Do You Have Assets in Foreign Accounts? You May Have Special Reporting Requirements

January 7, 2014|Lonnie Hampton

As you gather your information together for your individual tax return, don’t forget to include your foreign assets. You may be required to file certain returns depending on the value of these assets.

Form 8938 (Statement of Specified Foreign Financial Assets) is due with your individual tax return

For tax years starting after March 18, 2010, U.S. citizens and other specified persons are required to report information about financial assets held outside the United States to the Internal Revenue Service. Form 8938 is filed with your individual tax return (Form 1040).
Foreign financial assets consist of:

  • Financial accounts maintained at financial institutions outside the United States, such as bank accounts, investment accounts and mutual funds;
  • Stocks, bonds or other securities issued by a non-U.S. person and not held through an investment account;
  • Any interest in a foreign entity, such as a foreign corporation, foreign partnership, or foreign trust;
  • Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person.

You do not need to report foreign investments held through U.S.-based investment accounts on Form 8938.

Who is required to file Form 8938?

For now, the IRS is requiring only “specified individuals” to report their foreign financial assets. The following individual taxpayers may be required to file Form 8938: U.S. citizens, resident aliens, non-resident aliens who elect to be treated as if they were resident aliens, and non-resident aliens who reside in American Samoa, Puerto Rico, Guam, the Northern Mariana Islands and the US Virgin Islands.

Reporting thresholds for Form 8938

The filing thresholds for different types of taxpayers is as follows:

Unmarried individuals residing in the United States Market value of foreign financial assets is greater than $50,000 on last day of year or greater than $75,000 at any time during the year  
Married individuals filing jointly and residing in the United States Market value of their foreign financial assets is greater than $100,000 on last day of year or greater than $150,000 at any time during the year
Married individuals filing separately and residing in the United States Market value of their foreign financial assets is greater than $50,000 on last day of the year or greater than $75,000 at any time during the year
Unmarried individuals residing outside the United States and satisfying either the bona fide resident or physical presence tests Market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year
Married individuals filing jointly residing outside the United States and satisfying either the bona fide resident or physical presence tests Market value of their foreign financial assets is greater than $400,000 on last day of year or greater than $600,000 at any time during the year
Married individuals filing separately and residing outside the United States and satisfying either the bona fide resident or physical presence tests Market value of their foreign financial assets is greater than $200,000 on last day of year or greater than $300,000 at any time during the year

Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts) is due by June 30

Any U.S. person (includes U.S. citizens, resident aliens, trusts, estates and domestic entities) with a financial interest, signature authority, or other authority over any foreign financial account is required to file this form if the aggregate value is at least $10,000 for all such accounts at any time during the calendar year. Corporate officers are most likely to be in this situation, but others (such as college professors and military personnel) may also be in danger of violation without realizing it.

What constitutes a financial account for this purpose?

Financial accounts generally include any of the following:

  • Bank accounts (including any savings, demand, checking, deposit, or other account) maintained with a financial institution or other person engaged in the business of a financial institution
  • Securities accounts
  • Securities derivative accounts
  • Other financial instruments (such as insurance policies with a cash surrender value, annuities, and shares in a mutual or similar type of fund)

This form is filed separately from your individual return (Form 1040) and is due by June 30. It must reach the Department of Treasury by that date. For the 2013 filing year, electronic filing is required. Schenck can assist you with this filing.

Information required to file this form may also be included on Form 8938. Therefore it is important to get us this information at the same time you bring in your personal tax return information.

Failure to file either one of these forms can lead to significant penalties. If you have foreign assets you may also have other filing requirements, which all carry penalties for noncompliance. Therefore it is important that you tell your tax services provider about any of your foreign assets.

We can help you determine if you have a filing obligation. For assistance, please contact your account director or call Lonnie Hampton at 800-676-0829 or 920-455-4146.


Lonnie Hampton’s experience includes tax planning and research for closely-held corporations, partnerships and individuals. 

As leader of our International Tax team, Lonnie advises clients on global entity structures, income tax treaty planning, and Interest Charge–Domestic International Sales Corporation (IC-DISC) implementation and operations. In addition, he prepares research and development tax credit studies for manufacturers.