Form 8938 - Questions

[Mtriligy 0]

Hello,

After conducting extensive research, I believe I have a solid understanding of what I need to do for my Form 8938. If anyone can help me get to the right direction, I would truly appreciate it. Please note that this is a high-level overview of my plan. If I’m making any mistakes or missing something important, I’d appreciate any corrections or guidance.

Information to Input on Form 8938:

• Part 1 (Lines 5, 6, 9): Since we have both CDs and regular bank accounts, we need to report the total number of accounts and their combined maximum value during the year.
   

• Part 2 (Lines 10-11): 

  • We need to enter "1" in Line 10, as we have one foreign life insurance policy with a cash surrender value.

  • Line 11 will reflect its maximum value during the year.
     

• Part 3 (Line 13a): The only foreign income we earned was interest from our CD accounts. I believe we should report only the total interest earned from these accounts here.
   

• Part 4: (Skip) This section does not apply to our situation.
   

• Part 5: (Foreign Bank Accounts)

  • We need to report both open and closed foreign bank accounts.

  • For account type, we should select "Deposit" for all CDs and regular bank accounts.

  • We then provide the required details (institution name, account numbers, maximum values, etc.).
     

• Part 6 (Lines 29-34):

  • This section is for foreign financial assets that are not held in financial accounts.

  • Since we have a foreign life insurance policy with a cash surrender value, we need to report it here with all relevant details.
     

What We Do Not Need to Report:

• We own a rental property abroad, but from my understanding, this is not considered a financial asset for Form 8938 since it is personal property that we lease out. Therefore, it does not need to be reported on this form.

[Tesco 89]

On 3/11/2025 at 10:34 PM, Mtriligy said:

Hello,

After conducting extensive research, I believe I have a solid understanding of what I need to do for my Form 8938. If anyone can help me get to the right direction, I would truly appreciate it. Please note that this is a high-level overview of my plan. If I’m making any mistakes or missing something important, I’d appreciate any corrections or guidance.

Information to Input on Form 8938:

• Part 1 (Lines 5, 6, 9): Since we have both CDs and regular bank accounts, we need to report the total number of accounts and their combined maximum value during the year.
   

• Part 2 (Lines 10-11): 

  • We need to enter "1" in Line 10, as we have one foreign life insurance policy with a cash surrender value.

  • Line 11 will reflect its maximum value during the year.
     

• Part 3 (Line 13a): The only foreign income we earned was interest from our CD accounts. I believe we should report only the total interest earned from these accounts here.
   

• Part 4: (Skip) This section does not apply to our situation.
   

• Part 5: (Foreign Bank Accounts)

  • We need to report both open and closed foreign bank accounts.

  • For account type, we should select "Deposit" for all CDs and regular bank accounts.

  • We then provide the required details (institution name, account numbers, maximum values, etc.).
     

• Part 6 (Lines 29-34):

  • This section is for foreign financial assets that are not held in financial accounts.

  • Since we have a foreign life insurance policy with a cash surrender value, we need to report it here with all relevant details.
     

What We Do Not Need to Report:

• We own a rental property abroad, but from my understanding, this is not considered a financial asset for Form 8938 since it is personal property that we lease out. Therefore, it does not need to be reported on this form.

1, All of your accounts will be shown at the top of form 8938, 'cash and 'asset'.

2, The maximum value of your insurance policy will  be what you've distributed during the year. If its $0, so state.

3, report the individual accounts and they will then reflect in the total at the header of the form.

5, Yes, deposit.

6, Yes, needs reporting.

You would report property held in Trust, or owned by a business. 

Edited March 15 by Tesco
typo

[Mtriligy 0]

@Tesco
 

I noticed something for my 2023 taxes for form 8938.
 

I lived and worked abroad for several years. I returned to the U.S. in late September 2023.
 

Before 2024, I had over $50K in my foreign bank account, but it never exceeded $75K. Did I need to file Form 8938? Would the physical presence from September 2022 to September 2023 set my reporting threshold at $200K for Form 8938?
 

Additionally, I started working in the U.S. from October to the end of December 2024.
 

Thanks again.

[Tesco 89]

16 minutes ago, Mtriligy said:

@Tesco
 

I noticed something for my 2023 taxes for form 8938.
 

I lived and worked abroad for several years. I returned to the U.S. in late September 2023.
 

Before 2024, I had over $50K in my foreign bank account, but it never exceeded $75K. Did I need to file Form 8938? Would the physical presence from September 2022 to September 2023 set my reporting threshold at $200K for Form 8938?
 

Additionally, I started working in the U.S. from October to the end of December 2024.
 

Thanks again.

I'd say yes, needed reporting as you returned to the U.S. I'd suggest you get a CPA or an enrolled agent and file via the Streamlined Amnesty Program with the IRS. If you qualify, you may save tens of thousands of dollars in penalties. 

[Mtriligy 0]

15 minutes ago, Tesco said:

I'd say yes, needed reporting as you returned to the U.S. I'd suggest you get a CPA or an enrolled agent and file via the Streamlined Amnesty Program with the IRS. If you qualify, you may save tens of thousands of dollars in penalties. 

Do you any stories of normal people or know anyone who got these penalties before? I feel like these penalties only hits people who are doing things illegally with their money abroad.

Edited Saturday at 10:37 PM by Mtriligy

[Tesco 89]

27 minutes ago, Mtriligy said:

Do you any stories of normal people or know anyone who got these penalties before? I feel like these penalties only hits people who are doing things illegally with their money abroad.

Where are you located?

[Mtriligy 0]

35 minutes ago, Tesco said:

Where are you located?

In the US.

[Tesco 89]

18 minutes ago, Mtriligy said:

In the US.

 

18 minutes ago, Mtriligy said:

In the US.

Where did you work abroad?

[Mtriligy 0]

6 minutes ago, Tesco said:

Where did you work abroad?

Japan.

[Tesco 89]

9 minutes ago, Tesco said:

 

Where did you work abroad?

Japan will report you maximum account balances to the IRS. It's called FACTA.

[Mtriligy 0]

15 minutes ago, Tesco said:

Japan will report you maximum account balances to the IRS. It's called FACTA.

How do you know this?

So is it a better option to file an amended for my 2023 return? I'm really worried about that 10K fine if I do it.


The other question if I have to file form 8858 because of my spouse rental property abroad. I get conflicting results if she should file it or not. It's owned in her name, not an LLC and/or business. Do you know anything about Form 8858? Also, the issue with Form 8858 is that Taxact, Turbotax doesn't have it for efiling. When I tried ExpatFile, it doesn't even prompt me to do it even though people in Reddit complained about having to do it in ExpatFile.  

I appreciate all your input, Tesco.

[Tesco 89]

26 minutes ago, Mtriligy said:

How do you know this?

So is it a better option to file an amended for my 2023 return? I'm really worried about that 10K fine if I do it.


The other question if I have to file form 8858 because of my spouse rental property abroad. I get conflicting results if she should file it or not. It's owned in her name, not an LLC and/or business. Do you know anything about Form 8858? Also, the issue with Form 8858 is that Taxact, Turbotax doesn't have it for efiling. When I tried ExpatFile, it doesn't even prompt me to do it even though people in Reddit complained about having to do it in ExpatFile.  

I appreciate all your input, Tesco.

There are two systems for international reporting:

 

1, CRS 

2, FACTA

 

1, This is an international money laundering / tax evasion system, where tax information is shared between countries.

2, This is only for the U.S. and was signed into law in about 2010. The vast majority of countries, (with the exception of those sanctioned), report to Uncle Sam on their 'U.S. Persons'. customers. Things like maximum account balance, which must then tie in with your reporting on FinCEN114 and 8938. Many will be asked their U.S. status, SSN/ITIN when signing up for an account, or dealing with law firms.

 

My gut feeling on what you say is that no, a 8858 is not required, as the rental is held as a personal property, (not in trust, business etc).

 

You could do what they call a 'quiet disclosure' and hope the IRS don't bite. You're in a tricky situation, but I would reach out to an international tax accountancy firm, (TFX, Greenback). They are internationally known and can better advise on your circumstances. 

 

You do have complex issues and deep compliancy failures. Putting that to one side, I'd not go the DIY route on 8858's. Get a quote and sleep easy...

[Mtriligy 0]

17 minutes ago, Tesco said:

You could do what they call a 'quiet disclosure' and hope the IRS don't bite. You're in a tricky situation, but I would reach out to an international tax accountancy firm, (TFX, Greenback). They are internationally known and can better advise on your circumstances. 

 

You do have complex issues and deep compliancy failures. Putting that to one side, I'd not go the DIY route on 8858's. Get a quote and sleep easy...

Do you know what the chances of them biting because I didn't file Form 8938 for 2023? I can't find any stories of normal people getting with a fine for not filing Form 8938. From reading the instructions, I don't think I fall under willful neglect because I didn't know anything about this forum.

Also, in their instructions, it does mention this. I got it from the IRS website.

Presence abroad.
You satisfy the presence abroad test if you are one of the following.
• A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
• A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.

[Mtriligy 0]

5 minutes ago, Mtriligy said:

25 minutes ago, Tesco said:

You could do what they call a 'quiet disclosure' and hope the IRS don't bite. You're in a tricky situation, but I would reach out to an international tax accountancy firm, (TFX, Greenback). They are internationally known and can better advise on your circumstances. 

 

You do have complex issues and deep compliancy failures. Putting that to one side, I'd not go the DIY route on 8858's. Get a quote and sleep easy...

Do you know what the chances of them biting because I didn't file Form 8938 for 2023? I can't find any stories of normal people getting with a fine for not filing Form 8938. From reading the instructions, I don't think I fall under willful neglect because I didn't know anything about this forum.

Also, in their instructions, it does mention this. I got it from the IRS website.

Presence abroad.
You satisfy the presence abroad test if you are one of the following.
• A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year.
• A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.

@Tesco

With the question above, I'm currently looking into a CPA. I prefer a CPA that isn't online.