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When is it necessary to file Form 8938?

On Behalf of | Mar 19, 2018 | Tax Law |

Obtaining and maintaining significant assets overseas is often an excellent component of any portfolio, but is not without its own set of complications and potential headaches. This is especially true when it comes time to file income taxes.

Some individuals may need to file Form 8938 as a part of the returns, in conjunction with other foreign bank account reporting (FBAR). This may include Form TD F 90-22.1, depending the specifics of the assets involved, but it is important to understand that these forms serve distinct purposes and do not replace each other.

Should these issues arise in your own income reporting, it is always wise to carefully consider how to keep yourself in the clear with the IRS and make sure that you fully understand these issues. An experienced attorney who focuses on international tax matters can offer personalized insight that helps protect your priorities and keeps your rights secure as you navigate the complexities of owning foreign assets.

Who needs to file Form 8938?

If your foreign assets exceed certain value caps within the calendar year, then you probably need to address the matter using Form 8938.

If you are a single taxpayer living in the U.S., then you must file Form 8938 if your foreign assets exceed a total of $75,000 at any point during the year or exceed $50,000 on December 31. These same thresholds apply to married taxpayers living in the U.S. who choose to file separately.

For married taxpayers living in the U.S., the thresholds expand significantly. You must still file Form 8938, but only if your total assets as couple exceed $150,000 within a given calendar year or $100,000 on December 31.

For single taxpayers living abroad, the thresholds are even more favorable. It is necessary to file Form 8938 if the total value of held foreign assets exceeds $300,000 throughout the year or close out the year in excess of $200,000. For those filing jointly, these thresholds expand to $600,000 throughout the year or $400,000 on December 31.

This is a gross oversimplification of a very complex issue. Do not attempt to resolve this matter casually or with lax attention to detail. It is worth considering that fully addressing these issues often takes a day or detailed accounting, rather than filling out a few fields in a form and assuming that will be good enough for the IRS.

Use the tools you have available

In reality, this understanding of the issues surrounding Form 8938 barely scratches the surface of what it truly entails when considering all the other components of the return it must accompany. Don’t hesitate to use all the tools and resources you have available to treat this matter with the professionalism and attention that it deserves.