There is a new form that tax professionals and individuals with certain foreign financial assets must be aware of, Form 8938 Statement of Specified Foreign Financial Assets. The form is intended to report on are foreign bank accounts or any stock or securities issued by someone who is not a US citizen or a contract with a party that is not a U.S. citizen or U.S. based entity.
For tax years beginning after March 18, 2010 individuals must file a Form 8938 if their foreign financial assets exceeds the “reporting threshold”. You are exempt from filing a Form 8938 for 2012 if your tax year began after that date or you filed your return before the Form 8938 was released. You only have to file a Form 8938 if you are required to file an income tax return for that year. If no exception applies, you must file a Form 8938 even if none of the specified foreign financial assets affect your tax liability for the current tax year.
The completed Form 8938 should be attached to your annual income tax return which includes the following forms:
- A Form 1040;
- A Form 1120;
- A Form 1065;
- A Form 1041;
- A Form 1120-S; and
- A Form 1040NR.
The reporting threshold varies depending on several factors including whether or not the individual resides in the United States or if they file a joint income tax return with their spouse. Resident aliens are required to complete this form. The reporting thresholds are as follows for people whose primary domicile is within the United States, Puerto Rico or America Samoa:
- If you reside in the United States and are unmarried or are married and file separately, you only need to complete a Form 8938 if the total value of your specified foreign assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during that tax year.
- If you are married, reside in the United States and are filing jointly you must complete a Form 8938 if your specified foreign assets are more than $100,000 on the last day of the tax year or $150,000 at any time during the tax year.
For more information on how to determine the total value of your specified foreign assets, the instructions to Form 8938 outline this very clearly.