2022 Form 8938 Filing Requirements and Instructions
Understand the reporting framework for foreign financial assets on 2022 Form 8938. This guide helps U.S. taxpayers meet their compliance duties.
Form 8938, Statement of Specified Foreign Financial Assets, is a disclosure document required by the Internal Revenue Service (IRS) for certain U.S. taxpayers. It is used to report foreign financial assets if their total value exceeds specific thresholds. This requirement was established under the Foreign Account Tax Compliance Act (FATCA) to increase transparency and help the IRS verify that taxpayers report all foreign-sourced income.
Understanding these requirements is part of maintaining tax compliance for those with a global financial footprint. This form is a separate obligation from other reports like the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
Determining Your 2022 Filing Requirement
Your obligation to file Form 8938 for the 2022 tax year depends on your filing status, whether you reside in the United States or abroad, and the value of your specified foreign financial assets. It is important to assess your situation against these specific monetary values annually, as they are designed to capture individuals with significant foreign holdings.
For taxpayers living in the U.S., a single individual or someone married filing separately must file if their foreign assets were over $50,000 on the last day of the tax year or surpassed $75,000 at any point. For married couples filing a joint return, the thresholds are $100,000 on the last day of the tax year or $150,000 at any time during the year.
The requirements are different for taxpayers living abroad. A single filer or someone married filing separately must file if their foreign assets exceeded $200,000 on the last day of the year or $300,000 at any point. For married couples living abroad and filing jointly, the thresholds are $400,000 on the last day of the year or $600,000 at any time during the year.
Identifying Reportable Foreign Assets
Specified foreign financial assets include financial accounts maintained by a foreign financial institution. These can be depository accounts, like savings or checking, and custodial accounts that hold stocks or other securities for investment.
Other foreign assets must also be reported, even if not held in a financial account. These include:
- Stock or securities issued by a foreign corporation
- Any interest in a foreign partnership
- Notes, bonds, or debentures issued by a foreign person
- Any interest in a foreign trust or foreign estate
- Foreign pensions or deferred compensation plans
- Certain foreign life insurance or annuity contracts with a cash value
Certain assets are excluded from Form 8938 reporting. Foreign real estate owned directly in your name is not a reportable asset. However, if the real estate is held through a foreign entity like a corporation or trust, your interest in that entity must be reported. Other excluded assets include precious metals held directly and personal property, such as art, held outside of an account.
Information and Valuation for Form 8938
For each reportable asset, you must provide specific details. This includes the name and address of the foreign financial institution or asset issuer, the account or policy number, and the asset type. You must also report any income generated by the asset, such as interest or dividends, which should also be reported elsewhere on your tax return.
You must determine the maximum value of each asset during the 2022 tax year. For financial accounts, this is the highest balance shown on a periodic statement. For other assets, it is the fair market value on the last day of the tax year, or on the date of closing if the asset was closed during the year.
All values must be reported in U.S. dollars. If an asset is denominated in a foreign currency, you must convert its value using the U.S. Treasury Bureau of the Fiscal Service’s end-of-year exchange rate for 2022. This rate can be used for valuing assets on the last day of the year and for determining the maximum value if a more reliable rate is not available. The official form and its instructions provide detailed guidance and are available on the IRS website.
Completing and Filing the Form
Once you have gathered all necessary information, the final step is to submit Form 8938 correctly. The form is not filed by itself; it must be attached to your annual U.S. income tax return for the 2022 tax year, such as a Form 1040 or Form 1040-SR.
If you e-file, your tax preparation software will guide you through attaching Form 8938 to your electronic return. The software bundles it with your main tax return for transmission to the IRS.
If you file a paper return, you must physically attach the completed Form 8938 to your printed tax return. The entire package is then mailed to the designated IRS service center.
Penalties for Non-Compliance
Failing to file a required Form 8938 can lead to an initial penalty of $10,000. This penalty is for not filing a complete and correct form by the tax return’s due date, including extensions, and applies even if there is no underpayment of tax.
If you receive an IRS notice and do not file a correct form within 90 days, additional penalties can be assessed. These accrue at $10,000 for each 30-day period that the failure continues after the notice period expires. The continuation penalties are capped at $50,000, for a total potential penalty of $60,000.
An accuracy-related penalty of 40% may also apply to any underpayment of tax attributable to an undisclosed foreign financial asset. Additionally, failing to file Form 8938 can keep the statute of limitations for the IRS to assess tax on your entire return open indefinitely until the form is filed.