Common IRS Form 8938 Errors & Solutions – We Specialize in 8938
The IRS 8938 Form is different than many other types of international tax and reporting forms. That is because unlike the Form 5471 (Foreign Corporations), 8865 (Foreign Partnerships) and Form 3520-A (Foreign Trusts) — 8948 Form is part of your tax return.
An 8938 form is filed as part of the 1040, and it is available through most commercial tax software, such as TurboTax and TaxACT.
What is an 8938 FATCA Form?
The 8938 FATCA Form is used to report specified foreign financial assets to the IRS in accordance with FATCA (Foreign Account Tax Compliance Act).
There are different reporting requirements and thresholds, and just because you may have ownership of, or interest in a “specified foreign financial asset” does not mean you meet the threshold requirement for filing the form.
8938 Filing Errors
There are many errors that taxpayers make when completing the 8938 Form. As with most other things related to offshore tax, these errors are not typically fatal.
5 Common 8938 Form Problems
Here are 5 of the more common 8938 Form errors:
Filing a Tax Return Just to File the 8938 FATCA Form
Unlike the Form 5471 or 8865, which you have to file, even if you do not otherwise have to file a U.S. tax return (presuming you meet the filing requirements), the FATCA 8938 Form is different. You only file the 8938 Form in a year in which you are required to file a tax return, and meet the threshold filing requirements.
Only Include Assets You have an Interest In
Unlike the FBAR, a person only includes assets that the filer has an interest in. In other words, if you are associated with the asset, but you do not have an interest in the asset, you generally do not have to file.
Using Domestic Thresholds when the Filer is a Foreign Resident
The threshold filing requirements for the 8398 FATCA form is much higher than the threshold for U.S. residents. If you are a foreign resident and do not meet the threshold, then you do not have to file the form.
Excluding Assets which should be Reported
There are many assets that you may need to include in an 8938 FATCA Form submission. This will generally include:
- Retirement Accounts
- Foreign Entities (subject to 8865 and 5471)
- Foreign Investment Funds
- Foreign Life Insurance
If you do not include all the necessary assets, you may become subject to fines and penalties.
Filing the Return Late or Amending without RC or Amnesty
If you filed the tax return late, or missed the 8938 FATCA form requirements for prior years, you are out-of-compliance. When a taxpayer is out of compliance, they may become subject to excessive fines and penalties for not filing the form (or filing late using quiet disclosure).
There are many amnesty, voluntary disclosure and delinquency procedures that the IRS makes available to limit, reduce, minimize, and avoid penalties.
Interested in Filing under 8938 IRS Tax & Amnesty Procedures?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in offshore tax and reporting amnesty. Contact our firm today for assistance with getting compliant.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.