Are you a U.S. taxpayer with foreign financial assets? If so, you may need to file Form 8938 with the IRS. This form is used to report certain foreign financial assets, and it's an important part of your tax obligations. In this article, we'll take a closer look at Turbotax Form 8938, including who needs to file it, what information is required, and how to file it correctly.
Understanding the Purpose of Form 8938
Form 8938 is used to report certain foreign financial assets, including foreign bank accounts, securities, and other financial instruments. The form is required by the IRS as part of the Foreign Account Tax Compliance Act (FATCA), which aims to prevent tax evasion by U.S. taxpayers with foreign financial assets.
Who Needs to File Form 8938?
Not all U.S. taxpayers need to file Form 8938. The form is required for taxpayers who meet certain thresholds for foreign financial assets. For example:
- Unmarried taxpayers with foreign financial assets worth more than $50,000 at the end of the tax year, or more than $75,000 at any time during the tax year.
- Married taxpayers filing jointly with foreign financial assets worth more than $100,000 at the end of the tax year, or more than $150,000 at any time during the tax year.
- Married taxpayers filing separately with foreign financial assets worth more than $50,000 at the end of the tax year, or more than $75,000 at any time during the tax year.
What Information is Required on Form 8938?
Form 8938 requires taxpayers to report certain information about their foreign financial assets, including:
- The type of asset (e.g. bank account, securities, etc.)
- The value of the asset at the end of the tax year
- The value of the asset at any time during the tax year
- The country where the asset is held
- The name and address of the foreign financial institution where the asset is held
How to File Form 8938
Filing Form 8938 is a relatively straightforward process, but it does require some careful attention to detail. Here are the steps to follow:
- Gather your information: Before you start filing Form 8938, make sure you have all the necessary information about your foreign financial assets.
- Choose your filing status: Determine whether you need to file Form 8938 based on your filing status and the value of your foreign financial assets.
- Complete Form 8938: Fill out Form 8938 carefully, making sure to report all required information about your foreign financial assets.
- Attach Form 8938 to your tax return: Form 8938 must be attached to your tax return (Form 1040) when you file.
- E-file or mail your return: You can e-file or mail your tax return, including Form 8938, to the IRS.
Using Turbotax to File Form 8938
Turbotax is a popular tax preparation software that can help you file Form 8938 easily and accurately. Here's how:
- Import your W-2 and 1099 forms: Turbotax can import your W-2 and 1099 forms to help you get started with your tax return.
- Answer questions about your foreign financial assets: Turbotax will ask you questions about your foreign financial assets and guide you through the process of reporting them on Form 8938.
- Review and edit your return: Before you file, review and edit your return to make sure everything is accurate and complete.
- E-file your return: Turbotax can e-file your return, including Form 8938, to the IRS.
Penalties for Not Filing Form 8938
Failure to file Form 8938 can result in penalties, including:
- A penalty of $10,000 for failing to file Form 8938, or for filing an incomplete or inaccurate form.
- An additional penalty of $10,000 for each 30-day period that the form is not filed, up to a maximum of $50,000.
- A penalty of 40% of the underreported tax related to the foreign financial assets.
Conclusion
Filing Form 8938 is an important part of your tax obligations if you have foreign financial assets. By understanding the purpose of the form, who needs to file it, and what information is required, you can ensure that you comply with the IRS regulations and avoid penalties. Turbotax can help you file Form 8938 easily and accurately, so you can focus on more important things.
Take Action
If you have foreign financial assets, don't wait until the last minute to file Form 8938. Start gathering your information and preparing your tax return today. If you need help, consider using Turbotax to file Form 8938 and ensure that you comply with the IRS regulations.
What is Form 8938?
+Form 8938 is a tax form used to report certain foreign financial assets, including foreign bank accounts, securities, and other financial instruments.
Who needs to file Form 8938?
+U.S. taxpayers who meet certain thresholds for foreign financial assets need to file Form 8938. These thresholds include unmarried taxpayers with foreign financial assets worth more than $50,000 at the end of the tax year, or more than $75,000 at any time during the tax year.
What information is required on Form 8938?
+Form 8938 requires taxpayers to report certain information about their foreign financial assets, including the type of asset, the value of the asset at the end of the tax year, the value of the asset at any time during the tax year, the country where the asset is held, and the name and address of the foreign financial institution where the asset is held.