Scott B. Price, CPA

Expanded Disclosure Requirements on Foreign Assets

January 23, 2012

The federal government has further expanded disclosure requirements with respect to foreign assets. The IRS has issued a new form, Form 8938, Statement of Specified Foreign Financial Assets. If you meet the filing requirements, this form must be included with your income tax return for taxable years beginning after March 18, 2010 (e.g., calendar year 2011). Please note that the form does not replace the filing requirement for Form TDF 90-22.1.

You are required to file Form 8938 if you are
1. a “specified individual
2. with a “specified foreign financial asset”
3. the value of which meets reporting thresholds.

A specified individual is
• A US citizen.
• A resident alien.
• A nonresident alien who elects to be treated as a resident alien for income tax purposes.
• A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico.

A specified foreign asset is
• Any financial account maintained by a foreign institution.
• To the extent held for investment and not held in a financial account
o Stock or securities issued by a non U.S. person
o Any interest in a foreign entity (e.g., foreign partnership, foreign trust)
o Any financial instrument or contract with an issuer or counterparty that is not a U.S. person


You are required to file if the aggregate value of all your specified foreign financial assets is more than the amounts below:


• Unmarried and lives in the U.S: $50,000 on the last day of the year or $75,000 at any time during the year.

• Married separate returns and lives in the US: $50,000 on the last day of the year or $75,000 at any time during the year.

• Married joint returns and lives in the U.S: $100,000 on the last day of the year or $150,000 at any time during the year.

• Unmarried and lives abroad: $200,000 on the last day of the year or $300,000 at any time during the year.

• Married separate returns and lives abroad: $200,000 on the last day of the year or $300,000 at any time during the year.

• Married joint returns and lives abroad: $400,000 on the last day of the year or $600,000 at any time during the year

If a taxpayer required to file Form 8938 does not file a complete and correct Form 8938 by the due date, he may be subject to a penalty of $10,000. If the taxpayer does not file a correct and complete Form 8938 within 90 days after the IRS mails a notice of failure to file, he may be subject to an additional penalty of $10,000 for each 30-day period of noncompliance for a maximum additional penalty of $50,000.

Please let us know if you determine that you have a filing requirement or if you are uncertain whether or not you are required to file Form 8938 so that we can discuss your situation.