Foreign Financial Asset Reporting Form Finalized


The IRS on Saturday released the final version of Form 8938, Statement of Specified Foreign Financial Assets, and released its instructions on Monday. Affected taxpayers must use the form to report certain financial assets to the IRS.

Last week, the IRS released temporary and proposed regulations on the new reporting requirement (T.D. 9567 and REG-130302-10). See “Regulations Issued for Specified Foreign Financial Assets Reporting,” Dec. 15, 2011.

Under the Foreign Account Tax Compliance Act’s addition of Sec. 6038D to the Code, individuals are required to report interests in specified foreign financial assets (SFFAs) when filing their federal income tax returns. The act was effective for tax years beginning after March 18, 2010; however, in Notice 2011-55, the IRS suspended the requirement until the final version of Form 8938 was released. Therefore, the taxpayers subject to the requirement must file the form in 2012 for 2011 tax years. In addition, taxpayers who would have been required (except for the suspension of the requirement in Notice 2011-55) to file Form 8938 in 2011 for a tax year that began after March 18, 2010, must file it for the prior year with their return for the current tax year.

The Sec. 6038D reporting requirement also applies to any domestic entity that is formed or availed of to hold specified foreign assets, but until the IRS issues regulations governing such domestic entities, only individuals are required to file Form 8939.

The final form is unchanged from the draft form released in June. The instructions, issued in draft form in September, have been updated to reflect changes made by last week’s regulations—most notably, a reduction in the reporting threshold amounts for the value of specified foreign financial assets held at any time during the tax year. The new thresholds for taxpayers living in the United States are:

  • Single taxpayers/married filing separately: $50,000 on the last day of the year or $75,000 anytime during the year.
  • Married filing jointly: $100,000 on the last day of the year or $150,000 anytime during the year.


The reporting thresholds for taxpayers living abroad are:

  • Single taxpayers/married filing separately: $200,000 on the last day of the year or $300,000 anytime during the year.
  • Married filing jointly living abroad: $400,000 on the last day of the year or $600,000 anytime during the year.

More from the JofA:

 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos

SPONSORED REPORT

Tax reform complicates year-end tax planning

Get your clients ready for tax season with these year-end tax planning strategies, which address how to make the most of recent tax law changes, such as the new deduction for qualified business income and the cap on the deductibility of state and local taxes.

VIDEO

What RPA is and how it works

Robotic process automation is like an Excel macro that can work on multiple applications, says Danielle Supkis Cheek, CPA. RPA can complete routine, repetitive tasks such as data entry, freeing up employee time from lower-level chores.