If you own something outside the United States then you must file IRS Form 8938 and report it on your tax return. The penalties for failure to file this form are particularly horrendous…$10,000 is just the beginning!
Statement of Specified Foreign Financial Assets
IRS Form 8938 is called Statement of Specified Foreign Financial Assets. OK we got the statement part…you must report to the IRS on your tax return, stuff you own in foreign countries. They need to know about it. But what are specified foreign assets? Here are a few examples:
- a savings account in a foreign country
- stocks issued by a foreign corporation, but not maintained by a brokerage company
- your interest in a trust fund, which is held/maintained in a foreign country
- your interest in a partnership or corporation that’s in a foreign country
- bonds issued in a foreign country
- a foreign pension plan
If your foreign financial assets total more than $100,000 then you must file IRS Form 8938. If not, then you don’t have to file this form. If you file your taxes married filing jointly, then the total of you and your spouse’s foreign financial assets must meet the $100,000 threshold in order to require filing of form 8938.
File 8938 or Pay HUGE Fines!
The penalty for failing to file Form 8938 is an astonishing $10,000! And it doesn’t stop there. You can be assessed that fine even if you do file 8938 but file it incomplete or incorrect. No ‘A’ for Effort here! If you don’t file, then the IRS send you a letter telling you to file, and you still don’t file…another $10,000…every 30 days! Let me say that again…
$10,000 a month for failing to file IRS Form 8938
Need I say more about the importance of telling the IRS about your foreign financial accounts? Here’s a quick link to the IRS website where you can get a PDF copy of this all-important form for rich people who own stuff in foreign countries. If your accountant didn’t tell you about this then fire him or her immediately.