Form 8938 refers to the Statement of Specified Foreign Financial Assets while FinCEN Form 114 refers to an FBAR or Report of Foreign Bank and Financial Accounts. U.S. taxpayers that own foreign assets need to distinguish the requirements related to both of these forms. The following is the first part of a blog that compares Form 8938 and FBAR requirements.
*Who must file these forms?
U.S citizens, resident aliens, and certain non-resident aliens that have an interest in specified foreign financial assets and meet the reporting threshold must file Form 8938. U.S. persons, which include U.S. citizens, resident aliens, trusts, estates, and domestic entities that have an interest in foreign financial accounts and meet the reporting threshold, must file an FBAR.
*Does the United States include U.S. territories?
Regarding Form 8938, the answer is “No,” but regarding an FBAR, the answer is “Yes,” resident aliens of U.S territories and U.S. territory entities are subject to FBAR reporting.
*What is the reporting threshold (total value of assets)
Form 8938
Taxpayers living in the US:
- Unmarried taxpayer (or married filing separately): Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.
- Married taxpayer filing jointly: Total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.
Taxpayers living outside the US:
- Unmarried taxpayer (or married filing separately): Total value of assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
- Married taxpayer filing jointly: Total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.
FBAR
Aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. Because this is a cumulative balance, if a taxpayer has a combined account balance of $12,000 at any one time, even if divided between 2 accounts, both accounts must be reported.
*When do you have an interest in an account or asset?
Form 8938
If any income, gains, losses, deductions, credits, gross proceeds, or distributions from the holding or disposition of the account or asset are or would be required to be reported, included, or otherwise reflected on an income tax return, then a taxpayer has an interest in the account or asset.
FBAR
If a taxpayer, or his or her agent or representative, is the owner of record or holds legal title to a financial interest, a taxpayer has a sufficient interest in the entity. A taxpayer has signature authority if he or she has authority to control the disposition of the assets in the account by direct communication with the financial institution maintaining the account.
If you have questions about the timely or delinquent filing of a Form 8938 or FBAR, or questions about foreign holdings, assets, or accounts, contact THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
