Form 8938 is an informational IRS tax form that was created as part of the Foreign Account Tax Compliance Act (FATCA), which was passed into law in 2010. The purpose of the form is to alert the IRS that an individual has received certain types of foreign assets.
US persons who own foreign financial assets valued above certain thresholds must file this form to report those assets. Common examples of foreign financial assets include:
- Foreign bank accounts
- Foreign brokerage accounts
- Foreign financial instruments
- Foreign-issued life insurance
- Foreign annuity contracts with cash value
- Shares in foreign hedge funds and private equity funds
This form is required under the rules of the Foreign Account Tax Compliance Act (FATCA). FATCA is designed to prevent taxpayers from hiding their assets and income overseas to avoid taxation.
Note: While this form is similar to the FBAR, they are not the same. Understanding the differences can be crucial for expat tax compliance.