Tuesday, March 17, 2015

Latest Form 8938 Update: Statement Of Specified Foreign Financial Assets

I am happy to announce dear readers, my blog crossed 50,000 views this week. Can't tell you all what an awesome feeling that is. Thank you, thank you to my dear loyal readers! This time of the Tax Season is always interesting, most of my clients who have easy returns and get refunds have already filed their taxes, so now is the time when I become the deliverer of bad news. 

So staying in the spirit of the tax season, I deliver the latest changes to the Form 8938 with a huge spoonful of sugar! If you need to know if the Form 8938 thresholds apply to you, read my blog-post here

The latest release from the Internal Revenue Service on the 10th of March, 2015 incorporated into the Form 8938 instructions for reporting requirements made under the Final Regulations for § 6038D of the Internal Revenue Code. It also contains additional information not included in the published 2014 Instructions for Form 8938.

Dual resident taxpayers


  • If you are a specified individual filing as a nonresident alien at the end of your taxable year: A specified individual who computes his or her U.S. income tax liability as a nonresident alien on the last day of the taxable year is not required to report specified foreign financial assets on Form 8938 for the portion of the individual’s taxable year covered by Form 1040NR/ Form 1040NR-EZ:

  1. If the individual  complies with the filing requirements for nonresident aliens per § 301.7701. 
  2. Including the requirement to timely file Form 1040NR/ Form 1040NR-EZ and 
  3. Attach Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).


  • If you are a specified individual filing as a resident alien at the end of your taxable year:   A specified individual who computes his or her U.S. income tax liability as a resident alien on the last day of the taxable year is not required to report specified foreign financial assets on Form 8938 for the portion of the individual’s taxable year reflected on the schedule to Form 1040/ Form 1040EZ:            

  1. If the individual  complies with all of the filing requirements of §1.6012-1(b)(2)(ii)(a).
  2. Including the requirements to timely file Form 1040/Form 1040EZ and 
  3. Attach a properly completed Form 8833.  




 Accounts excluded from the definition of a financial account under an applicable Model 1 or Model 2 IGA 


  • For taxable years beginning on or before December 12, 2014: If you have an account that can be considered specified foreign asset/s in a country that has an model 1 IGA or Model 2 IGA in effect, on or before the last day of the taxpayer's taxable year, and if the retirement and pension accounts, non-retirement savings accounts and other accounts satisfying requirements under the law are excluded from the definition of financial account in such IGA, are not required to be reported on Form 8938. 
  • For taxable years beginning on or after December 12, 2014: All retirement, pension accounts, non-retirement savings accounts and other accounts satisfying required conditions under the law must be reported on the Form 8938 irrespective whether account is maintained in a country with an IGA in effect. 

Joint Form 5471 or Form 8865 filing
A person who has included as part of a joint Form 5471 filing or joint Form 8865 filing & notifies the government of this effect does not have to file a Form 5471/ Form 8865 for the same accounts. And if an asset is reported on these forms that are timely filed, then they do not have to be included on the Form 8938 as well for the same tax year. 
Bibliography: Form 8938; www.irs.gov; Form 5471; form 8865; § 301.7701; Form 8833
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As always, read my disclaimer here. Please consult a qualified tax professional for your unique tax needs. More of my contact information is on my website, www.mntaxsolutionsllc.com.