If you are a US citizen or resident and own liquid assets in a foreign country (including Canada), you may be required to file Form 8938, Statement of Specified Foreign Financial Assets along with your 2011 US income tax return, i.e., Form 1040, 1041, 1120, 1065, etc., depending on whether the return is for an individual, trust or estate, corporation or LLC, respectively.
In general, Form 8938 requires disclosure of “foreign financial assets,” which generally means accounts holding cash or securities maintained by a foreign bank or brokerage house. However, the instructions indicate that interests in foreign mutual funds, foreign hedge funds, foreign private equity funds, foreign corporations, foreign partnerships and foreign trusts/estates are also included. Foreign real estate is not.
Offshore assets reported on Form 3520 (foreign trusts and gifts) or 5471 (foreign corporations) need not be reported on Form 8938 (although it must be noted on Form 8938 that Forms 3520 or 5471 have been filed to report these items). However, you must include on Form 8938 all items already reported on Treasury Form 90-22.1.
Filing Threshold – Single taxpayers living in the US must file Form 8938 if foreign financial assets exceed $50,000 at year end or $100,000 at any time during the year. These threshold amounts are doubled for married taxpayers living in the US and filing a joint return. If living abroad, the threshold for single taxpayers is $200,000 / $400,000, and the threshold for married taxpayers filing a joint return is $400,000 / $600,000.
Penalty – The penalty for failure to file Form 8938 is $10,000 per year.