What Are the Specified Foreign Assets You Must Report on Form 8938?


You’ve heard lots about FATCA, Foreign Account Tax Compliance Act, and much of it is likely confusing. Especially the reporting requirements. Wondering what ‘foreign specified assets’ really are? David McKeegan explains it all in this brief video.

VIDEO TRANSCRIPT

Hi, everybody. I’m David McKeegan with Greenback Expat Tax Services, and our question today is, “What does it mean that I must report specified assets?” This refers to the FACTA regulations, which is Form 8938, which says that if the value of your specified foreign assets exceeds the reporting threshold, you have to report these assets.

FACTA, I’m sure you’ve heard about, is the Foreign Account Tax Compliance Act and it’s designed to uncover tax cheats, people hiding assets offshore, things like that. A lot of expats are up in arms about it because a lot of the assets that expats have fall into this category, so people feel like they’re being treated like criminals because they were saving for their retirement while living overseas.

I’m not going to comment on that one or the other, other than to say that if you do have assets, according to the law, you should be reporting them each year. There’s any number of companies out there that can help you do that and it’s also possible to do it yourself. If you Google Form 8938, you can get the instructions and you can get the forms and you can fill them out yourself.

The filing thresholds are higher for expats than they are for individuals living in the United States. It’s $200,000 at the end of the tax year or $300,000 at any point during the tax year for a single filer. If you’re married filing jointly, then those numbers get doubled. If you’re living in the United States, let’s say you were living abroad, you have foreign assets and you’ve since moved back to the United States, then it’s $50,000 at any point during the year or $75,000 at the end of the tax year. That is for a single person. If you’re married filing jointly, that doubles again, so it’s $100,000 and $150,000.

A couple of examples of these specified assets, stocks or securities issued by a foreign corporation, savings, deposits, checking or a brokerage account held with a broker dealer, an interest in a foreign entity, any financial instrument or contract held for investment must be reported if issued by somebody who is not a US person, notes, bonds, anything like that issued by a foreign person, partnership interests in foreign partnerships have to be reported, an interest in a foreign retirement plan or a deferred compensation plan may need to be reported, an interest in a foreign estate would have to be reported and an interest in foreign-issued insurance contract or annuity contract with a cash surrender value would have to be reported as well.

If you own a home overseas, let’s say you own a home in your own name overseas, that doesn’t have to be reported and if you’re somebody that holds gold overseas, then that doesn’t need to be reported either, so long as it’s held in your name. If you’re holding it in a foreign corporation or an LLC or something like that, then you would need to report those assets.

That’s all for today. If you have any questions, please let us know. Thank you.

 

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