Form 8938 for Americans in Canada: What Foreign Assets Must Be Reported?

If you are a US citizen living in Canada, filing an FBAR does not necessarily mean you have completed all of your foreign financial asset reporting.

Another US reporting requirement, Form 8938, Statement of Specified Foreign Financial Assets, can apply when the value of certain foreign financial assets exceeds the applicable thresholds.

Form 8938 is part of the US federal income tax return and is associated with the Foreign Account Tax Compliance Act, commonly known as FATCA.

It is separate from the FBAR.

Some assets can be relevant to both reporting regimes, while other assets may be treated differently.

That is why the key question is not simply:

“Did I file my FBAR?”

It is:

“Which foreign financial assets do I have, and which US reporting rules apply to them?”

What Is Form 8938?

Form 8938 is an IRS information return used by certain specified individuals and other specified persons to report specified foreign financial assets when the applicable value thresholds are exceeded.

Unlike the FBAR, Form 8938 is generally attached to the taxpayer's federal income tax return.

The form can include information about certain foreign:

• financial accounts
• stocks and securities
• financial instruments and contracts
• interests in foreign entities
• other specified foreign financial assets

Whether an asset is reportable depends on the IRS rules and the taxpayer's specific circumstances.

Is Form 8938 the Same as FBAR?

No.

Form 8938 and FBAR are separate reporting requirements administered under different rules.

Form 8938

• filed with the federal income tax return
• administered by the IRS
• covers specified foreign financial assets
• has thresholds that vary based on filing status and whether the taxpayer lives abroad

FBAR

• filed separately through FinCEN
• uses FinCEN Form 114
• focuses on foreign financial accounts
• generally uses the US $10,000 aggregate account threshold

A taxpayer can be required to file both.

Filing an FBAR does not automatically satisfy Form 8938, and filing Form 8938 does not automatically satisfy FBAR.

For the FBAR rules, read our guide to FBAR requirements for Americans living in Canada.

Who May Need to File Form 8938?

Form 8938 can apply to specified individuals and certain specified domestic entities when the applicable value thresholds are exceeded.

For individuals, specified persons can include certain US citizens, resident aliens and other taxpayers covered by the IRS rules.

For Americans living in Canada, the key issues usually include:

• US tax filing status
• whether the taxpayer qualifies as living abroad for Form 8938 threshold purposes
• the total value of specified foreign financial assets
• the value at year-end
• the maximum value during the year

Are the Form 8938 Thresholds Higher for Taxpayers Living Abroad?

Yes, the IRS provides different Form 8938 thresholds for certain taxpayers living abroad.

The applicable threshold depends on filing status and whether the taxpayer meets the IRS requirements for being considered to live abroad for Form 8938 purposes.

For qualifying taxpayers living abroad, the thresholds are generally higher than for taxpayers living in the United States.

Because the exact dollar threshold depends on filing status and circumstances, the current IRS instructions should be checked for the applicable tax year.

Do not confuse these Form 8938 thresholds with the FBAR threshold.

The FBAR generally uses a separate US $10,000 aggregate foreign-account test.

What Canadian Assets Can Be Relevant to Form 8938?

Depending on the facts, specified foreign financial assets can potentially include several types of Canadian assets.

Examples may include:

• Canadian bank accounts
• Canadian brokerage accounts
• certain foreign stocks or securities held outside a financial account
• interests in certain Canadian corporations or partnerships
• certain foreign financial contracts
• certain Canadian investment accounts

However, not every Canadian asset is automatically a specified foreign financial asset for Form 8938 purposes.

The reporting analysis should be based on the IRS definitions and the characteristics of the asset.

Do Canadian Bank Accounts Count?

Canadian bank accounts can be relevant to Form 8938 when they meet the definition of a specified foreign financial asset and the taxpayer exceeds the applicable reporting threshold.

The account may also be relevant to FBAR.

This is an example of an asset that can potentially fall within both reporting systems.

The fact that the account is a normal local Canadian checking or savings account does not automatically remove US reporting considerations.

Does a Canadian Brokerage Account Count?

A Canadian brokerage account can also be relevant for Form 8938.

The analysis can include the account itself and, depending on how the asset is held and the applicable rules, other foreign financial assets.

Canadian investment accounts can also raise separate US questions involving the underlying investments.

For example, certain foreign investment companies may fall under the US Passive Foreign Investment Company rules.

That is a separate issue from Form 8938 and can require additional analysis.

Does a TFSA Matter for Form 8938?

A TFSA can be relevant when evaluating a US taxpayer's specified foreign financial assets.

Whether and how it is reported depends on the applicable US rules, the account structure and the taxpayer's facts.

A TFSA can also raise other US tax and reporting questions beyond Form 8938.

Read our guide to TFSA considerations for US citizens living in Canada.

Does an RRSP Matter for Form 8938?

An RRSP can also be relevant to Form 8938 reporting depending on the taxpayer's circumstances.

The account may receive favorable treaty treatment in certain areas, but treaty treatment and information reporting are separate questions.

Do not assume that an account receiving tax deferral is therefore invisible for US information-reporting purposes.

For more detail, see our guide to RRSP tax and reporting considerations for US citizens living in Canada.

What About Canadian Stocks Held Directly?

Foreign stocks and securities held outside a US financial account can potentially be specified foreign financial assets for Form 8938.

The exact reporting requirement depends on the way the asset is held and the applicable IRS rules.

This differs from FBAR, which focuses on foreign financial accounts rather than every type of foreign financial asset.

What About an Interest in a Canadian Corporation?

An ownership interest in a foreign corporation can be relevant to Form 8938.

However, corporate ownership can also trigger separate US international reporting requirements.

Depending on the ownership percentage and circumstances, forms such as Form 5471 may be relevant.

Form 8938 does not replace those separate reporting obligations.

What About a Canadian Partnership?

An interest in a foreign partnership can also create US reporting issues.

Form 8938 may be relevant, and separate forms such as Form 8865 can apply in certain circumstances.

The correct reporting depends on ownership, control, transactions and other facts.

Does Canadian Real Estate Go on Form 8938?

Directly owned foreign real estate is generally treated differently from foreign financial assets.

A directly owned Canadian home or other directly held real property should not automatically be treated as a reportable foreign financial asset on Form 8938 merely because it is located outside the United States.

However, if foreign real estate is owned through a foreign corporation, partnership, trust or other entity, the ownership interest in that foreign entity can create separate reporting questions.

The structure therefore matters.

Does Form 8938 Report Income or Just Assets?

Form 8938 is primarily an information-reporting form for specified foreign financial assets.

It does not replace the requirement to report taxable income from those assets on the appropriate sections of the federal income tax return.

For example, a taxpayer may need to report:

• foreign interest
• foreign dividends
• capital gains
• other investment income

in addition to providing Form 8938 information when required.

What If the Same Account Is Already on the FBAR?

That does not automatically eliminate the Form 8938 requirement.

The same foreign financial account can potentially be relevant under both reporting regimes.

The forms serve different legal purposes and have different thresholds.

This is one of the most common misunderstandings among Americans living abroad.

What If the Asset Is Already Reported on Another International Form?

Some assets may also be reported on forms such as:

• Form 5471
• Form 8865
• Form 3520
• Form 8621

Form 8938 contains coordination rules for certain assets reported on other forms.

In some situations, the taxpayer may identify the other form rather than duplicate all information.

The exact reporting mechanics should follow the current Form 8938 instructions.

What If You Forgot Form 8938 in Prior Years?

The correct response depends on the taxpayer's overall filing history.

Questions to review can include:

• were US tax returns filed?
• was all foreign income reported?
• were FBARs filed?
• were other international information returns missing?
• was US tax underpaid?
• why was Form 8938 omitted?

For some taxpayers living outside the United States, the Streamlined Foreign Offshore Procedures may be relevant if the applicable requirements are satisfied.

Read our guide to Streamlined Filing Procedures for US citizens living in Canada.

Can Missing Form 8938 Create Penalties?

Form 8938 has its own penalty provisions.

The consequences depend on the taxpayer's circumstances, filing history and applicable law.

This article does not attempt to calculate penalties for individual cases.

If Form 8938 may have been missed, the better first step is usually to review whether the form was actually required and whether other international reporting was also incomplete.

Common Form 8938 Mistakes Americans in Canada Make

• assuming FBAR and Form 8938 are the same form
• assuming filing an FBAR automatically satisfies FATCA reporting
• using the FBAR $10,000 threshold for Form 8938
• forgetting that Form 8938 thresholds vary by filing status and residence
• ignoring foreign assets held outside bank accounts
• forgetting interests in foreign entities
• assuming tax-deferred accounts never require information reporting
• forgetting to consider TFSA or RRSP accounts
• failing to coordinate Form 8938 with Forms 5471, 8865, 8621 or other international returns

A Practical Form 8938 Review

A useful review can start by listing all foreign financial assets and accounts.

For each item, identify:

• type of asset
• country
• financial institution or issuer
• maximum value during the year
• year-end value
• how the asset is owned
• whether income was generated
• whether it appears on FBAR
• whether another international form applies

Then compare the total specified foreign financial assets with the applicable Form 8938 thresholds.

Frequently Asked Questions

Is Form 8938 the same as FBAR?

No. Form 8938 is filed with the federal income tax return and reports specified foreign financial assets. FBAR is filed separately through FinCEN and focuses on foreign financial accounts.

What is the Form 8938 threshold for Americans living abroad?

The applicable threshold depends on filing status and whether the taxpayer qualifies as living abroad under the IRS rules. Qualifying taxpayers living abroad generally have higher Form 8938 thresholds than taxpayers living in the United States.

Does a Canadian bank account go on Form 8938?

It may, depending on the account, the taxpayer's total specified foreign financial assets and whether the applicable reporting threshold is exceeded.

Does an RRSP go on Form 8938?

An RRSP can be relevant to Form 8938 reporting depending on the facts. Treaty-based tax deferral does not automatically eliminate separate information-reporting questions.

Does a TFSA go on Form 8938?

A TFSA can be relevant when evaluating specified foreign financial assets. The exact reporting depends on the account and taxpayer's circumstances.

Does Canadian real estate go on Form 8938?

Directly held foreign real estate is generally treated differently from specified foreign financial assets. However, ownership through a foreign entity can create separate reporting requirements.

Do I still need Form 8938 if I filed FBAR?

Possibly. Filing an FBAR does not automatically satisfy Form 8938. They are separate reporting regimes.

Important: This article provides general educational information and is not individualized tax or legal advice. Form 8938 reporting depends on filing status, residence, asset type, ownership structure, values and other individual circumstances.

Official Resources

• IRS — About Form 8938, Statement of Specified Foreign Financial Assets
• IRS — Instructions for Form 8938
• IRS — Comparison of Form 8938 and FBAR Requirements
• IRS — FATCA Information for Individuals
• FinCEN — FBAR Guidance
• IRS — Streamlined Filing Compliance Procedures