FATCA Report – Form 8938: The Complete Guide for U.S. Taxpayers Abroad

!Form 8938 FATCA reporting guide for U.S. expats and Americans living abroad

Form 8938 FATCA reporting is one of the most critical compliance obligations for U.S. citizens and residents who hold foreign financial assets. If you live in Israel or anywhere outside the United States and maintain bank accounts, investment portfolios, pension funds, or other financial assets abroad, understanding Form 8938 — the Statement of Specified Foreign Financial Assets — is essential to staying compliant with the IRS and avoiding significant penalties. This comprehensive guide covers who must file, what thresholds apply, which assets must be reported, how Form 8938 differs from the FBAR, and what consequences follow if you miss a filing deadline.

—

What Is the Form 8938 FATCA Report?

Form 8938, officially titled the Statement of Specified Foreign Financial Assets, was introduced under the Foreign Account Tax Compliance Act (FATCA), enacted in 2010. The form is filed directly with the IRS and is attached to your annual federal tax return (Form 1040 or 1040-SR).

The purpose of FATCA and Form 8938 is to increase transparency around foreign financial assets held by U.S. taxpayers. Under FATCA, foreign financial institutions are also required to report information about U.S. account holders directly to the IRS — which means the IRS often already has data about your foreign accounts before you even file your return.

Key facts about Form 8938:

• It is filed as an attachment to your annual tax return, not as a standalone submission.
• You are not required to send Form 8938 to the IRS unless it is attached to a return.
• Filing Form 8938 does not relieve you of the separate obligation to file an FBAR (FinCEN Form 114) if required.
• You must report all specified foreign financial assets in which you have an interest, even if none of those assets affects your tax liability for the year.

For a broader overview of your obligations under FATCA, visit our dedicated FATCA Reporting guide.

—

Who Must File Form 8938?

Form 8938 applies to specified individuals and certain domestic entities. A specified individual includes:

• U.S. citizens, regardless of where they live
• U.S. resident aliens (Green Card holders or those meeting the Substantial Presence Test)
• Non-resident aliens who elect to be treated as U.S. residents for tax purposes
• Non-resident aliens who reside in a U.S. territory

If you are a U.S. citizen living in Israel, you fall squarely within this definition. The key trigger is whether the total value of your specified foreign financial assets exceeds the applicable reporting threshold, which varies based on your filing status and country of residence. Even if you believe your assets fall below the threshold, calculating the correct maximum value across the entire tax year is essential — a common source of errors.

—

Form 8938 Reporting Thresholds by Filing Status

The Form 8938 FATCA reporting thresholds differ significantly depending on whether you live inside or outside the United States. Taxpayers residing abroad benefit from much higher thresholds, reflecting the reality that living overseas often means maintaining larger balances in foreign accounts.

Thresholds for Taxpayers Living in the United States

Thresholds for Taxpayers Living Outside the United States

Important: You must report the maximum value during the tax year of each foreign financial asset listed on Form 8938 — not just the value as of December 31. If your combined assets exceeded $300,000 at any point during the year, you must file even if the year-end balance has dropped below $200,000.

For U.S. citizens living in Israel who may also benefit from the U.S.-Israel Tax Treaty, it is critical to understand that treaty benefits do not exempt you from Form 8938 FATCA reporting obligations.

—

What Assets Must Be Reported on Form 8938?

Not all foreign assets qualify as “specified foreign financial assets” under FATCA. Understanding exactly what must be reported — and what does not — can save you time and prevent both over-reporting and costly under-reporting.

Assets that MUST be reported on Form 8938:

• Foreign bank accounts (savings, checking, time deposits)
• Foreign investment accounts and brokerage accounts
• Foreign stock or securities held outside a financial account
• Foreign partnership interests
• Foreign mutual funds and hedge funds
• Foreign-issued life insurance or annuity contracts with a cash surrender value
• Foreign pension plans and deferred compensation arrangements
• Any interest in a foreign entity (corporation, partnership, trust, or estate)

Assets that are generally NOT required to be reported:

• A foreign financial account held at a U.S. branch of a foreign bank
• A foreign financial account held at a foreign branch of a U.S. bank
• Real estate held directly (not through a foreign entity)
• Social Security-type benefits from a foreign government
• Personal property held directly, such as art, jewelry, or automobiles

If you hold Israeli pension funds (קרן פנסיה), Kupot Gemel (קופות גמל), or similar Israeli retirement vehicles, these may qualify as specified foreign financial assets and require disclosure — a nuanced area where professional guidance is critical. The Foreign Tax Credit can often help offset your U.S. tax liability on income generated by these assets, reducing the overall burden of dual compliance.

—

Form 8938 vs. FBAR: Key Differences Explained

Many taxpayers confuse Form 8938 FATCA reporting with the FBAR (Foreign Bank Account Report), filed separately with FinCEN. Both are required for many U.S. expats, but they serve different purposes and operate under different rules. Filing one does not satisfy the requirement to file the other.

The FBAR threshold is dramatically lower ($10,000 vs. $200,000 for expats living abroad), which means many taxpayers who are not required to file Form 8938 must still file an FBAR. For a full breakdown of FBAR rules and filing procedures, read our comprehensive FBAR Guide.

—

Deadlines, Extensions, and Filing Timeline

Form 8938 is attached to your annual federal tax return, so its due date aligns directly with your return’s deadline.

• Standard deadline: April 15 of the year following the tax year being reported
• Automatic extension for expats: U.S. citizens living abroad receive an automatic 2-month extension to June 15
• Further extension available: You may request an additional extension to October 15 using Form 4868

Worked Example: A U.S. citizen living in Tel Aviv holds an Israeli bank account, a Kupat Gemel, and an Israeli brokerage account. The combined maximum value during 2024 reached $310,000. She is unmarried and lives outside the U.S., so her threshold is $300,000 at any time during the year. She must file Form 8938 with her 2024 return by June 15, 2025 (automatic expat extension), or October 15, 2025 if she requests an additional extension using Form 4868.

If you need to file late or correct a previous filing, an amended return with an attached Form 8938 is required. Voluntary disclosure programs may also be available for taxpayers who have not historically filed. Contact our team at Tax4US to discuss your specific situation confidentially.

—

Penalties for Failing to File Form 8938

The IRS takes Form 8938 FATCA reporting seriously. Non-compliance penalties are significant and can escalate quickly.

• Failure to file: $10,000 penalty per tax year, with an additional $10,000 assessed for each 30-day period (up to $50,000) after IRS notification
• Accuracy-related penalty: 40% of any underpayment of tax attributable to undisclosed foreign financial assets (compared to the standard 20% penalty for other underreporting)
• Criminal penalties: In cases of willful non-compliance, criminal prosecution is possible under federal law
• Extended statute of limitations: If Form 8938 is not filed or is filed with substantial omissions, the IRS audit window extends to 6 years — double the standard 3-year period

These penalties make timely, accurate filing essential. The IRS has extensive information-sharing agreements with foreign governments — including Israel — under the FATCA intergovernmental agreement (IGA), making it increasingly difficult for unreported assets to go undetected. According to IRS guidance on Form 8938, the agency continues to expand its network of reporting partners globally.

—

Common Mistakes to Avoid on Form 8938

Even diligent taxpayers make errors on Form 8938. Being aware of the most frequent pitfalls can protect you from costly penalties.

1. Failing to report Israeli pension funds and Kupot Gemel — These are frequently considered specified foreign financial assets and must be reported if thresholds are met.
2. Using year-end values only — You must report the maximum value during the entire tax year, not just the December 31 balance.
3. Assuming FBAR filing covers FATCA — Filing an FBAR does not satisfy your Form 8938 obligation, and vice versa. Both may be required simultaneously.
4. Overlooking foreign life insurance policies — Policies with cash surrender values issued by foreign insurers must be reported on Form 8938.
5. Missing the filing deadline — Because Form 8938 is attached to the tax return, failing to file the return on time automatically means failing to file Form 8938 on time.
6. Not reporting assets with no income — Even if a foreign asset generated zero income during the year, it must still be reported if the aggregate threshold is met.
7. Incorrect currency conversion — All values must be reported in U.S. dollars using the Treasury’s official year-end exchange rate or the maximum-value-date exchange rate, as applicable.

—

How Tax4US Can Help with Your Form 8938 FATCA Filing

Form 8938 FATCA compliance is complex, particularly for U.S. citizens living in Israel who must navigate two full tax systems simultaneously. Determining which Israeli financial assets require disclosure, calculating maximum values across the calendar year, applying the correct exchange rates, and ensuring the form is accurately completed and properly attached to your return — each step carries risk if handled incorrectly.

At Tax4US, we specialize in U.S. tax compliance for Americans living in Israel and around the world. Our services cover FATCA reporting, FBAR filing, foreign tax credit planning, U.S.-Israel tax treaty analysis, and full annual tax return preparation. Explore our full range of U.S. tax services or contact us today to speak with an expert who understands both U.S. and Israeli tax obligations in depth.

—

The information in this article is based on IRS guidance current as of the publication date and is intended for general informational purposes only. Tax laws change frequently — always consult a qualified tax professional for advice tailored to your specific situation.