Form 8938 Step by Step: Statement of Specified Foreign Financial Assets

Form 8938, the Statement of Specified Foreign Financial Assets, is the income tax return counterpart to the FBAR. Where the FBAR goes to FinCEN, Form 8938 is attached to your annual tax return and goes to the IRS. It applies to US citizens, resident aliens and certain nonresidents whose foreign financial assets are worth more than the dollar thresholds for their filing status and where they live. For newcomers from India and Canada, it often covers the same bank, demat and retirement accounts as the FBAR, plus assets the FBAR ignores, such as shares of a foreign company held directly. This guide takes Form 8938 step by step.

Who must file Form 8938?

You are a specified individual if you are a US citizen, a resident alien for any part of the tax year, a nonresident alien who elects to be treated as a resident to file a joint return, or a nonresident bona fide resident of American Samoa or Puerto Rico. If you are a resident alien for only part of the year, the reporting period is the part you are a specified individual. For example, an unmarried person who arrived on February 1 and met the substantial presence test reports from February 1 (the residency starting date) to December 31. See the residency tests.

Living abroad means a tax home in a foreign country plus a bona fide residence or 330 full days abroad. If your spouse and you file separately and own an asset jointly, each counts half of its value; otherwise each joint owner counts the whole asset.

Which assets are specified foreign financial assets?

• Financial accounts at foreign financial institutions: deposit, custodial, and cash-value insurance or annuity contracts, and equity or debt interests in a foreign financial institution.
• Held for investment, outside an account: stock or securities of a non-US issuer, any interest in a foreign entity, and contracts with non-US counterparties.
• Interests in foreign pension plans and deferred compensation plans, reported by the plan, not the plan's holdings.

Not reportable: accounts at US financial institutions (including US IRAs, 401(k)s and US brokerage accounts), foreign social security equivalents, and assets already shown on Forms 3520, 3520-A, 5471, 8621 or 8865, although you still count their value toward the threshold and identify those forms on Form 8938. A flat in Pune or a house in Mississauga that you own directly is not on the list; an interest in a foreign company that owns it is.

Form 8938 step by step

1. Confirm you file a tax return. If no return is required, no Form 8938 is required.
2. Determine your reporting period and residence category (US or abroad, married or single).
3. List every foreign asset with an interest, including joint accounts, accounts held by a disregarded entity you own, and grantor trusts.
4. Find the maximum fair market value during the year for each, in the asset's currency, then convert at the Treasury Bureau of the Fiscal Service rate for the last day of the tax year. You may use the rate on a financial statement issued at least annually.
5. Test the thresholds using both year-end and highest total value. Joint assets follow the rules above.
6. Complete the form. Report the maximum value for each account or asset, the institution's name and address, and whether you reported a tax item. A foreign pension is reported by its value; if you do not know it, use zero unless you received distributions, in which case use the distributions.
7. Identify excepted assets by entering the number of Forms 3520, 3520-A, 5471, 8621 and 8865 you filed.
8. Attach it to your Form 1040, 1040-SR or 1040-NR and file by the return's due date including extensions.

Form 8938 versus the FBAR

Read the FBAR guide for the second form.

Documents you need

• Year-end and peak statements for each foreign account
• Share certificates or demat statements for directly held foreign shares
• Partnership, company and trust documents for entity interests
• Treasury year-end exchange rates
• Copies of Forms 3520, 5471, 8621 or 8865 you file

Deadlines and penalties

Form 8938 is due with your return: April 15, 2026 for 2025, October 15, 2026 if you extended, and April 15, 2027 for 2026. A required Form 8938 that is not filed on time draws a $10,000 penalty. If you do not file within 90 days of an IRS notice, an extra $10,000 applies for each 30-day period, up to $50,000 more. Couples filing jointly are treated as one person and are jointly liable. There is no penalty if the failure is due to reasonable cause, which you must prove; a foreign law that forbids disclosure is not reasonable cause. A 40% penalty can apply to underpayments tied to an undisclosed asset, and criminal penalties are possible. See IRS foreign reporting penalties.

Country notes

Illinois has no matching state form. The federal threshold depends on your filing status and whether you live in the United States.

Worked examples

Neha and Sandeep, Aurora, filing jointly. At December 31 their Indian accounts total $62,000, with a peak of $88,000 during the year. Both are below $100,000 and $150,000, so no Form 8938 for them, but their combined accounts clear the $10,000 FBAR threshold, so they file the FBAR.

Tarun, H-1B, single, arrived February 1. His Indian demat and savings accounts total $55,000 on December 31. His reporting period starts on his residency starting date. $55,000 exceeds $50,000, so he files Form 8938 listing each account and the maximum values, and also files the FBAR.

Mistakes to avoid

• Assuming the FBAR makes Form 8938 unnecessary, or the reverse.
• Reporting only year-end balances, not the maximum.
• Leaving out directly held shares of a foreign company.
• Ignoring the part-year reporting period in the arrival year.
• Counting a joint account at half value on a joint return.

How we can help

Our Aurora, Illinois firm prepares Form 8938 with your return, aligns it with the FBAR, Form 8621 and Form 5471 reporting, and coordinates with your Indian CA and Canadian CPA so Schedule FA and Form T1135 match. See our foreign account and asset reporting service and the 2026 reminders.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.