I forgot Form 8938 and owed no tax — is there still a penalty?
Yes. The charge attaches to the form and the year rather than to the balance on the return, so a year that settles at nil is not a year with nothing at stake. A further addition runs where the failure continues after the IRS has written to you about it, and where income was understated and the asset behind it had never been disclosed, the accuracy-related addition to tax is computed at a higher rate than the ordinary one. The practical point is that the cheapest years to put right are the ones put right before anybody asks. See the route for delinquent information returns.
How do I file Form 8938 late for a year I have already filed?
The statement is an attachment to the return, so a late one travels with an amended return for that year rather than being posted in on its own. What goes with it is the real decision. If income was also unreported, an amendment on its own gives up the protection a certification-based catch-up route would have carried, and that cannot be taken back once it is filed. If nothing was unreported and only the statement was missed, the form can go in late with a written reasonable-cause statement attached to it. We settle which of those two describes your years before anything is drafted. See amending a filed return.
Can the penalty be removed if I never knew about the form?
Not knowing is where the argument starts rather than where it ends. Relief turns on reasonable cause, judged on facts you can evidence: what you were told, by whom and when — a preparer who never asked about assets abroad, an estate administered entirely in another country, an illness, a death in the family. The statute is explicit that one thing is not reasonable cause, and it is the one people reach for: that the country holding the asset would penalise you for disclosing it. So the work is documentary. We assemble the sequence with dates and the papers behind it, and file it alongside the form rather than waiting to be asked for it. See reasonable cause.
Does a missing Form 8938 keep the year open for the IRS?
It can. Where a return was filed without a statement it should have carried, the period the IRS has for assessing that return does not close on its ordinary timetable — it stays open, and filing the missing information is what eventually closes it. An old year with a missing statement is therefore less settled than its age suggests. That is why the years are mapped before any of them is touched. Which years remain open to assessment, which are past the point where a refund can still be claimed, and which catch-up route covers them are three separate questions, and the answers rarely line up. The order the years go in decides which reliefs survive to be claimed.
I filed the FBAR but not Form 8938 — am I covered?
No. These are two obligations with different agencies, thresholds, asset lists and due dates, and the account report goes to FinCEN instead of being attached to your return, so satisfying one does nothing for the other. The asset statement also reaches things an account report does not — foreign-issued securities held directly, interests in foreign entities, certain foreign contracts — which is why a filer who reported every account can still have a missing statement for the same year. The two carry separate penalty regimes as well, so the route that fixes one is not automatically the route that fixes the other. See filing both.
How many past years of Form 8938 do I have to file?
The number is set by the route back in rather than by the obligation itself. The duty reaches every year your specified foreign financial assets were above the threshold for your filing status and for where you were living, which can be a long run of years. What you actually file depends on which catch-up route the facts support: the certification-based routes ask for a defined run of back years and turn off the offshore penalties for those who qualify, while the delinquent-return route asks only for the missing forms with a reasonable-cause statement, and is open only while no income is unreported and no examination has begun. Settle the route first. See the streamlined foreign offshore route.
What is a PFIC, and why do Canadian mutual funds cause trouble for US persons?
A passive foreign investment company is a non-US company that is mostly passive by income or by assets — which describes almost every Canadian mutual fund and ETF. For a US owner the default regime taxes distributions and gains punitively with an interest charge for the years the value built up. Two elections fix it, and both need annual information the fund may not produce for you. Holding the same exposure through US-domiciled funds usually avoids the problem entirely. See PFICs and Canadian mutual funds.
Does the United States tax gifts I receive from a foreign person?
The recipient is not taxed on a gift, and a foreign donor with no US-situs property is outside US gift tax — so often no tax arises on either side. What does arise is reporting: a US person receiving gifts above the annual reporting thresholds from a foreign individual, or from a foreign corporation or partnership at a lower threshold, files the information return for the year. The distinction between a gift and a distribution from a foreign trust matters here, because they are reported differently. See Form 3520.
