# 8938 Total Asset Value



## andie17

The instructions for 8938 state that reporting is required if the total value of your specified foreign assets reach a certain level "at any time during the tax year". 

If I have a foreign account at Bank A with $100k and if I transfer this amount to Bank B and later transfer to Bank C, my total foreign assets "at any time" would be $100k, but does the IRS expect these to be added together and equal $300k? 

To expand the above example a bit: suppose I did not transfer to Bank C, but instead transferred back to Bank A. Again, my total assets would be $100k and if added together would only equal $200k, and I could transfer back and forth between Bank A and Bank B numerous times and it would still remain $100k or $200k added together. 

The instructions are unclear to me, and I called the IRS International help phone number, and they do not deal with 8938 because... it is too complicated.


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## iota2014

andie17 said:


> The instructions for 8938 state that reporting is required if the total value of your specified foreign assets reach a certain level "at any time during the tax year".
> 
> If I have a foreign account at Bank A with $100k and if I transfer this amount to Bank B and later transfer to Bank C, my total foreign assets "at any time" would be $100k, but does the IRS expect these to be added together and equal $300k?


No. At any one time, the total value is $100,000.


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## horseshoe846

andie17 said:


> but does the IRS expect these to be added together and equal $300k?


That is what TurboTax is going to do for you automatically - $300K .


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## iota2014

horseshoe846 said:


> That is what TurboTax is going to do for you automatically - $300K .


TurboTax will reflect the information supplied by the user, or it's broken. $100,000 is not $300,000.


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## horseshoe846

iota2014 said:


> TurboTax will reflect the information supplied by the user, or it's broken. $100,000 is not $300,000.


I'm not trying to give you a hard time - 

I happened to be working on this year's 8938 today. My return from last year has an 8938 and a "continuation statement" for each of our foreign accounts. 

TurboTax takes the value of each statement's line 4 and adds the sum to Line 2 of the 8938. It also moves the tally of the statements to the 8938. I can't even edit the fields (I would need to manually over-ride).

Edit : which makes me ask the question - doesn't an 8938 have VERY similar information to the FBAR ?


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## iota2014

horseshoe846 said:


> I'm not trying to give you a hard time -
> 
> I happened to be working on this year's 8938 today. My return from last year has an 8938 and a "continuation statement" for each of our foreign accounts.
> 
> TurboTax takes the value of each statement's line 4 and adds the sum to Line 2 of the 8938. It also moves the tally of the statements to the 8938. I can't even edit the fields (I would need to manually over-ride).


But at some point, presumably, TurboTax will enquire whether money has been transferred from one account to another, and adjust accordingly.


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## andie17

If you are filling out the 8938 form in Turbotax, it will of course add up all the values you enter. My question is whether (in my example) 8938 is required to begin with.


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## iota2014

andie17 said:


> If you are filling out the 8938 form in Turbotax, it will of course add up all the values you enter. My question is whether (in my example) 8938 is required to begin with.


No.


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## horseshoe846

andie17 said:


> If you are filling out the 8938 form in Turbotax, it will of course add up all the values you enter. My question is whether (in my example) 8938 is required to begin with.


I think here is your answer :
"Taxpayers living outside the US:
Unmarried taxpayer (or married filing separately): Total value of assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.
Married taxpayer filing jointly: Total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year."

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

Edit : or perhaps that really doesn't answer your question ...


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## andie17

Thank you iota2014 - I do like your answer.


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## iota2014

You're welcome.


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## horseshoe846

Just for giggles I called - 267-941-1000 - the IRS International Help Desk.

After waiting on hold for 15 minutes the gentleman said - sorry we are not trained on form 8938. You need to consult the IRS website, or a tax professional...


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## Moulard

Remember you are reporting on the value of the asset on 31 December on that form - even if the reason you meet the reporting threshold is because of a value mid year.

The only way in which you could possibly double up is if you transferred money between accounts with two different financial institutions that had same day clearance between them.

Its the FBAR where you report the maximum value at any point during the year. On that one yes, the values are meaningless, because of double reporting when you transfer money between accounts...


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## horseshoe846

Moulard said:


> Remember you are reporting on the value of the asset on 31 December on that form - even if the reason you meet the reporting threshold is because of a value mid year.


But the text on line 4 (of the 8938 continuation statement) reads "Maximum value of account during tax year".


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## iota2014

Moulard said:


> Remember you are reporting on the value of the asset on 31 December on that form - even if the reason you meet the reporting threshold is because of a value mid year.
> 
> The only way in which you could possibly double up is if you transferred money between accounts with two different financial institutions that had same day clearance between them.
> 
> Its the FBAR where you report the maximum value at any point during the year. On that one yes, the values are meaningless, because of double reporting when you transfer money between accounts...


For threshold purposes the FBAR is the same. If you have savings of $7000 in Account A, and midyear you move your $7000 to Account B, you aren't required to file FBARs.

However, if you have savings of $10,000 in Account A, and you move the $10,000 to Account B, you are required to file FBARs and it looks as if you have $20,000. That's what worries people - unnecessarily, as far as I know. The IRS doesn't seem to do anything with the totals. They're presumably just trying to catch people "structuring".


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## iota2014

horseshoe846 said:


> But the text on line 4 (of the 8938 continuation statement) reads "Maximum value of account during tax year".


There are two thresholds for the 8938 - end of year and "at any time". You're required to file if you meet either.



> Unmarried taxpayers.
> If you are not married, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year.


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## Moulard

horseshoe846 said:


> But the text on line 4 (of the 8938 continuation statement) reads "Maximum value of account during tax year".


Must not post before coffee kicks in.

You are correct.

The total amount reported has no bearing on real dollars, but I would hold that whether or not you have to report is based on real dollars.


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## andie17

iota2014 said:


> For threshold purposes the FBAR is the same. If you have savings of $7000 in Account A, and midyear you move your $7000 to Account B, you aren't required to file FBARs.
> 
> However, if you have savings of $10,000 in Account A, and you move the $10,000 to Account B, you are required to file FBARs and it looks as if you have $20,000. That's what worries people - unnecessarily, as far as I know. The IRS doesn't seem to do anything with the totals. They're presumably just trying to catch people "structuring".


And this does concern me in that, because of transfers (to take advantage of limited time bonus interest rates), it could appear that I have bank accounts of nearly $400,000, but I am only reporting interest income on actually less than $100,000. Of course this can be easily explained, if necessary.


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## iota2014

andie17 said:


> And this does concern me in that, because of transfers (to take advantage of limited time bonus interest rates), it could appear that I have bank accounts of nearly $400,000, but I am only reporting interest income on actually less than $100,000. Of course this can be easily explained, if necessary.


Yes I agree it's disconcerting. But they know what they've done, in setting out the requirements in the way they have. They're presumably going to be aware that there's no necessary relationship between FBAR aggregates and reportable interest.


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## Moulard

Really that form is just a reporting requirement, and the amounts reported on it are meaningless from the perspective of your net worth.

The only penalties appear to be related to failing to report an asset, and underpaying tax because you failed to report income related one of those assets.

So long as you are clear on that front... it should not matter.


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## horseshoe846

I KNOW I need to file form 8938 at the moment - but even next year, say, if I didn't - I probably take the FBAR values and complete an 8938 anyway. I can see the IRS complaining if they think I am hiding something - but I don't think they are going to fine me for being overly open with them. And if TurboTax wants to use a cumulative value on the form - I'm fine with that.


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## Bevdeforges

Wait a minute here.... Before you make any decisions on these things, take a look at the IRS document that compares the 8938 to the FBAR https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

The FBAR is for reporting your accounts. The high balance you report for each account is only an indication of what the account is for. And the criteria for filing is if at any point during the year you had more than $10,000 in total between all your foreign accounts. If you had $9000 and moved it to a new account every day in the year, your total foreign account balance is still only $9000 and you would not be subject to reporting. If you did the same thing with, say, $12,000 you would have to declare each of the accounts at $12,000 "high balance."

The 8938 is for reporting total asset value held in overseas accounts on the last day of the year (or on any particular day of the year). But you do NOT double count your asset value for transfers between accounts. Simple example: Say you have $500,000 in various bank and investment accounts throughout the year, but on December 15th you withdraw $50,000 to buy yourself a nifty new car. On December 31st, your balance is $450,000 and that's what you'd report on your 8938. 

For the FBAR, what you're reporting are the accounts themselves, not necessarily the balances. For the 8938, what they are interested in is the total asset value at a point in time.
Cheers,
Bev


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## Moulard

First reporting threshold is always in the form …

_“is more than $X on the last day of the tax year or more than $Y at any time during the tax year._

Transferring money from one account to another does not affect the gross amount you have. You either exceed the end of your amount, the any time during the year amount or you don’t. You either exceed the reporting value at the end of the year or you don’t.

But… The instructions are quite explicit about the amount to report once you exceed that amount, either at the end of the year or during it.. 

_You must report the maximum value during the tax year of each specified foreign financial asset reported on Form 8938._

And 

_Use the currency exchange rate on the last day of the tax year to figure the maximum value_

The issue is around double reporting of maximum value.

Taken literally, if you move a sum of money from one account on the 15th and it lands in another on the 16th and that sum takes both accounts to the maximum value for the year, on face value.. the same amount would be reported twice (assuming that prior to the transfer, account 1 was at its maximum, and then afterwards account 2 was at its transfer.

Later in the instructions on maximum value calculation it says you can use periodic statements. It says you can use the amount on the statement. 

That makes sense and is often the overlooked part. If you move 10,000 from one account to another on the 15 of June and it lands in the second account on the 16 of June, then the net amount between the accounts will not be impacted on a 30 June statement.

The double reporting comes when Account 1 has a max balance of 50,000 in May, you transfer in June to Account 2 (say a term deposit with higher interest) and Account 2 has a max balance of 50,000 in July. You have to report the maximum value of each account even though the actual currency that makes up that amount is exactly the same.

The point to not is this double reporting only occurs if you meet the reporting threshold, not to determine if you meet the reporting threshold.

These rules were designed for money laundering and secret trusts, not for day to day transactional transfers of an ordinary taxpayer. We are just collateral damage.


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## Moulard

horseshoe846 said:


> After waiting on hold for 15 minutes the gentleman said - sorry we are not trained on form 8938. You need to consult the IRS website, or a tax professional...


And that ladies and gentlemen is an example of why, so long as you try to do the right thing you are in a pretty good position.

Estimates of Overseas Americans range from what... 3 to 8 million people.

Its the equivalent of saying...ringing the IRS domestic Helpdesk and them saying... 

_l terribly sorry.. you live in Colorado, we cant help you._

Lets face it forms 8938 and 2555 are probably the only ones that are used predominately by overseas taxpayers... if an international helpdesk can't help basic international queries why exactly are my US tax paying relatives paying their wages? *

* OK So far I always end up with zero tax liability, so I can't claim to be paying their wages... so I will claim outrage on their behalf.


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## iota2014

> These rules were designed for money laundering and secret trusts, not for day to day transactional transfers of an ordinary taxpayer. We are just collateral damage.


Or from the IRS point of view, an unexpected but welcome additional revenue stream.

Serendipity!


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## Bevdeforges

Moulard said:


> Lets face it forms 8938 and 2555 are probably the only ones that are used predominately by overseas taxpayers... if an international helpdesk can't help basic international queries why exactly are my US tax paying relatives paying their wages? *
> 
> * OK So far I always end up with zero tax liability, so I can't claim to be paying their wages... so I will claim outrage on their behalf.


I'll grant you the 2555. But form 8938 was/is primarily intended for those who have foreign assets - which includes a large number of US residents. (Take a look at Mitt Romney's returns that he published while running for President a few years back.) The whole FATCA thing is really aimed at the top x% crowd who is actively trying to cache assets overseas, where they won't be reported on. Overseas residents working to support themselves were merely collateral damage.
Cheers,
Bev


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## horseshoe846

Ya know - FATCA exempts some foreign institutions from reporting to the US. In the case of Mexico it was something like 8-10. 

Why don't they also provide FATCA sanctioned institutions ? Institutions which are so open and honest with the US that any monies held there the individual does not have to report. For instance - Citi US OWNS Banamex. It is even called CitBanamex these days. I recently received an ominous notice from Citi that my Banamex account MAY not be in FATCA compliance - and that I needed to provide the W9 (is it?) again immediately. The guy at the bank said they sent the notice to all foreigners.


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## iota2014

horseshoe846 said:


> Ya know - FATCA exempts some foreign institutions from reporting to the US. In the case of Mexico it was something like 8-10.
> 
> Why don't they also provide FATCA sanctioned institutions ? Institutions which are so open and honest with the US that any monies held there the individual does not have to report. For instance - Citi US OWNS Banamex. It is even called CitBanamex these days. I recently received an ominous notice from Citi that my Banamex account MAY not be in FATCA compliance - and that I needed to provide the W9 (is it?) again immediately. The guy at the bank said they sent the notice to all foreigners.


Model 1 IGAs have a category "Deemed Compliant" - FFIs that are considered low risk. It's the FI, not the customers, that are classed as low risk.

Wasn't Banamex involved in some AML problems a few years back? And consequently was taken over altogether by Citibank? Probably not regarded as low risk, if there have been previous problems. But I may be misremembering.


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## iota2014

Sounds like your ominous notice might be partly due to Trump's threatening attitude toward Mexico. Making American banks with Mexican investments somewhat anxious, since no one knows what might come next.

Just in time: US banks slash exposure to Mexico


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## Bevdeforges

horseshoe846 said:


> Ya know - FATCA exempts some foreign institutions from reporting to the US. In the case of Mexico it was something like 8-10.
> 
> Why don't they also provide FATCA sanctioned institutions ? Institutions which are so open and honest with the US that any monies held there the individual does not have to report. For instance - Citi US OWNS Banamex. It is even called CitBanamex these days. I recently received an ominous notice from Citi that my Banamex account MAY not be in FATCA compliance - and that I needed to provide the W9 (is it?) again immediately. The guy at the bank said they sent the notice to all foreigners.


The simplest and easiest way for a bank to get "FATCA sanctioned" would be for them to agree to file 1099s on all their US customers with the IRS. That's basically what the IRS wants from the foreign banks - an easy way to run 1099s against their data base to make sure everyone reported all their interest income. 
Cheers,
Bev


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## KristenJune

Sorry peeps, I am now confused (doesn't take much!).


Turbo tax question is *'What was the maximum combined value of all Other Foreign Financial Assets at any time during 2016 (in USD)?*' for form 8938, and I need to fill in the blank.

I am over the reporting threshold (for US resident) and have two accounts at the same foreign bank.

Supposing I reported $100k in account A and moved 50K from account A to account B, then I also report account B as $50k. 
Is the maximum *combined value* of all Other Foreign Financial Assets $100k or 150K ??


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## Moulard

Bevdeforges said:


> I'll grant you the 2555. But form 8938 was/is primarily intended for those who have foreign assets - which includes a large number of US residents. (Take a look at Mitt Romney's returns that he published while running for President a few years back.) The whole FATCA thing is really aimed at the top x% crowd who is actively trying to cache assets overseas, where they won't be reported on. Overseas residents working to support themselves were merely collateral damage.
> Cheers,
> Bev


I agree. But you miss my point. 

As broad sweeping statements...


The preponderance of lower income overseas filers will submit a 2555. 
The preponderance of asset rich overseas filers will submit the 8938.
A sizable number of overseas filers will submit the 1116 .

For the International help-desk (if that indeed is what was called) not to have training on one of the key forms that an international filers regularly use is negligent at best.

If it was a standard domestic help-desk that is a different matter.

....Oh wait, I forgot that new form that all the cool kids are filing. Form 8854.


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## Bevdeforges

> As broad sweeping statements...
> 
> The preponderance of lower income overseas filers will submit a 2555.
> The preponderance of asset rich overseas filers will submit the 8938.
> A sizable number of overseas filers will submit the 1116 .


Overseas retirees won't file a 2555. Pensions aren't considered "earned income."

Your "asset rich overseas filers" may actually have much of their "fortune" in US based investments.

And whether or not overseas filers submit one or more 1116 depends entirely on circumstances. Again, retirees may not need to.

The "overseas help desks" used to be based in London, Paris, Frankfurt and Beijing. All 12 (or maybe it was 15) staff from those 4 offices were rotated back to the US. Doesn't leave all that many experts handling "international" issues to staff whatever international help line they may have tried to set up.
Cheers,
Bev


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## Moulard

KristenJune said:


> Sorry peeps, I am now confused (doesn't take much!).
> 
> Turbo tax question is *'What was the maximum combined value of all Other Foreign Financial Assets at any time during 2016 (in USD)?*' for form 8938, and I need to fill in the blank.
> 
> I am over the reporting threshold (for US resident) and have two accounts at the same foreign bank.
> 
> Supposing I reported $100k in account A and moved 50K from account A to account B, then I also report account B as $50k.
> Is the maximum *combined value* of all Other Foreign Financial Assets $100k or 150K ??


In Part V you would report 100k and 50k 

Because ... _you must report the maximum value during the tax year of each asset_

In Part I, the instructions are _Report the total maximum value of these deposit accounts._

Which in your case would be 100k.

But I would consider entering 150k simply so you never actually have to answer a question "why don't the numbers add up". 

Interesting that TurboTax is smart enough to realise that total max value may not be the sum of the max values of the parts... the tool I have been playing with isn't that smart. Its a calculated field based on the entries for each asset.


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## horseshoe846

Better yet - how about if we meet the residency requirement (just like the healthcare exclusion) - have a foreign income exclusion (all of it). 

I would love to see how Trump handles his foreign incomes...


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## horseshoe846

Moulard said:


> Interesting that TurboTax is smart enough to realise that total max value may not be the sum of the max values of the parts... the tool I have been playing with isn't that smart. Its a calculated field based on the entries for each asset.


Actually - TurboTax DOES calculated a cumulative aggregate value for all the assets. Which is virtually a read-only field.


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## Moulard

I wonder whether or not the question that the OP is being posed by TurboTax is trying to determine whether or not completing the form is required at all...

I don't use it therefore I cannot check.


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