Most taxpayers with a reporting requirement for their interests in specified foreign financial assets must file their first IRS Form 8938 with their 2011 income tax return. The Foreign Account Tax Compliance Act (FATCA), enacted in 2010, requires certain U.S. taxpayers to report specified assets on Form 8938, if the aggregate value of the relevant assets exceed certain thresholds.
Presently, only certain individuals must file Form 8938, however certain U.S. entities will eventually have to file the form as well. Taxpayers who do not file a federal income tax return for the year do not have to File Form 8938, even if the value of their foreign assets exceeds the normal reporting threshold.
The filing requirement applies to U.S. citizens, resident aliens for any part of the year, and nonresident aliens living in Puerto Rico or American Samoa. Generally, assets which must be included are financial accounts maintained by a foreign financial institution, and other financial assets such as stocks or securities issued by a non-U.S. person, or an interest in a foreign entity.
For the filing requirement to apply, the aggregate value of the specified assets must exceed $50,000 on the last day of the year, or more than $75,000 on any day during the year for unmarried U.S. taxpayers and married U.S. taxpayers filing a separate return. For married U.S. taxpayers filing a joint return, the filing requirement occurs when the aggregate value of the specified assets is $100,000 on the last day of the year, or more than $150,000 on any day during the year.
Special rules apply for taxpayers living abroad. In the case of a joint return, the numbers increase to $400,000 at the end of the year and $600,000 during the year. Other taxpayers living abroad may have to file Form 8938 if the aggregate value is $200,000 on the last day of the year, or more than $300,000 at any time throughout the year.
Taxpayers who report assets on other forms, such as Form 3520, do not have to report the asset on Form 8938, but must use Form 8938 to identify other forms on which they report.
If you have any questions, please call our office at (916) 488-8501.