# Form 8938



## Omater

Well, I should have known it was too good to be true! Just when I thought I had a handle on filing my US tax return, they change things around. It is just more confusion for me.

I understand that form 8891 has been eliminated and we are now supposed to use 8938 instead? I have seen comments that this makes it easier for us than the old form 8891. 

Am I missing something? Am I over-thinking something? Why is 8938 thought to be easier? Are they just saying that the RRSP deferral is better? These two pages look like they want more info than ever to me!

IRS Eliminates Requirement To File Form 8891 For Canadian Retirement Plans - Hutcheson and Co. LLP

Sorry about my panic. I am not too proud anymore, IRS does that to a person.


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## maz57

Nothing is ever easy when it comes to the IRS. But you do have it right; 8891 is gone and RRSPs are now reported on 8938. As far as which section, who knows? The opinions of reasonable people seem to differ. 

Also, the threshold for 8938 is way higher for expats---200k for single and 400k for joint. That seems to say that if you don't meet the 8938 threshold and don't need to file one then with the elimination of 8891 you don't report your RRSP at all.

They say they want compliance but they won't even tell us what compliance is. I don't think they know either. You can probably file damn near anything and you will never hear from them.


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## BBCWatcher

maz57 said:


> They say they want compliance but they won't even tell us what compliance is.


That's over the top, Maz57. Again. Yes, there are a few occasions when the instructions and the tax code are unclear or ambiguous -- in any tax code. But an Apple iPhone is sometimes unclear or ambiguous, too.

So let's calm down, try to be helpful, and simply take a look at the instructions for IRS Form 8938 and the form itself. Looking at the 2014 edition, the thresholds are described in the sections on page 2. Specifically, the section "Taxpayers living outside the United States" is the one Omater probably needs to refer to. The thresholds are immediately followed by a section entitled "Determining the Total Value of Your Specified Foreign Financial Assets," so that's also quite straightforward.

Now, where do you report what you used to report on IRS Form 8891, in this case a Canadian RRSP? Well, one naive way to figure that out is simply to search the instructions for IRS Form 8938 to find either "8891" or "RRSP." And, what do you know, there's a "What's New" section in the instructions. There you'll find a section entitled "Part IV Reporting Not Available for Former Form 8891 Filers." That section tells you precisely where your RRSP is now supposed to go. I'll quote from that section of the instructions:

_...Instead, such specified individual must report such assets in Section VI, Detailed Information for Each “Other Foreign Asset” Included in the Part II Summary.... A specified individual required to report an interest in an RRSP or RRIF on Form 8938 for 2014 must disregard the reference to Form 8891 in Part IV and in the Note at the beginning of Part VI and report the interest in Part VI of the form. The information required by Part VI, lines 1 through 6 and line 8 must be reported, and line 7 should be skipped._

And there you go. It's all quite clear, and it's on page 1 of the instructions. There's not actually any ambiguity here whatsoever, at least to anybody with about a high school level of English reading comprehension.

Yes, the IRS is doing a decent job here to try to make tax filing and tax compliance simpler. One way to make tax filing simpler is to reduce the number of forms and to make those remaining forms have higher filing thresholds, and that's exactly what they've done here. And the IRS has clearly explained the change and how to follow the new, simplified filing procedure.

I say bravo.


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## maz57

Well that's great, you found it! It appears the IRS has changed the instructions for 2014 but not the form itself! So I think people can be forgiven for being confused by the conflicting directions. 

But I do think I have drawn the right conclusion that an RRSP will now not reported at all if the threshold for filing 8938 is not otherwise met. Also people whose income is low enough they have no 1040 filing obligation will not file 8938 even if the value of their foreign assets exceeds the threshold for 8938.

The next "improvement" will be to eliminate ANY RRSP reporting; these things aren't any more exciting than an IRA. Reporting them is an exercise in futility and a waste of everyone's (including the IRS') time.


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## maz57

BBCWatcher said:


> And there you go. It's all quite clear, and it's on page 1 of the instructions. There's not actually any ambiguity here whatsoever, at least to anybody with about a high school level of English reading comprehension.
> 
> Yes, the IRS is doing a decent job here to try to make tax filing and tax compliance simpler. One way to make tax filing simpler is to reduce the number of forms and to make those remaining forms have higher filing thresholds, and that's exactly what they've done here. And the IRS has clearly explained the change and how to follow the new, simplified filing procedure.
> 
> I say bravo.


I'll ignore the thinly veiled insult and but mention that when the form says one thing and the instructions say something else that certainly meets the definition of ambiguity for most people. Only the IRS could turn an adjective (obsolete) into a verb (obsoleted). Apparently the IRS decided to rewrite the English language at the same time they were revising RRSP reporting.

Additionally, I had a good look at the current Form 8938. While it is true that the IRS eliminated Form 8891 (good), the level of reporting now required on Form 8938 for an RRSP is far more detailed compared what they previously demanded on 8891 (bad). 

The net result is that the IRS made RRSP reporting more complicated when they tried to make it simpler. New, yes. Simpler, no way. The only good news is that because the 8938 threshold is fairly high, many expats now won't need to bother with any of this. And why should they; it is none of the IRS' business until such time as there is a distribution.


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## BBCWatcher

maz57 said:


> Only the IRS could turn an adjective (obsolete) into a verb (obsoleted). Apparently the IRS decided to rewrite the English language at the same time they were revising RRSP reporting.


Before accusing somebody of not using the English language correctly, go check the dictionary first. Or check the Oxford English Dictionary if you don't like that one. Or this one if you don't like the OED.

The IRS speaks and writes in standard U.S. (not necessarily Canadian) English, and in this case (at least) correctly so. According to MW, the first literary or published use of the verb "obsolete" dates back to about 1640, and the past participle emerged not too long after.


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## maz57

Good for the IRS. They managed to resurrect a quaint usage of the word "obsolete". Bully for them. Perhaps there are some literary experts in the employ of the IRS? If so, their talent is wasted for sure. Too bad they didn't put 'em to work fixing the form as well.

Did you spend the evening doing the research or did you just know that off the top of your head? Most normal people would never use the word in that fashion, myself included. In this particular instance it's not too hard to figure out what the IRS is really trying to say; often, well, you'd have to be an English major to figure it out.

By the way. what about the large numbers of Canadian accidentals in Quebec who have less than a "high school level of English reading comprehension"? I know what their response to US CBT is. They are ignoring the US government, ignoring FATCA, and ignoring the IRS. Hell, they even ignore the Canadian government because the only government they recognize is the Quebec government. (The Quebec provincial government is referred to as the National Assembly.) Not too many US expat returns coming from Quebec, I'd wager. If the IRS sends one of them a letter it had better be in French or it will be tossed in the circular file.

Just for the record, I don't do iPhones. Blackberry all the way; the best devices and best OS on the market. No ambiguity there!


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## Bevdeforges

Can we tone this down a few levels, please? This is not a forum for debate over fine points of grammar or usage of English or any other language. And, to the uninitiated, the IRS instructions are anything but crystal clear at the best of times. Heck, I'm a trained accountant and the instructions can drive me nuts when dealing with foreign financial phenomena that don't fit the IRS' pigeonholes.
Cheers,
Bev


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## Omater

Thanks for the replies, but as an educated person who understands English pretty well, I disagree that this is simple and I am grateful that there are people who agree with me. I was wondering if I was thick headed with confusion. From the information I am reading in the instructions for form 8938, the total time they estimate to do this one thing is 4 hours and 39 minutes to learn the form, prepare it and send it. The old form took me 15 minutes tops. This is as bad as FATCA. 

I am not sure I am doing this form correctly, and in some ways I would just give them what I think they want, but then worry that I am giving them extra and will regret it down the road. I have several accounts that go over the 200K when combined, plus my regular deposit accounts. I could see having to report proceeds from these accounts, but don't understand why I have to spend hours on useless information. Am I still being thick? Where is the easy part? 

Thanks for all the replies! Believe it or not, I was able to gain a bit of knowledge from them!


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## maz57

The whole 8891/8938 business reminds me of the old saying; "I'm from the government and I'm here to help". (Code for run the other direction as fast as you can!) 

They supposedly tried to simplify things by eliminating a form which in theory is nice, but in so doing they moved RRSP reporting over to a much more complicated form. I had a look at some of my old 8891s to see if maybe my memory was fuzzy, but you are right; 8891s were dead simple. The most time consuming thing was waiting for the printer to spit 'em out. In a year with no withdrawal the only thing they asked for (aside from the usual institution name and account number) was the end of year balance and even that number was useless to the IRS. (Not to mention was already reported on FBAR.)

The only information that is of significance as far as US tax is concerned is when there is a withdrawal. Reporting anything else is just useless busy work. You are not thick; they really aren't making it easy.


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## BBCWatcher

For the record, "obsoleted" is a perfectly common word in modern U.S. English and with a couple centuries of use. _As the dictionaries themselves explain_ when they note the word is most commonly U.S. rather than British, Canadian, or Australian standard. (Who doesn't know to check a dictionary if you encounter a word unfamiliar to you? Not that "obsoleted" is hard to figure out if you're only familiar with the adjective "obsolete.") The dictionaries do not label the word slang, jargon, or antiquated because it isn't any of those things.

There are many legitimate, reasonable criticisms of the IRS, but this isn't one of them.


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## maz57

We've been warned so I'm not going to push my luck. You have got the last word on this one. (Which I'm sure Bev will appreciate!) There is a reason forums have moderators. 

Over and out.


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