Is FBAR & Form 8938 Both Required to Report the Same Assets?

Is FBAR & Form 8938 Both Required to Report the Same Assets?

FBAR & Form 8938 to Report the Same Assets?

One of the biggest headaches about international information reporting of overseas accounts, assets, investments, and income is that the US government requires a significant amount of duplicative reporting for the same assets — on several different forms. This is a very common situation — especially when the taxpayer has the category (and value) of foreign assets that require the filing of both Form 8938 and FBAR. Unfortunately, these two forms are not mutually exclusive of one another; therefore, a taxpayer may have to file both the FBAR and Form 8938 to report the same asset in the same year. Here are five (5) examples of when a taxpayer may have to file both of these forms to disclose the same asset in the same year:

Overseas Accounts for FBAR & FATCA

When a Taxpayer has overseas bank accounts, they are required to be filed on both the FBAR and FATCA Form 8938. Depending on which country the Taxpayer has overseas accounts, this may include several different types of accounts:

      • Checking Accounts

      • Savings Accounts

      • Current Accounts

      • Salary Accounts

      • Resident Accounts

      • Non-Resident Accounts

      • Fixed Deposits

      • Term Deposits

Overseas Stock Accounts for FBAR & FATCA

Overseas stock accounts or another type of investment account held at a Foreign Financial Institution (FFI) that is required to be included on both FBAR and FATCA Form 8938. A common nuance for stock, in general, is that while the stock account is required to be reported on both forms, if the same stock is held as actual stock certificates — and not in an account — the individual stock certificates are not included on FBAR because they are not held in a financial account – but they are included on the Form 8938.

*Some specific exceptions may apply to stock certificates in a safety deposit box at a Foreign Financial Institution that is accessible by the FFI.

Overseas Investment Accounts & Individual Funds are Required Too

Whether or not a Taxpayer owns investment funds such as mutual funds, ETFs, or SICAVs in an actual account or individually – they are required to be included on both the FBAR and FATCA Form 8938. This can (understandably) get confusing for taxpayers who may own overseas mutual funds in various portfolios, but they are not technically within an account – they are still reported on both forms.

Overseas Pension Plans for FBAR & Form 8938

Overseas pension plans are a very common type of international account that is required to be disclosed on both the FBAR and FATCA Form 8938. This is because Overseas pension plans generally have accounts numbers and are held in foreign financial institutions. Common types of reportable pensions are CPF, EPF, MPF, Superannuation, and Pillar 2 and 3 Pension Plans across the globe.

Overseas Life Insurance Policies for FBAR & Form 8938

One of the most confusing aspects of international overseas account reporting involves disclosing foreign life insurance policies.  In many countries, a life insurance policy is not so much a life insurance policy with a death benefit, as it is an investment wrapper containing mutual funds and other equities that are wrapped within a life insurance policy. The mere fact that the investments are held within a life insurance policy does not negate the fact that the policy must be reported –– when there is a surrender value or cash value to the asset.

IRS International Tax Amnesty Programs

The Form FBAR and FATCA Form 8938 Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs include:

Can I Just Start Filing FBAR & Form 8938 This Year Instead?

No, unless the current year is the first year you had a Form 8938 Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as a Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.

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