Form 8938 Training for Tax Staff: Build FATCA Foreign-Asset Reporting Competence Beyond the FBAR

By Vincent Howard, CPA | Managing Partner, Howard, Howard and Hodges | SkillAbility for Accounting Firms

Last updated: September 16, 2026  |  50-minute read

What Is Form 8938 Training for Tax Staff?

Form 8938 training develops a tax professional’s ability to identify the correct filer, build a complete specified-foreign-financial-asset population, apply the appropriate threshold, value and classify each reportable asset, coordinate duplicative international reporting, and reconcile the form to the taxpayer’s actual income-tax return.

That is a broader capability than knowing where the software stores “FATCA assets.”

Form 8938 can capture assets that never appear on an FBAR, including directly held stock of foreign corporations, interests in foreign partnerships, foreign private equity or hedge funds, certain foreign pensions and deferred compensation plans, foreign trust interests, and certain financial contracts with foreign counterparties.

At the same time, some accounts that belong on an FBAR do not belong on Form 8938. Signature authority by itself is the clearest example. A financial account at a foreign branch of a U.S. financial institution is another important difference.

The master register should come before any individual form.

This guide complements FBAR Training for Tax Staff, Form 3520 and 3520-A Training, Form 8621 Training, Form 5471 Training, Form 8865 Training, Form 8858 Training, Tax Workpaper Training, and Workpaper Review Checklist.

Why Form 8938 Is a Workforce-Development Topic

I have practiced public accounting since 1990, founded my accounting firm in 1993, and helped grow Howard, Howard and Hodges from three people to approximately 50 staff. Since 2020, I have built SkillAbility around a recurring development problem: staff can often complete the form they were handed without knowing whether the form population is complete.

Form 8938 makes that gap visible. A preparer can report three foreign bank accounts perfectly and still miss a directly held foreign partnership interest, foreign pension, foreign cash-value insurance contract, foreign trust interest, PFIC, or derivative with a foreign counterparty. They can also over-report assets such as directly held foreign real estate, foreign currency, precious metals, or a foreign-government social-security equivalent.

The development objective is therefore not “complete Form 8938.” It is “prove why every asset is included, excluded, or cross-referenced.”

Current Form 8938 Facts Staff Should Know in 2026

As of September 16, 2026, the IRS Form 8938 product page still identifies the November 2021 Form 8938 and its November 2021 instructions as the current official products.

However, on September 8, 2026, the IRS posted a draft December 2026 Form 8938.

What changed on the draft form?

The draft keeps the same overall architecture—filer identification, Parts I through IV on page 1, and detailed account/asset reporting on page 2—but makes several wording changes that tax software teams and reviewers should monitor:

• Part II is labeled “Other Foreign Assets and Accounts Summary” instead of only “Other Foreign Assets Summary.”
• Part VI similarly refers to each “Other Foreign Asset and Account.”
• Line 12 asks whether other foreign assets and accounts were acquired, sold, opened, or closed during the year.
• Page 2 adds corresponding opened/closed terminology to Part VI.

Because updated 2026 instructions were not located with the draft as of this review, this article does not infer a new substantive asset class from those wording changes. Staff should use the current official instructions for live work until final 2026 products are released.

The FATCA READY Framework

F — Who Must File Form 8938?

The IRS instructions start with three gates. Unless an exception applies, Form 8938 is required when:

1. the filer is a specified person;
2. the filer has an interest in specified foreign financial assets; and
3. the aggregate value is above the applicable reporting threshold.

Specified individuals

Specified individuals include U.S. citizens, resident aliens for at least part of the year, certain nonresident aliens who elect resident treatment for a joint return, and certain bona fide residents of American Samoa or Puerto Rico.

Specified domestic entities

The rules also reach certain domestic corporations, partnerships, and trusts. A closely held domestic corporation or partnership can be a specified domestic entity when at least 50% of gross income is passive or at least 50% of its assets produce or are held for passive income. Certain domestic trusts with a specified person as a current beneficiary can also qualify.

No income-tax return required?

One Form 8938 rule differs sharply from the FBAR mindset: if the person is not required to file the applicable annual income-tax return for the year, the current instructions state that the person does not have to file Form 8938 solely because foreign assets exceed the threshold.

T — The Six Form 8938 Threshold Tests Staff Must Know

Form 8938 has no single “FATCA threshold.” The applicable threshold depends on filing status, whether the specified individual qualifies as living abroad, and whether the filer is a specified domestic entity.

The “living abroad” threshold is not based simply on mailing address. The current instructions tie it to a foreign tax home plus either a bona-fide-residence test or a 330-full-day physical-presence test.

Why two values?

A taxpayer can finish the year below the year-end threshold and still file because aggregate foreign assets exceeded the higher “at any time” threshold during the year. Conversely, a year-end spike can trigger filing even when the assets never crossed the higher any-time figure.

For married taxpayers filing separately, special joint-asset valuation rules affect the threshold computation. Staff should not automatically split every jointly owned foreign asset 50/50.

A — Assemble the Complete Specified-Foreign-Financial-Asset Population

The IRS definition is broader than “foreign bank accounts.” Specified foreign financial assets include:

• deposit and custodial accounts maintained by foreign financial institutions;
• stock or securities issued by a non-U.S. person when held for investment outside a financial account;
• interests in foreign corporations, foreign partnerships, foreign trusts, and foreign estates when the rules treat the taxpayer as having an interest;
• certain notes, bonds, debentures, swaps, options, derivatives, and other financial instruments or contracts with a foreign issuer or counterparty;
• interests in foreign pensions or deferred compensation plans;
• foreign-issued cash-value life insurance or annuity contracts;
• foreign hedge fund and private-equity interests;
• PFIC interests when otherwise within the Form 8938 rules.

Financial account vs. underlying investments

If foreign securities are held inside a reportable custodial account at a foreign financial institution, the account itself is generally the Form 8938 asset. Staff generally do not separately list each stock inside that account merely because each issuer is foreign.

By contrast, directly held foreign stock outside a financial account can be a separate Part VI asset even though it is not an FBAR account.

Foreign mutual funds

A foreign mutual fund can create overlapping Form 8938, FBAR, and PFIC questions. Do not stop after one form. A directly held foreign mutual fund can be a specified foreign financial asset and can also require Form 8621 if it is a PFIC; depending on how it is held, FBAR analysis can also be required.

Use Form 8621 Training for Tax Staff for the PFIC regime.

What Does Not Automatically Belong on Form 8938?

A complete population also requires a documented exclusion list. Common items that are not themselves specified foreign financial assets include:

• directly held foreign real estate;
• foreign currency held directly rather than in a financial account;
• precious metals held directly;
• art, antiques, jewelry, cars, and other directly held collectibles;
• foreign-government benefits equivalent to U.S. Social Security;
• certain accounts maintained by a U.S. payer, including certain U.S.-based financial institutions;
• an account at the foreign branch of a U.S. financial institution for Form 8938 purposes;
• an account at the U.S. branch of a foreign financial institution.

This is another reason a checkbox organizer is not enough. Staff need an asset-classification memo for unusual holdings.

A — When Does the Taxpayer Have an “Interest” in the Asset?

Form 8938 does not use the same financial-interest and signature-authority framework as FBAR.

Under the current instructions, a taxpayer generally has an interest in a specified foreign financial asset if income, gain, loss, deduction, credit, gross proceeds, or distributions from holding or disposing of the asset are or would be required to be reported, included, or otherwise reflected on the taxpayer’s income-tax return.

Disregarded entities

If the taxpayer owns a disregarded entity, the taxpayer is treated as having an interest in the specified foreign financial assets owned by that disregarded entity for Form 8938 purposes.

Grantor trusts

A grantor treated as the owner of a trust under the applicable grantor-trust rules can have a Form 8938 interest in the trust’s specified foreign financial assets.

Entities that are not disregarded

Do not automatically look through a corporation, partnership, or trust merely because the taxpayer owns an interest. The entity interest itself can be the specified foreign financial asset. Separate rules determine when underlying assets are treated as held directly.

Joint ownership

A joint owner can be treated as having an interest in the entire asset. Reporting and threshold mechanics vary for married taxpayers filing jointly versus separately and for other co-owners.

R — Maximum Value, Joint Ownership, and Foreign Currency

Form 8938 is a maximum-value return. Tax staff should be able to reproduce the value used for every Part V account and Part VI asset.

Financial accounts

For a foreign financial account, periodic account statements can generally be used to estimate the maximum value unless the taxpayer knows or has reason to know that the statements do not provide a reasonable estimate.

Other assets

For other specified foreign financial assets, reasonable fair-market-value estimates may be based on reliable public information or other verifiable sources. The IRS FAQ states that a third-party appraisal is not automatically required merely because no public market quote exists.

Foreign pensions and deferred compensation

For a foreign pension, deferred compensation plan, or foreign estate, the current instructions generally use the fair market value of the taxpayer’s beneficial interest as of year-end. If that value is not known or reasonably knowable from readily accessible information, a special rule can use the fair market value of cash and other property distributed during the year.

Foreign trusts

Foreign trust valuation has its own rules and should be tied to the Form 3520/3520-A workpapers when applicable. Use Form 3520 and 3520-A Training.

Currency conversion

For Form 8938, the current instructions generally require the U.S. Treasury Bureau of the Fiscal Service exchange rate for purchasing U.S. dollars. Importantly, the last day of the tax year exchange rate is used to convert the maximum foreign-currency value—even if the account was closed or the asset was sold earlier in the year.

If Treasury does not publish an appropriate rate, another publicly available rate can be used and the source must be disclosed as instructed.

Joint assets

On a joint return, a jointly owned asset is generally reported once at its full maximum value. On separate returns, both specified spouses can be required to report the jointly owned asset at its full maximum value on the form, even though special threshold-computation rules can differ.

How Parts I–VI Fit Together

Part III is a tax-return reconciliation

Part III summarizes interest, dividends, royalties, other income, gains/losses, deductions, and credits attributable to the reported foreign assets and asks where those items appear on the return.

That turns Form 8938 review into a useful completeness test:

• foreign brokerage account but no dividends, interest, or gains—does that make sense?
• foreign pension with a distribution but no pension-income workpaper—why?
• foreign corporation stock sold during the year but no gain/loss schedule—was basis considered?
• foreign tax credits claimed but no asset or income source in the international register—what generated the tax?

E — Part IV: Duplicative Reporting Is an Exception to Detail, Not an Exception to Analysis

Current Form 8938 Part IV lists five international forms:

• Form 3520,
• Form 3520-A,
• Form 5471,
• Form 8621,
• Form 8865.

When a specified foreign financial asset is fully reported on one of those forms, the current instructions generally allow the filer to avoid repeating the full asset detail on Form 8938 and instead complete Part IV.

Why this distinction matters

Suppose an individual owns:

• $35,000 foreign bank account,
• $40,000 directly held foreign stock, and
• $55,000 PFIC reported on Form 8621.

The PFIC may not need to be repeated in Part VI if the duplicative-reporting rule is satisfied, but its value still matters to the individual’s threshold computation. The aggregate is $130,000, not $75,000.

By contrast, a specified domestic entity applies the special threshold rule for assets already reported on Part IV forms.

Partial duplicate reporting

If only some foreign assets are reported on the listed forms, staff must report the remaining specified foreign financial assets directly on Form 8938 and complete Part IV for the excepted items.

D — Form 8938 vs. FBAR: Build Two Independent Tests

The IRS explicitly states that filing Form 8938 does not replace the FBAR and filing the FBAR does not replace Form 8938.

Use the SkillAbility FBAR guide for the separate foreign-account reporting architecture.

Foreign Pensions, Trusts, PFICs, and Foreign Entity Interests

Foreign pensions and deferred compensation

An interest in a foreign pension or deferred compensation plan can be a specified foreign financial asset even though a foreign-government program equivalent to U.S. Social Security is generally not. That distinction should be documented rather than decided from the word “pension.”

Foreign trusts

A beneficial interest in a foreign trust can be reportable under Form 8938 rules, but Forms 3520/3520-A may also apply. Part IV can eliminate duplicate asset detail when the requirements are met; it does not eliminate the foreign-trust analysis.

PFICs

A PFIC can trigger Form 8621 and Form 8938 coordination. The Form 8621 population should be reconciled to Part IV and the Form 8938 threshold calculation.

Foreign corporations

Directly held stock can be a Part VI specified foreign financial asset. If Form 5471 is also required, use the Part IV duplicate-reporting rules and reconcile entity value, ownership, dividends, dispositions, and CFC/PFIC status.

Foreign partnerships

A foreign partnership interest can be a specified foreign financial asset. Form 8865 obligations are separate and can depend on control, ownership level, property transfers, and ownership changes.

Foreign disregarded entities and branches

Form 8858 itself is not one of the five forms listed in current Form 8938 Part IV. However, assets held through disregarded entities can still be treated as held by the owner for Form 8938, and the Form 8858/8938 workpapers should reconcile.

Specified Domestic Entities: The Rule Staff Often Forget

Form 8938 is not limited to individuals.

A domestic corporation or partnership can be a specified domestic entity if it is closely held by a specified individual and meets the passive-income or passive-asset test. Certain domestic trusts can also qualify when they have specified persons as current beneficiaries.

Closely held

For corporations and partnerships, ownership and constructive-ownership rules matter. Staff should build an ownership chart before deciding that a domestic entity is outside Form 8938.

50% passive test

The current instructions apply both an income path and an asset path. Meeting either can cause the entity to qualify, subject to the other specified-domestic-entity requirements and exceptions.

Related domestic entities

The threshold computation can include special aggregation rules for related closely held domestic corporations and partnerships. This is not an area to evaluate one entity in isolation without an ownership-family map.

Worked Form 8938 Examples

Example 1 — U.S. single filer: FBAR and Form 8938 both apply

A single U.S.-resident taxpayer has a German bank account with a maximum value of $42,000 and a French brokerage account with a maximum value of $39,000. Aggregate specified foreign financial assets reached $81,000 during the year.

The taxpayer exceeds the $75,000 any-time Form 8938 threshold. The foreign accounts also exceed the separate $10,000 aggregate FBAR threshold. Both filings can be required.

Example 2 — Direct foreign stock creates Form 8938 without increasing the FBAR account population

A taxpayer has a $9,000 Canadian bank account and directly holds $90,000 of stock in a privately held Canadian corporation outside any financial account.

The bank account alone does not exceed the FBAR $10,000 aggregate threshold, assuming no other reportable foreign accounts. The directly held foreign stock is not itself an FBAR account. But both assets can count toward Form 8938, taking the taxpayer above the $50,000/$75,000 U.S.-resident single-filer thresholds.

Example 3 — Part IV PFIC still counts for an individual threshold

An individual owns a $35,000 foreign deposit account, $40,000 directly held foreign stock, and a $55,000 PFIC that is fully reported on Form 8621.

The Form 8621 can support Part IV instead of repeating PFIC detail in Part VI, but the individual still includes the PFIC value when testing the Form 8938 threshold. Aggregate value is $130,000.

Example 4 — Married joint return in the United States

Spouse A owns a $70,000 foreign account. Spouse B owns $45,000 of directly held foreign stock. The couple files jointly.

Aggregate year-end specified foreign financial assets are $115,000, exceeding the $100,000 year-end threshold for a joint return filed by taxpayers living in the United States. They file one combined Form 8938.

Example 5 — Qualifying taxpayer living abroad

An unmarried U.S. citizen with a foreign tax home satisfies the presence-abroad test. Foreign financial assets are $230,000 on December 31 and never exceed $260,000 during the year.

The taxpayer exceeds the $200,000 year-end threshold for a non-joint filer qualifying as living abroad, even though the $300,000 any-time threshold was not exceeded.

Example 6 — Temporary spike

A single U.S.-resident taxpayer begins the year with $25,000 in a foreign account. In June, the taxpayer sells directly held foreign shares for $60,000 and transfers the proceeds to the United States. By year-end, only $20,000 of foreign assets remain.

The year-end value is below $50,000, but the taxpayer may still cross the $75,000 any-time threshold when the account and stock values are aggregated at the relevant time. Staff should reconstruct the peak aggregate value rather than looking only at December statements.

Example 7 — Foreign pension with limited valuation information

A U.S. resident has an interest in a foreign employer pension. The taxpayer cannot obtain a reliable year-end actuarial value from readily accessible information but received a $12,000 distribution during the year.

The special pension valuation rule becomes relevant. Staff document the plan, accessible valuation information, distribution value, and whether other reporting such as FBAR, treaty disclosure, PFIC, or Form 3520 analysis applies.

Example 8 — Foreign real estate inside a corporation

A taxpayer directly owns a vacation home in Spain worth $500,000. Direct foreign real estate is not itself a specified foreign financial asset. The result changes if the taxpayer owns shares of a Spanish corporation whose principal asset is the house: the corporation interest can be a specified foreign financial asset even though the underlying real estate is not listed separately.

Example 9 — Signature authority only

A U.S. executive can direct payments from a German employer bank account but has no ownership or other income-tax interest in the account.

FBAR signature-authority analysis is required. Form 8938 generally does not report the account merely because of signature authority.

Example 10 — Specified domestic corporation

A domestic corporation is closely held by a specified individual and 70% of its gross income is passive. It owns foreign financial assets worth $92,000 during the year.

The corporation can be a specified domestic entity and may have a Form 8938 filing obligation, subject to the detailed rules and Part IV threshold treatment.

Penalty-Ready Review Controls

The IRS currently describes an initial $10,000 section 6038D penalty for failing to timely file a complete and correct Form 8938.

If the IRS sends notice of the failure and the taxpayer does not file within 90 days, continuation penalties of $10,000 for each 30-day period or fraction can apply, up to an additional $50,000. That creates potential Form 8938 information-return penalties totaling $60,000 before considering other consequences.

40% accuracy-related penalty

If an underpayment is attributable to a transaction involving an undisclosed foreign financial asset, section 6662(j) can impose a penalty equal to 40% of that portion of the underpayment.

The current Form 8938 instructions give examples such as unreported taxable distributions from undisclosed foreign corporation stock, unreported gain on sale of foreign stock, and unreported taxable foreign pension distributions.

Reasonable cause

Reasonable-cause relief can apply in appropriate circumstances, but the current instructions specifically warn that a foreign jurisdiction’s law imposing civil or criminal penalties for disclosure is not itself reasonable cause for failing to report.

Section 6501(c)(8)

Failure to furnish required international information can extend the assessment period. The current Form 8938 instructions state that the statute may remain open for all or part of the return until three years after the required Form 8938 information is furnished. When reasonable cause and lack of willful neglect are established, the extension is generally limited to items related to the reporting failure.

Penalty review protocol

• Do not estimate penalty outcomes before confirming the exact filing obligation.
• Preserve the organizer, client communications, statements, entity documents, and prior-return history.
• Identify whether taxable income was omitted in addition to the information return.
• Identify related FBAR, 3520, 5471, 8621, 8865, or other international returns.
• Escalate late or incomplete filings to a qualified international-tax reviewer before amending or entering a disclosure procedure.

Form 8938 Self-Review Checklist

A preparer should be able to answer every item below before moving the return to final review.

100-Point Form 8938 Readiness Scorecard

Suggested SkillAbility readiness bands

• 90–100: review-ready ownership of standard Form 8938 engagements.
• 82–89: targeted coaching on identified gaps.
• 72–81: controlled preparation with mandatory manager review.
• Below 72: structured practice before independent ownership.

Automatic override conditions

Regardless of score, do not classify a preparer as review-ready if the work contains an omitted foreign-asset category, wrong threshold, unsupported foreign-pension exclusion, incorrect Part IV shortcut, reversed FX convention, unexplained FBAR mismatch, use of the draft form for filing, or undisclosed late-filing problem.

30/60/90-Day Form 8938 Development Plan

Days 1–30 — Population and classification

• Rebuild five prior-year Form 8938 populations from source documents.
• Prepare a Form 8938-vs-FBAR classification matrix without tax software.
• Practice the six threshold paths.
• Classify 30 assets as Part V, Part VI, Part IV, or nonreportable.
• Document specified-domestic-entity analysis on two cases.

Days 31–60 — Valuation and cross-form reporting

• Prepare maximum-value workpapers in at least three currencies.
• Practice joint ownership on joint and separate returns.
• Reconcile Forms 3520, 5471, 8621, and 8865 to Part IV.
• Complete three foreign-pension/foreign-trust valuation exercises.
• Tie Part III to Forms 1040/1041/1065/1120 source lines.

Days 61–90 — Review and judgment

• Own ten live or simulated Form 8938 workpapers through first review.
• Explain every difference between Form 8938 and FBAR in writing.
• Complete a late-filing/penalty escalation memo.
• Review another staff member’s asset register using the 100-point scorecard.
• Present one 15-minute team training on a recurring foreign-asset error.

15 Realistic Form 8938 Training Scenarios

Scenario 1: Foreign bank + direct stock

Single U.S.-resident client has $45K bank account and $40K directly held foreign stock. Test Form 8938 threshold separately from FBAR.

Scenario 2: Signature authority only

Employee can direct employer’s foreign account but owns none of it. Route to FBAR analysis without assuming Form 8938.

Scenario 3: Foreign branch of U.S. bank

Account is maintained at a London branch of a U.S. bank. Explain why FBAR and Form 8938 can diverge.

Scenario 4: Joint spouses in U.S.

Joint return with $70K account in one spouse’s name and $50K foreign stock in the other’s name. Aggregate for the joint threshold.

Scenario 5: MFS joint account

Spouses file separately and jointly own a $90K foreign account. Apply threshold and reporting-value rules carefully.

Scenario 6: Living abroad

Unmarried U.S. citizen meets the presence-abroad test and holds $250K of specified assets. Use the abroad threshold.

Scenario 7: PFIC already on Form 8621

Client has $60K PFIC plus $30K foreign bank account. Apply Part IV but include PFIC value in the individual’s threshold test.

Scenario 8: Foreign partnership

Client owns 15% of a foreign partnership. Test Form 8865 and Form 8938 separately and coordinate Part IV if appropriate.

Scenario 9: Foreign pension

Client has a UK pension with no easy actuarial valuation and received a distribution. Apply the pension valuation rule and cross-form checks.

Scenario 10: Direct foreign real estate

Client owns a condo in France directly. Exclude the real estate itself from Form 8938 but inspect bank accounts and other associated assets.

Scenario 11: Real estate through foreign company

Client owns 100% of a foreign corporation holding the condo. Analyze the corporation interest, Form 5471, and Part IV.

Scenario 12: Grantor trust

U.S. grantor owns a foreign trust with foreign accounts and PFICs. Coordinate Form 3520/3520-A, Form 8621, Form 8938, and FBAR.

Scenario 13: Temporary peak value

Foreign assets are $40K at year-end but exceeded $90K during June. Test the any-time threshold.

Scenario 14: Specified domestic entity

Closely held domestic LLC taxed as partnership earns 65% passive income and holds $85K foreign assets. Test entity status and threshold.

Scenario 15: Late discovery

Client reveals a $200K foreign brokerage account after the return was filed. Preserve facts, identify all related filings, and escalate before promising a penalty outcome.

Firm Metrics: How to Know Form 8938 Training Is Working

Measure capability, not just completion. A lower review-note count is useful only if population completeness and escalation quality remain high.

Frequently Asked Questions About Form 8938

What is Form 8938?

Form 8938 is the IRS statement used under section 6038D to report specified foreign financial assets when a specified person exceeds the applicable reporting threshold.

Is Form 8938 the same as FBAR?

No. Form 8938 is attached to an annual tax return under Title 26. FBAR is FinCEN Form 114 under Title 31 and is filed separately. The filer definitions, thresholds, assets, and deadlines differ.

What is the Form 8938 threshold for a single taxpayer living in the United States?

More than $50,000 on the last day of the tax year or more than $75,000 at any time during the year.

What is the threshold for married taxpayers filing jointly in the United States?

More than $100,000 at year-end or more than $150,000 at any time during the year.

What is the threshold for qualifying taxpayers living abroad?

For a non-joint filer, more than $200,000 at year-end or $300,000 at any time. For a joint return, more than $400,000 at year-end or $600,000 at any time.

Can a domestic corporation or partnership file Form 8938?

Yes. Certain closely held domestic corporations and partnerships meeting the passive-income or passive-asset conditions can be specified domestic entities.

Does a taxpayer who is not required to file an income-tax return still file Form 8938?

The current instructions state that a person who does not have to file an income-tax return for the year does not file Form 8938 solely because foreign assets exceed the threshold. FBAR rules remain separate.

Does foreign real estate go on Form 8938?

Directly held foreign real estate is not itself a specified foreign financial asset. An interest in a foreign entity that owns the property can be reportable.

Does directly held foreign stock go on Form 8938?

It can. Foreign stock held for investment outside a financial account is a classic Part VI asset, subject to the filing threshold and other rules.

Does foreign stock go on FBAR?

Directly held stock is not itself a foreign financial account. Stock held inside a reportable foreign brokerage account is reflected through the account for FBAR purposes.

Is a foreign pension reportable on Form 8938?

An interest in a foreign pension or deferred compensation plan can be a specified foreign financial asset. Foreign-government social-security equivalents are treated differently.

Is a foreign mutual fund reportable?

It can create Form 8938 and potentially FBAR reporting, and foreign mutual funds frequently require a separate PFIC/Form 8621 analysis.

Do I list every security inside a foreign brokerage account?

Generally the foreign custodial account is reported as the Form 8938 financial account rather than separately listing each security solely because its issuer is foreign.

Does signature authority create Form 8938 reporting?

Not by itself under the Form 8938 interest standard. Signature authority can create an FBAR obligation, so staff must run the separate FBAR test.

What exchange rate does Form 8938 use?

The current instructions generally use the Treasury Bureau of the Fiscal Service year-end exchange rate to convert the maximum foreign-currency value, even if the asset was sold or account closed earlier in the year.

What if the foreign asset is also on Form 5471?

If the asset is fully reported on a listed Part IV form such as Form 5471, duplicate detail on Form 8938 may be excepted. The filer still completes Part IV and applies the threshold rules correctly.

Does a PFIC reported on Form 8621 still count toward the Form 8938 threshold?

For a specified individual, yes—the value is still included in the Form 8938 threshold calculation even when Part IV prevents duplicate detail. Specified domestic entities have a different rule.

What forms are listed in current Form 8938 Part IV?

Forms 3520, 3520-A, 5471, 8621, and 8865.

What is the basic Form 8938 failure-to-file penalty?

The IRS states that failure to timely file a complete and correct Form 8938 can result in a $10,000 penalty, with continuation penalties after IRS notice that can add up to $50,000.

Can there be a 40% penalty?

Yes. Section 6662(j) can impose a 40% accuracy-related penalty on the portion of an underpayment attributable to a transaction involving an undisclosed foreign financial asset.

Can missing Form 8938 affect the statute of limitations?

Yes. Section 6501(c)(8) can keep the assessment period open until three years after the required information is furnished, with a narrower rule when reasonable cause and lack of willful neglect are established.

What is different about the draft December 2026 Form 8938?

The September 2026 draft changes some labels to “other foreign assets and accounts” and adds open/close wording in Part II/VI. It is a draft and should not be filed.

Should staff start Form 8938 from last year’s form?

Use last year as a reconciliation source, not as the population source. Start with current ownership, accounts, entities, pensions, trusts, funds, contracts, acquisitions, dispositions, and country changes.

What is the best workpaper for Form 8938?

A Foreign Asset Master Register that captures owner, asset type, country, institution/issuer, maximum local-currency value, FX rate, U.S.-dollar value, Form 8938 classification, FBAR status, other information returns, tax items, and reviewer conclusion.

How should a CPA firm train Form 8938 staff?

Use threshold drills, asset-classification scenarios, foreign-asset registers, cross-form reconciliations, worked valuations, penalty review, and scored review-ready simulations rather than software-only demonstrations.

Authoritative Sources and Further Reading

• IRS — About Form 8938
• IRS — Instructions for Form 8938
• IRS — Do I Need to File Form 8938?
• IRS — Comparison of Form 8938 and FBAR
• IRS — Basic Questions and Answers on Form 8938
• IRS — International Information Reporting Penalties
• IRS — Draft December 2026 Form 8938 (Do Not File)
• U.S. Treasury — Reporting Rates of Exchange
• Google Search Central — Generative AI Search Optimization Guidance

How This Guide Was Developed

This guide combines current IRS Form 8938 materials, FATCA/section 6038D guidance, IRS comparison material for FBAR, current international-information-return penalty guidance, and the September 2026 draft Form 8938 with more than three decades of public-accounting experience and SkillAbility’s scenario-based workforce-development approach.

The technical objective is not to replace primary authority or firm review. It is to convert the primary rules into a preparation architecture that staff can execute, explain, and defend.

About Vincent Howard, CPA

Vincent Howard, CPA, has practiced public accounting since 1990. He earned his bachelor’s degree in accounting and master’s degree in taxation from the University of Central Florida, founded his accounting firm in 1993, and merged in 2001 to form Howard, Howard and Hodges. The firm grew from three staff to approximately 50 people serving clients across Florida and multiple states. Vincent has been active in PASBA since 1997 and his firm was recognized as PASBA Firm of the Year in 2015. He created SkillAbility to help accounting firms turn institutional knowledge into structured practice, judgment, independence, and future leadership capacity.

Protect Knowledge. Develop People. Scale the Firm.