Form 8938 and FATCA for Americans Living in Andorra

Americans living in Andorra are often aware that their U.S. income tax obligations continue after the move. What more people run into later is a second layer of U.S. rules: international asset reporting. Under FATCA-related reporting rules, a U.S. taxpayer may need to report specified foreign financial assets — which can include Andorran bank and investment accounts — to the IRS on Form 8938, in addition to the normal income tax return.

This guide explains, at a general level, what Form 8938 is, which assets it can cover, what the reporting thresholds look like for taxpayers considered to be living abroad, how it differs from the FBAR, and what FATCA means for Andorran banks. It is general educational information, not individualized tax advice.

Do Americans Living in Andorra Need to File Form 8938?

Americans living in Andorra may need to file Form 8938 if they hold specified foreign financial assets above the applicable reporting thresholds. The thresholds vary depending on filing status and whether the taxpayer is considered to live abroad. Form 8938 is separate from the FBAR, and some taxpayers may need to file both.

Whether Form 8938 applies to a given taxpayer depends on several factors working together:

• The value of specified foreign financial assets. The aggregate value — measured on the last day of the tax year and at any time during the year — is tested against the applicable threshold.
• Filing status. The thresholds differ, for example, between unmarried taxpayers and married couples filing jointly.
• Where the taxpayer lives for these purposes. Taxpayers who qualify as living abroad under the applicable rules have higher thresholds than taxpayers living in the United States.

Not every American in Andorra will meet a threshold, and Form 8938 applies only when a federal income tax return is filed for the year. The IRS's own page on who needs to file Form 8938 is the authoritative starting point.

What Is Form 8938?

Form 8938 is the Statement of Specified Foreign Financial Assets. Several points define how it works:

• It is part of FATCA-related taxpayer reporting. Under FATCA (the Foreign Account Tax Compliance Act), certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS, generally using Form 8938.
• It is attached to the federal income tax return. Form 8938 is filed with the IRS as part of the annual income tax return when required — it is not a standalone filing.
• It applies only when a return is filed. If no income tax return is required for the tax year, no Form 8938 is filed for that year, even if asset values exceed the reporting threshold.
• It is separate from the FBAR. The FBAR (FinCEN Form 114) is a different reporting regime, filed directly with FinCEN, with its own thresholds and scope.

The IRS's Form 8938 page, FATCA information for individuals, and summary of FATCA reporting for U.S. taxpayers cover the official mechanics.

What Foreign Assets May Need to Be Reported?

A "specified foreign financial asset" is defined in the IRS rules, and whether a particular asset counts depends on the facts. At a general level, the categories can include:

• Financial accounts maintained by foreign financial institutions — for example, bank, brokerage or custodial accounts held with institutions outside the United States. Accounts maintained by a U.S. payer, the foreign branch of a U.S. financial institution, or the U.S. branch of a foreign financial institution do not need to be reported on Form 8938.
• Other foreign financial assets held for investment that are not held in an account — including, in general terms, stock or securities issued by someone other than a U.S. person, interests in foreign entities, and certain financial instruments or contracts with a non-U.S. issuer or counterparty.

This is not an exhaustive list, and not every foreign asset is automatically reportable. Real estate and tangible property are common examples the IRS's questions and answers on Form 8938 address directly. The Form 8938 instructions are the authoritative reference for the definitions.

What Are the Form 8938 Thresholds for Americans Living Abroad?

For taxpayers considered to be living abroad under the applicable rules, the reporting thresholds are substantially higher than for taxpayers living in the United States. Per the IRS's current guidance:

• Unmarried taxpayers, or married filing separately: more than US $200,000 on the last day of the tax year, or more than US $300,000 at any time during the tax year.
• Married taxpayers filing a joint return: more than US $400,000 on the last day of the tax year, or more than US $600,000 at any time during the tax year.

Two notes on these figures:

• Both prongs matter. The threshold is exceeded if the aggregate value is more than the year-end amount or more than the any-time-during-the-year amount.
• Eligibility for the higher "living abroad" thresholds depends on the IRS definition. Generally, a U.S. citizen whose tax home is in a foreign country is treated as living abroad if they are a bona fide resident of a foreign country for an uninterrupted period that includes the entire tax year, or if they are physically present in a foreign country for at least 330 days during a period of 12 consecutive months ending in the tax year. The IRS's Form 8938 guidance and the Form 8938 instructions set out the details.

For comparison, the thresholds for taxpayers living in the United States are lower — for example, US $50,000 at year-end or US $75,000 at any time during the year for unmarried taxpayers, and US $100,000 / US $150,000 for married couples filing jointly. An American who has recently moved to Andorra may not qualify as "living abroad" for these purposes in the first year, so the applicable thresholds should be checked year by year.

Is Form 8938 the Same as the FBAR?

No. Form 8938 and the FBAR are two different reporting regimes that can apply to some of the same accounts:

• Different filing authorities. Form 8938 is filed with the IRS; the FBAR is filed directly with FinCEN.
• Different filing channels. Form 8938 is attached to the federal income tax return; the FBAR is submitted electronically on its own and is not part of the tax return.
• Different scope. The FBAR covers reportable foreign financial accounts; Form 8938 covers specified foreign financial assets, which include accounts but can also cover assets held outside an account. The IRS's comparison of Form 8938 and FBAR requirements is the clearest official side-by-side reference.
• Different thresholds. The FBAR threshold is an aggregate of US $10,000 at any time during the calendar year; Form 8938 thresholds depend on filing status and residence, as described above.

Filing one does not replace the other. For the FBAR side of this comparison in an Andorra context, see our guide to FBAR requirements for Americans living in Andorra.

Do Andorran Bank Accounts Count for Form 8938?

Financial accounts maintained by foreign financial institutions — including banks in Andorra — are generally the kind of asset Form 8938 is designed to capture. Whether reporting is actually required depends on the taxpayer's total reportable assets and the threshold that applies to them, as outlined above.

That means a single Andorran bank account does not automatically trigger Form 8938. It can also mean that several accounts and assets, taken together, move the taxpayer over the applicable threshold. Where an account sits also matters: accounts maintained by a U.S. payer, the foreign branch of a U.S. financial institution, or the U.S. branch of a foreign financial institution are not reported on Form 8938, per the IRS guidance.

What About Investment Accounts and Foreign Funds?

Non-U.S. investment accounts — including brokerage and custodial accounts held with Andorran or other foreign financial institutions — may be specified foreign financial assets, subject to the same thresholds and exclusions. Directly held foreign stock or securities and interests in foreign entities can also fall within the definition when held for investment.

Some non-U.S. pooled investment products can additionally raise a separate U.S. reporting issue: the passive foreign investment company (PFIC) rules, reported on Form 8621 where applicable. Not every European fund is a PFIC, and PFIC reporting is separate from Form 8938. For background, see our article on Canadian mutual funds, ETFs and PFIC rules and our guide to Form 8938 and foreign asset reporting. For an Andorra-focused walkthrough, see our guide to PFIC for Americans living in Andorra.

How Does FATCA Affect Banks in Andorra?

FATCA is not only an individual reporting rule — it also imposes obligations on foreign financial institutions themselves. Under FATCA, foreign financial institutions may provide the IRS with third-party information about financial accounts they maintain for U.S. individual account holders, including identity and certain financial information.

Andorra is a specific case. Based on the information published by Andorran Banking (the association of Andorran banks) as of this article's date, there is currently no Intergovernmental Agreement (IGA) between the United States and the Principality of Andorra. Instead, each Andorran bank signs a FATCA agreement directly with the IRS and is subject to the obligations arising from it — including registering with the IRS, identifying U.S. person clients, and reporting certain account information such as name, address and U.S. tax identification number, account numbers, year-end balances and income earned.

The key distinction for individual taxpayers: a bank's FATCA compliance is separate from the taxpayer's own reporting obligations. Bank-side reporting does not replace, satisfy, or eliminate an individual's Form 8938 or FBAR obligations where those apply. The IRS's FATCA overview covers the framework from the U.S. side.

Can Someone Need Both an FBAR and Form 8938?

Yes, depending on the circumstances. The two regimes have overlapping but not identical scopes, and the IRS notes in its FATCA guidance for individuals that a person may have to file both forms and that separate penalties may apply for failure to file each. Whether both, one, or neither is required in a given year depends on the assets involved, their values, and the applicable thresholds.

Do I Need Form 8938 If I Owe No U.S. Tax?

It depends on whether a tax return is required. Per the IRS guidance, if no federal income tax return is required for the tax year, no Form 8938 is filed for that year, even if asset values exceed the reporting threshold. However, many U.S. citizens living abroad do need to file a return, and where a return is required, international information-reporting obligations such as Form 8938 may exist even when little or no U.S. income tax is ultimately due. U.S. filing obligations for citizens abroad are covered in the IRS's U.S. citizens and resident aliens abroad guidance.

What If I Did Not File Form 8938 in Previous Years?

If prior-year Form 8938s — or prior-year returns generally — were missed, the starting point is a factual review, not a self-selected remedy. Depending on the facts, prior-year corrections and compliance procedures may be relevant. For some taxpayers, the IRS Streamlined Filing Compliance Procedures can address prior-year returns together with certain international information reporting, subject to applicable requirements and eligibility rules that are never automatic or guaranteed.

For general background, see our article on Streamlined Filing Compliance Procedures and the IRS's own Streamlined procedures overview. A professional review of your specific circumstances should come first.

Form 8938 Checklist for Americans Living in Andorra

Use this checklist as a starting point for organizing your foreign asset reporting — not as individualized advice:

• Identify foreign financial accounts, including Andorran bank, investment and brokerage accounts.
• Identify foreign investment assets held outside accounts, where applicable.
• Determine the maximum value of each asset during the year.
• Determine the year-end value of each asset.
• Determine your filing status.
• Determine whether you qualify as living abroad under the applicable rules.
• Check the Form 8938 thresholds that apply to your situation.
• Review the FBAR separately — the thresholds and scope differ.
• Review possible PFIC or foreign-entity reporting where relevant.
• Review prior-year compliance before deciding on any correction route.
• Retain supporting documentation, including statements and valuations.

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U.S. Tax Professional in Andorra
Aleksandr Isakov, CPA, Principal of US CAN Tax Group, is based in Andorra and has 25+ years of experience in U.S. tax and cross-border tax matters.

For how the firm works with clients there, see U.S. tax services for Americans living in Andorra.

The information in this article is general educational information and does not constitute individualized tax, legal, immigration, or financial advice. U.S. filing and reporting requirements depend on each person's circumstances and applicable law.