What is Form 8938?
The Statement of Specified Foreign Financial Assets. Filed with Form 1040. Reports foreign financial assets if they exceed threshold.
Required by FATCA. Penalty for non-filing: $10,000+ plus 40% accuracy penalty.
Thresholds
Living in US:
- Single/MFS: Foreign assets > $50,000 year-end OR > $75,000 anytime
- MFJ: > $100,000 year-end OR > $150,000 anytime
Living abroad (qualifying):
- Single/MFS: > $200,000 year-end OR > $300,000 anytime
- MFJ: > $400,000 year-end OR > $600,000 anytime
"Living abroad" thresholds apply if you meet FEIE physical presence (330+ days) or bona fide residence test.
What qualifies as "foreign financial asset"?
- Foreign bank accounts (savings, NRO, NRE, FCNR, FD)
- Foreign brokerage/demat accounts
- Foreign mutual fund interests
- Foreign-issued stocks and bonds held outside US brokers
- Foreign life insurance with cash value (ULIPs)
- Foreign retirement/pension accounts (PPF, EPF, NPS)
- Interests in foreign trusts, foreign estates
- Foreign-issued financial contracts (futures, swaps)
What does NOT qualify:
- Foreign real estate directly held
- Foreign-domiciled US-based investments (ADRs)
- Foreign tangible assets (jewellery, artwork)
- Foreign personal-use property
Worked threshold check
US tax resident, single, in India year-round.
- NRO bank: $30K year-end, $40K peak
- NRE FD: $50K year-end, $50K peak
- Demat: $20K year-end, $30K peak
- PPF: $25K year-end
- ULIP: $40K year-end, $45K peak
Year-end total: $165K. Peak: $190K.
Living-abroad threshold: > $200K year-end OR > $300K peak.
Under both. No Form 8938 required.
But FBAR threshold: $10K aggregate at peak. Exceed easily. FBAR required.
Form 8938 has higher thresholds than FBAR. Often file FBAR but not Form 8938.
Information on Form 8938
For each asset:
- Type (bank, brokerage, mutual fund, etc.)
- Identifying info (account number, institution name)
- Year-end USD value
- Maximum value during year
- Source of income (dividends, interest, gains)
- Income reported elsewhere (Schedule B, Schedule D)
Form 8938 vs FBAR
| Feature | FBAR | Form 8938 |
|---|---|---|
| Agency | FinCEN | IRS |
| Filed with | Standalone | Form 1040 |
| Threshold | $10K aggregate anytime | $50K year-end / $75K anytime (single, US); higher abroad |
| Includes | Financial accounts | Broader: accounts + stocks + bonds + trusts + retirement |
| Penalty | $10K–$100K + 50% balance | $10K+ + 40% accuracy |
| Deadline | April 15 (auto-ext Oct 15) | With 1040 |
Common Form 8938 mistakes
- Aggregating peak instead of year-end
- Forgetting joint-account aggregation rules
- Missing PPF/EPF in Form 8938
- Not aggregating multiple accounts at same institution
- Reporting in INR instead of USD
- Filing Form 8938 but not FBAR (or vice versa)
What if I miss filing?
Penalty: $10,000. Continued failure after IRS notice: additional $10,000 per 30 days, max $50,000 (total $60K).
Plus 40% accuracy penalty on undisclosed income.
If missed in past years, Streamlined Foreign Offshore Procedure for non-willful failures. Most NRI cases qualify.
Practical advice
- Run threshold calculation in March/April for prior year
- Use year-end USD value with documented FX rate
- List every account, even small ones
- Match Form 8938 to FBAR data
- If gaps exist, file via Streamlined Procedure
Explore our complete US Tax Return Guide to understand refunds, filing rules, and IRS procedures for NRIs.