Who is a ‘specified’ person?
The IRS has defined a “specified” person as one of the following:
- U.S. citizen
- Resident alien of the United States for any part of the tax year
- Nonresident alien electing to be treated as a resident alien in order to file a joint tax return
- Nonresident alien who is a bona fide resident of American Samoa or Puerto Rico
At this time, only individuals are required to file Form 8938. The IRS anticipates issuing regulations that would extend the reporting requirements to entities, including corporations, partnerships and trusts.
A specified person must file Form 8938 even if the assets do not affect the individual’s tax liability for the year. An exception to filing Form 8938 occurs if the individual is not required to file an income tax return, regardless of whether the reporting thresholds are met.
What is a ‘specified’ foreign financial asset?
Specified foreign financial assets include financial accounts maintained by a foreign financial institution. They may also refer to any of the following foreign financial assets if they are held for investment but not held in an account maintained by a financial institution:
- Stock or securities issued by a non-U.S. person
- Any interest in a foreign entity
- Any financial instrument or contract issued by a non-U.S. person
There are exceptions to reporting certain assets, such as securities or commodities subject to the mark-to-market rules for dealers.
What are the reporting thresholds?
The reporting thresholds vary depending upon filing status and country of residency. The following chart summarizes the values of specified foreign financial assets that would trigger a reporting requirement.