Form 8938: Filing Requirements, Thresholds, and What to Report

Form 8938, Statement of Specified Foreign Financial Assets, is the IRS reporting form created by IRC 6038D as part of FATCA (the Foreign Account Tax Compliance Act). You file it with your income tax return if your foreign financial assets exceed a threshold that depends on where you live and how you file. The form reports the same accounts the FBAR covers, plus a wider set of foreign financial interests that the FBAR does not reach: foreign stock held directly (not through a US broker), interests in foreign partnerships, foreign trusts, and foreign financial instruments. For Canadians with US filing obligations, the most common assets triggering Form 8938 are bank accounts, RRSPs, TFSAs, RRIFs, and non-registered investment accounts held at Canadian brokerages.

Who has to file Form 8938?

Any specified person who holds specified foreign financial assets with an aggregate value exceeding the applicable threshold must file Form 8938. A specified person is a US citizen, a US resident alien (including green card holders and individuals who meet the substantial presence test), and certain domestic entities with specified foreign financial assets.

The obligation applies regardless of whether the assets produce income. A dormant Canadian bank account earning $3 in interest still counts toward the threshold. An RRSP with no contributions or withdrawals during the year still counts. The threshold is based on the aggregate value of all specified foreign financial assets, not the income they generate.

US citizens living in Canada are specified persons. They file under the higher “living abroad” thresholds because they qualify as a bona fide resident of a foreign country or meet the physical presence test. A US citizen who moved from Canada to the US mid-year files under the lower “living in the US” thresholds for that year, which is where many people first encounter the form: the threshold drops from $200,000 to $50,000 at year-end, and accounts that never triggered the filing requirement suddenly do.

The filing obligation is annual. You file Form 8938 with your Form 1040 (or 1040-NR, 1040-SR, or 1065/1120S for domestic entities subject to the rules) for every year the threshold is met. Missing it for one year does not excuse the next.

What are the filing thresholds?

The thresholds are set by IRC 6038D(a) and the regulations, and they vary by filing status and by whether you live in the United States or abroad. Each threshold has two prongs: a year-end value and an “at any time” value, and you file if you exceed either one. The at-any-time prong catches temporary spikes from property sales, inheritances, or currency swings. US persons living abroad get much higher thresholds than those living in the US, which means the move itself can trigger a first-time filing requirement when the thresholds drop.

Living in the United States:

Filing status	Year-end threshold	At-any-time threshold
Single or married filing separately	$50,000	$75,000
Married filing jointly	$100,000	$150,000

Living abroad (bona fide resident or physical presence test):

Filing status	Year-end threshold	At-any-time threshold
Single or married filing separately	$200,000	$300,000
Married filing jointly	$400,000	$600,000

You file if you exceed either threshold at any point. The “at any time” threshold catches people who had a temporary spike: a property sale, an inheritance deposited in a foreign account, or a currency fluctuation that pushed the US-dollar equivalent above the line on a single day. If your Canadian accounts peaked at $80,000 CAD on March 15 and you are single, filing from the US, the US-dollar equivalent on that date is what matters. If it crossed $75,000 USD, you file Form 8938 for the year even if the year-end balance was $40,000.

The aggregate value is across all specified foreign financial assets, not per account. A $30,000 bank account plus a $25,000 RRSP equals $55,000 in aggregate, which exceeds the $50,000 year-end threshold for a single filer living in the US.

What counts as a specified foreign financial asset?

The category is broader than “foreign accounts.” IRC 6038D(b) and Treas. Reg. 1.6038D-3 define specified foreign financial assets to include:

Financial accounts maintained by a foreign financial institution. This is the overlap with the FBAR. Bank accounts, brokerage accounts, savings accounts, RRSPs, TFSAs, RRIFs, and any other account at a non-US financial institution. A Canadian bank account at TD Canada Trust is a foreign financial account. The same money at TD Ameritrade (a US institution) is not. The institution’s country of organization determines whether it is foreign, not where the account holder lives.

Financial assets held for investment that are not in an account. Stock or securities issued by a non-US person and not held through a US financial institution. If you hold shares of a Canadian public company directly (certificated or held through a Canadian transfer agent) rather than through a US brokerage account, those shares are specified foreign financial assets. The same shares held in a Schwab brokerage account are not reportable on Form 8938, because the US brokerage reports them separately.

Financial instruments or contracts with a non-US counterparty. Options, derivatives, forward contracts, or other financial instruments where the issuer or counterparty is a non-US person or entity. Rarely relevant for most individual cross-border filers, but matters for sophisticated investment portfolios.

Interests in foreign entities. An interest in a foreign partnership, foreign corporation (if treated as a financial asset), or foreign trust. A US person who owns shares in a Canadian corporation reports that interest on Form 8938 if the aggregate value of all specified foreign financial assets meets the threshold. This is separate from the Form 5471 obligation for controlled foreign corporations.

What is excluded. Foreign real property held directly (not through a foreign entity) is not a specified foreign financial asset. Canadian social insurance benefits (CPP, OAS) are not reportable. Assets held in a US financial institution, even if the underlying investment is foreign, are not reportable on Form 8938. A Canadian mutual fund held in a Fidelity US brokerage account does not count (though it may be a PFIC for income tax purposes).

How do I determine the value of each asset?

You use the maximum value during the tax year for the “at any time” threshold and the year-end value for the year-end threshold. For accounts, the value is the fair market value in US dollars. Use the Treasury Department’s year-end exchange rate for the year-end value, and a reasonable exchange rate for the date of the maximum value.

For assets that are not accounts (stock, partnership interests, financial instruments), you use the fair market value if known. If the fair market value is not determinable, you use a reasonable estimate and check the “estimated” box on the form. You do not need to obtain an appraisal, but you should document your basis for the estimate.

For jointly owned accounts, each spouse reports the entire value of jointly owned assets on their separate Form 8938 if filing separately. If filing jointly, the combined value of both spouses’ foreign assets is measured against the joint filing thresholds.

Currency conversion uses the Treasury Reporting Rates of Exchange for year-end values. For mid-year values (the “at any time” peak), the IRS accepts any reasonable exchange rate, including the spot rate on the relevant date.

What are the penalties for not filing?

The penalty structure is in IRC 6038D(d) and it escalates:

Base penalty: $10,000. Failure to file Form 8938 when required results in a $10,000 penalty for each year the form is missing. This applies even if no tax is owed on the foreign assets. The penalty is for the information reporting failure, not for underpayment of tax.

Continuation penalty: $10,000 per 30-day period after IRS notice, up to $50,000. If the IRS sends you a notice of the failure to file and you still do not comply within 90 days, additional penalties of $10,000 accrue for each 30-day period (or fraction thereof) of continued non-compliance. The continuation penalty is capped at $50,000 per year.

Combined maximum: $60,000 per year ($10,000 base plus $50,000 continuation).

Accuracy-related penalty enhancement: 40%. If an underpayment of tax is attributable to an undisclosed foreign financial asset, the accuracy-related penalty under IRC 6662 is increased from 20% to 40% of the underpayment. This applies on top of the $10,000/$60,000 reporting penalty.

Statute of limitations extension. Failure to file Form 8938 extends the statute of limitations on the entire return to six years under IRC 6501(e)(1)(A), not just the three-year default. The IRS has more time to find and assess the underreported foreign income.

Reasonable cause exception. The penalties do not apply if you can show the failure was due to reasonable cause and not willful neglect. The IRS considers whether you exercised ordinary business care and prudence, whether you relied on professional advice, and whether the failure was the result of circumstances beyond your control. For cross-border filers who did not know about the requirement, the streamlined filing procedures provide a formal path to demonstrate non-willfulness and avoid penalties.

How is Form 8938 different from the FBAR?

They are two separate obligations, filed with two separate agencies, under two separate statutes. Filing one does not satisfy the other. The full comparison guide covers the side-by-side differences in detail, but the key distinctions are:

Form 8938 goes to the IRS with your tax return. The FBAR goes to FinCEN through the BSA E-Filing system. Form 8938 covers a wider set of assets (accounts plus non-account financial assets). The FBAR covers only financial accounts. Form 8938 has higher, variable thresholds ($50,000 to $600,000 depending on circumstances). The FBAR has one threshold: $10,000 aggregate. Form 8938 penalties start at $10,000 with a $60,000 maximum before IRS-notice response. FBAR non-willful penalties are up to $16,987 per violation; willful penalties are the greater of $100,000 or 50% of the account balance.

Most cross-border filers who owe Form 8938 also owe the FBAR, because the FBAR’s $10,000 threshold is lower than any Form 8938 threshold. The reverse is not always true: someone with $15,000 in Canadian accounts owes the FBAR but not Form 8938 (if living in the US and single, the Form 8938 threshold is $50,000).

What should I do next?

If you are a US person with foreign financial assets, check both the Form 8938 and FBAR thresholds for the current year. If you are behind on either form, the streamlined procedures or delinquent FBAR filing can resolve the backlog without the standard penalties.

• Form 8938 vs FBAR: do I file both?, the side-by-side comparison of both reporting obligations
• FATCA explained, the law that created Form 8938
• How far back can the IRS audit?, the statute of limitations including the 8938 extension
• Late FBAR: delinquent filing or streamlined?, the compliance paths for missed filings
• What does the streamlined procedure cost?, the standard resolution for non-willful failures

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.