8 Common Form 8938 Mistakes (and How to Avoid Them)

Most Form 8938 problems don't come from exotic situations — they come from a handful of the same misunderstandings, repeated year after year. Here are the eight we see most often, and the quick check that heads each one off.

1. Assuming the FBAR covers it

The most common error of all: filing an FBAR and thinking you're done. The FBAR and Form 8938 are separate obligations with different thresholds and different covered assets. Filing one has no effect on the other. The fix: run both tests every year — see Form 8938 vs. FBAR.

2. Only looking at the year-end balance

People check their December 31 balances, see they're under the threshold, and stop. But Form 8938 has an any-time threshold too, and it's higher for a reason. An account that spiked mid-year and drained by December can still trigger a filing. The fix: find each asset's peak value during the year, not just its ending value. See Reporting Thresholds.

3. Using the wrong exchange rate

A surprising number of filers convert at the rate on the day a balance peaked. The instructions call for the U.S. Treasury year-end rate, applied even to a mid-year maximum value. The fix: use the year-end Treasury rate (or a consistent public rate if none is published), and note the source. See Valuing Foreign Assets.

4. Forgetting non-account assets

Form 8938 reaches more than accounts: directly held foreign stock, interests in foreign entities, and foreign financial instruments all count. Filers who think "I don't have a foreign bank account, so I don't file" sometimes miss reportable foreign shares or a stake in a foreign company. The fix: review the full specified assets list, not just bank accounts.

5. Double-reporting assets already on another form

If an asset is fully reported on Form 3520, 5471, 8621, or 8865, you don't detail it again on Form 8938 — you just note how many of those forms you filed. Re-entering the same foreign corporation in full is a needless error. The fix: use Part IV's duplicative-reporting rule. See How to File.

6. Leaving a foreign pension off the form

Because a pension feels untouchable and is often covered by a treaty, people assume it doesn't need reporting. Usually it does — the treaty may defer tax, but it doesn't switch off the disclosure. The fix: treat foreign pensions as reportable by default and value them using the fallback rules. See Foreign Pensions and Form 8938.

7. Not filing because "I owe no extra tax"

Form 8938 is a disclosure, not a tax calculation. Owing nothing extra doesn't excuse you — if you're a specified person over the threshold, you file. The fix: separate the two questions in your mind. The threshold test, not your tax bill, decides whether you file.

8. Ignoring the income cross-check (Part III)

Form 8938 asks you to tie each asset's income to the specific line of your return where you reported it. Filers who leave Part III sloppy create exactly the mismatch the IRS is looking for. The fix: make sure the interest, dividends, and gains from your foreign assets actually appear on your return — and that Part III points to them.