Readers are reminded that IRS Form 8938, Statement of Specified Foreign Financial Assets, is due with their 1040 tax returns by April 15, 2014. IRS Form 8938 was first introduced for tax year 2011, and is yet another IRS form to report ownership of foreign assets. In many cases, Form 8938 is due even if the same foreign assets are reported on different IRS forms, such as Form 3520 for foreign trusts, Form 5471 for foreign corporations, and the FBAR form (Report of Foreign Bank and Financial Accounts, FinCEN Form 114) for foreign financial accounts. If a taxpayer obtains an extension for submission of Form 1040, then Form 8938 should be submitted when the Form 1040 is submitted on extension.
The following are examples of foreign assets that are subject to reporting on Form 8938:
- foreign bank and brokerage accounts;
- stock of foreign corporations and interests in foreign LLCs and partnerships;
- interests in a foreign entity such as a trust or foundation;
- ownership of foreign financial instruments, such as bonds and promissory notes;
- ownership of foreign investment instruments and contracts issued by a foreign entity, including foreign annuity policies and insurance policies;
- interests in a foreign investment fund, hedge fund, mutual fund and private equity fund.
FATCA (the Foreign Account Tax Compliance Act) is coming into effect internationally and foreign financial institutions (FFIs) will soon begin to report to the IRS regarding US owners of foreign assets. Thus, it is imperative to file Form 8938 before the IRS first learns of the asset from an FFI.
For our prior guidance on IRS Form 8938, please read our article here.
For a helpful comparison between Form 8938 and the FBAR, please click here.