Foreign Financial Asset Reporting Form Finalized


The IRS on December 17 released the final version of Form 8938, Statement of Specified Foreign Financial Assets, and released its instructions on December 19. Affected taxpayers must use the form to report certain financial assets to the IRS.

Last week, the IRS released temporary and proposed regulations on the new reporting requirement (T.D. 9567 and REG-130302-10). See “Regulations Issued for Specified Foreign Financial Assets Reporting.” Under the Foreign Account Tax Compliance Act’s addition of Sec. 6038D to the Code, individuals are required to report interests in specified foreign financial assets (SFFAs) when filing their federal income tax returns. The act was effective for tax years beginning after March 18, 2010; however, in Notice 2011-55, the IRS suspended the requirement until the final version of Form 8938 was released. Therefore, the taxpayers subject to the requirement must file the form in 2012 for 2011 tax years. In addition, taxpayers who would have been required (except for the suspension of the requirement in Notice 2011-55) to file Form 8938 in 2011 for a tax year that began after March 18, 2010, must file it for the prior year with their return for the current tax year.

The Sec. 6038D reporting requirement also applies to any domestic entity that is formed or availed of to hold specified foreign assets, but until the IRS issues regulations governing such domestic entities, only individuals are required to file Form 8939.

The final form is unchanged from the draft form released in June. The instructions, issued in draft form in September, have been updated to reflect changes made by last week’s regulations—most notably, a reduction in the reporting threshold amounts for the value of specified foreign financial assets held at any time during the tax year. The new thresholds for taxpayers living in the United States are:

  • Single taxpayers/married filing separately: $50,000 on the last day of the year or $75,000 anytime during the year.
  • Married filing jointly: $100,000 on the last day of the year or $150,000 anytime during the year.

The reporting thresholds for taxpayers living abroad are:

  • Single taxpayers/married filing separately: $200,000 on the last day of the year or $300,000 anytime during the year.
  • Married filing jointly living abroad: $400,000 on the last day of the year or $600,000 anytime during the year.
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