As a “specified person”, you are required to complete Form 8938, Statement of Specified Foreign Financial Assets annually if the total value of your foreign financial assets held outside the United States exceeds the application threshold. This form must be attached to your US tax return. The definition of specified person includes US citizens, US residents, US corporations, and US trusts. For individuals, the threshold depends in particular on your status (single, married, etc.) and where you live (whether or not outside the United States). Additional conditions must be met for a US corporation or trust to be required to file Form 8938.

Covered foreign financial assets

The foreign financial assets to be declared correspond, among others, to your bank accounts, your non-registered investment accounts, your accounts from registered plans (registered retirement savings plan, registered education savings plan, for example), interest in a partnership and the shares not held in a foreign account.

Applicable penalties

Failure to report your foreign financial assets will expose you to a statutory penalty of $10,000 US plus a $10,000 US every 30 days following receipt of a notice from the Internal Revenue Service (IRS) notifying the breach. The maximum penalty can be up to $60,000 US for an unintentional omission.

Other forms

As a US citizen or US tax resident, other forms may apply to you depending on your situation. This will be the case in particular if you have a TFSA, if you are a shareholder of a foreign company or if you hold mutual funds. Finally, you will normally be required to produce the FBAR form, Report of Foreign Bank and Financial Accounts.

We will be happy to assist you in preparing Form 8938. Make an appointment with one of our tax experts or drop your file on our virtual platform. Being specialized in American taxation, we are equipped to assist you quickly!

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About the author

Olivier Custeau, tax expert, B.A.A., M. Fisc., EA

Holder of a bachelor's degree in business administration (B.B.A) from Université Laval and a master's degree in taxation (M. Fisc.) from the Université de Sherbrooke, Olivier has developed expertise in American and international taxation by working in a renowned firm. Over the years, he has developed a keen interest in US taxation. In fact, he was awarded Enrolled Agent status in 2019, the highest level a professional can attain to represent clients to the Internal Revenue Service (IRS). Recognized for his rigorous, dynamic and human approach, Olivier is an asset to the team.