their foreign financial assets to the IRS, ensuring compliance with U.S. tax regulations. The form serves as a legal document that can be used by the IRS to assess tax liabilities and enforce penalties for non-compliance. Properly completing and filing the form is essential for maintaining legal standing with the IRS.

Filing Deadlines / Important Dates

The filing deadline for the 8938 Form generally aligns with the annual tax return deadline, which is typically April 15th for most taxpayers. However, if additional time is needed, taxpayers can file for an extension, which may extend the deadline to October 15th. It is important to keep track of these deadlines to avoid late filing penalties. Additionally, taxpayers residing outside the U.S. may have different deadlines based on their circumstances.

Penalties for Non-Compliance

Failure to file the 8938 Form when required can result in significant penalties. The IRS imposes a penalty of $10,000 for failure to disclose foreign financial assets, with additional penalties accruing for continued non-compliance. If the IRS determines that the failure to file was due to willful neglect, penalties can escalate to 40 percent of the unpaid tax liability associated with the undisclosed assets. Understanding these penalties emphasizes the importance of timely and accurate filing.