# Question about Form 8938



## HillbillyCanuck (Apr 9, 2012)

Among the bank accounts that I'm reporting on Form 8938 (Statement of Specified Foreign Financial Assets) are two chequing accounts which did not earn any interest.

Line 3d in parts I and II asks me to check a box if "no tax item was reported with respect to this asset". I'm wondering if checking this box will cause my return to be flagged for further attention by the IRS and am actually contemplating listing the two accounts on Schedule B (Interest and Ordinary Dividends) with amounts of zero so that I can avoid checking the box.

Thoughts?


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## BBCWatcher (Dec 28, 2012)

"Follow the instructions." If the IRS wants to audit you, they will audit you. If they audit you and you didn't follow the instructions, you may be screwed.

Do the instructions for Schedule B allow you to report accounts with zero interest? Probably not. That's why Form 8938 and that checkbox exist. If that's the truth, report it.

First, second, and third rule of avoiding an IRS audit: follow their instructions and tell the truth to the best of your ability.


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## Bevdeforges (Nov 16, 2007)

I suspect that reporting accounts with 0 interest on a Schedule B would probably draw more attention than just listing the accounts on the 8938 and ticking the appropriate box. The IRS is perfectly well aware that certain accounts do not draw interest in Canada or other countries. 

Whatever you do, don't confuse them. Just fill out the forms the way they ask you to and if they have questions, they will come back to you to ask them before slapping you with an audit or penalties. (Just be sure to also report those checking accounts on your FBAR forms, too.)
Cheers,
Bev


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