Guide : Tax Form 8938
Form 8938 is a tax form that must be filed by certain United States taxpayers with the Internal Revenue Service (IRS).
"Tax season is here, and with it comes a host of forms that can leave even the savviest taxpayer feeling overwhelmed. Enter Tax Form 8938 – the lesser-known but equally important sibling to the ubiquitous Form 1040. Whether you're an expat living abroad or simply have significant foreign assets, understanding this form is crucial for staying compliant with IRS regulations and avoiding costly penalties. In this guide, we'll break down everything you need to know about Tax Form 8938 and how to navigate it like a pro." Read More-: Tax Form 8938
What is Form 8938?
Form 8938 is a tax form that must be filed by certain United States taxpayers with the Internal Revenue Service (IRS). The form is used to report certain foreign financial assets, including bank accounts, securities, and interests in foreign entities.
Who Must File Form 8938?
You must file Form 8938 if you are a specified individual with Specified Foreign Financial Assets and your total value of these assets exceeds the appropriate reporting threshold. A specified individual includes:
• An unmarried individual who files a joint income tax return;
• A married individual filing a separate income tax return; or
• An individual who is not a citizen of the United States or resident alien for any part of the tax year.
When to File Form 8938
If you are the specified owner of certain foreign financial assets, you must report those assets to the IRS on Form 8938. Specified owners include:
-Individuals who file a joint income tax return with a total annual income of $150,000 or more
-Individuals who file an individual income tax return with a total annual income of $75,000 or more
- Married couples filing separately with a total annual income of $75,000 or more
If your total annual income is below these thresholds, you are not required to file Form 8938. However, you may still need to report your foreign financial assets on other forms, such as FinCEN Report 114 (FBAR).
You must file Form 8938 if you meet the above criteria AND you have foreign financial assets that exceed certain value thresholds. The value thresholds are:
Where to File Form 8938
When it comes to filing your taxes, there are a lot of forms to choose from. Form 8938 is one of them, and it's important to know where to file it.
If you're a single filer, you'll need to file Form 8938 if your total assets exceed $50,000. If you're married and filing jointly, the threshold is $100,000. And if you're married and filing separately, the threshold is $25,000. See also-: Tax Form 8938 assets include things like cash in checking and savings accounts, stocks and bonds, mutual funds, certain retirement accounts, and real estate (not including your primary home).
To file Form 8938, attach it to your federal income tax return. You can find the form on the IRS website.
Penalties for Not Filing Form 8938
If you don't file Form 8938 when required, you may be subject to a penalty of $10,000. Additionally, if you don't file Form 8938 and it results in a substantial understatement of your tax liability, you may be subject to a 40% accuracy-related penalty on the portion of your understatement. Also Read -: Tax Form 8621