Once you know you have to file Form 8938, the next question is deceptively simple: what number do you put down? Valuation trips up a lot of otherwise-careful filers, because "the value of a foreign asset" involves two moving parts at once — the value in the local currency, and the exchange rate you use to translate it into dollars.
What "maximum value" actually means
Form 8938 asks for the maximum value of each specified foreign financial asset during the tax year — not just the year-end balance. In practice, that means looking across the whole year and identifying the highest value the asset reached. For a bank account, that's usually the highest periodic statement balance. The reason the form wants the peak, not the endpoint, is the same reason the any-time threshold exists: a snapshot on December 31 can hide a large balance that passed through earlier in the year.
You can generally rely on account statements
The instructions let you use periodic financial account statements to determine an account's maximum value, as long as those statements fairly reflect the account's value during the year. You do not need an independent appraisal for a normal bank or brokerage account. That's a relief for most filers — the hard cases are the assets without a tidy statement.
The exchange rate to use
Here's the rule that surprises people: for converting to U.S. dollars, you generally use the exchange rate on the last day of the tax year — even when you're reporting a maximum value that occurred in, say, June. The instructions direct you to the U.S. Treasury Bureau of the Fiscal Service year-end exchange rates. If Treasury doesn't publish a rate for a particular currency, you may use another publicly available rate, applied consistently, and disclose the rate and its source on the form.
A worked example
Suppose your euro account peaked at €90,000 during the year. You don't convert at the June rate when the peak occurred — you take €90,000 and convert it at the Treasury year-end euro rate. If that rate were, hypothetically, 1.08 USD/EUR, you'd report roughly $97,200. (Always use the actual published rate for the year in question.)
Assets that are hard to value
The genuinely difficult cases are the assets that don't come with a monthly statement:
- Foreign pensions: Many plans won't quote you a lump-sum value. The instructions provide fallback approaches — in some cases, the value of your interest can be based on what you're entitled to receive, or a value of $0 may be permissible if you truly can't determine a value and have no distributions. This area is nuanced; see Foreign Pensions and Form 8938.
- Interests in a foreign entity: For a stake in a private foreign company, you may need to estimate fair market value using a reasonable method, since there's no market price.
- Foreign trusts and estates: The value of your interest can depend on distributions received during the year when a precise valuation isn't available.
The common thread: where an exact figure genuinely isn't obtainable, the rules generally ask for a good-faith, reasonable estimate, documented — not perfection.
Joint ownership and double-counting
If you own an asset jointly, how you report its value depends on who your co-owner is and your filing status. Spouses filing jointly report the asset once at its full value. A specified individual who jointly owns an asset with a spouse filing separately, or with someone who isn't a spouse, generally reports the full value too — which can feel like double-counting across two returns, but follows the instructions. Getting this right matters both for the threshold test and for the reported figures.
Keep your work
Whatever figures you use, keep the supporting records: the statements, the exchange-rate source, and any estimate methodology. Because Form 8938 is part of your return, a valuation the IRS questions is a return-level issue — and contemporaneous documentation is your best friend if you ever need to show your reasoning was reasonable.
When to bring in a professional
If your assets include a foreign pension, a private company interest, or anything without a clean statement, valuation stops being arithmetic and starts being judgment. That's the point to involve a qualified tax professional, especially given the penalties attached to getting the form wrong.