IRS Updates Instructions for Reporting Specified Foreign Financial Assets

The IRS updated the instructions to IRS Form 8938 ("Statement of Specified Foreign Financial Assets") to clarify the filing requirements for dual-resident taxpayers.

Dual residents will not be required to file Form 8938 and report on their specified foreign financial assets if they complete the appropriate tax returns and comply with certain other filing requirements under applicable U.S. Treasury Department regulations. Generally, individual U.S. taxpayers are required to file IRS Form 8938 if they own certain specified foreign financial assets the value of which in the aggregate exceeds certain thresholds, which, in the case of a single individual, are more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. Specified foreign financial assets include their financial accounts in a foreign financial institution, interests in a foreign entity, and certain stock, securities and financial instruments issued by a non-U.S. person.

The updated instructions also clarify that retirement and pension accounts, non-retirement savings accounts and other similar accounts that are excluded from the definition of "financial account" under an intergovernmental agreement generally will not be reported under Form 8938.

Taxpayers who report their specified foreign financial assets as part of joint filings of Form 5471 or Form 8865 and so notify the IRS will not be required to report those same assets on Form 8938.

See: Updated Instructions; Form 8398.