Individuals Must Report Specified Foreign Financial Assets on New Form 8938 for 2011 Tax Year

Posted on 01.23.12

The IRS released the final Form 8938, Statement of Specified Foreign Financial Assets, which individuals (“specified persons”) must use to report specified foreign financial assets for 2011. Until the IRS issues future regulations, only individuals, and not specified domestic entities, must file Form 8938.  The 2010 Tax Act provided that individuals with an interest in a “specified foreign financial asset” during the tax year must attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is generally greater than $50,000 (or a higher dollar amount as the IRS may prescribe, more detail follows below). “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a U.S. person, and (c) any interest in a foreign entity.  The assets that can be included in these categories are wide and far sweeping including such assets as foreign pension plans and foreign deferred compensation plans. 

Reporting Specified Foreign Financial Assets on New Form 8938 for 2011