Specified Foreign Financial Asset

A specified foreign financial asset is a foreign financial account or certain other foreign investment asset that may need to be reported on Form 8938 under FATCA. For U.S. expats, specified foreign financial assets can include foreign bank accounts, brokerage accounts, foreign stock, foreign partnership interests, foreign trust interests, foreign pensions, and some foreign financial contracts.

Why it matters for U.S. expats

Specified foreign financial assets matter because Form 8938 is separate from FBAR and can apply to a wider range of assets. A U.S. expat may need to report foreign accounts, investments, pensions, trusts, entity interests, or financial contracts with the IRS even when the same asset is also reported elsewhere, and even when the asset produced little or no income during the year.

Common questions

1. What counts as a specified foreign financial asset?

Specified foreign financial assets include financial accounts maintained by foreign financial institutions and certain other foreign assets held for investment, such as foreign stock, foreign securities, interests in foreign entities, and foreign financial contracts.

2. What form reports specified foreign financial assets?

Specified foreign financial assets are reported on Form 8938, Statement of Specified Foreign Financial Assets, when the taxpayer meets the filing threshold.

3. Is Form 8938 the same as FBAR?

No. Form 8938 is filed with the IRS as part of the tax return. FBAR is filed separately with FinCEN as FinCEN Form 114. Some assets may need to be reported on both forms.

4. Are foreign bank accounts specified foreign financial assets?

Yes. Foreign bank accounts maintained by foreign financial institutions can be specified foreign financial assets for Form 8938.

5. Are foreign brokerage accounts specified foreign financial assets?

Yes. Foreign brokerage or custodial accounts can be specified foreign financial assets, and the account itself is usually reported rather than each asset held inside the account.

6. Are foreign stocks specified foreign financial assets?

Yes, when the stock is issued by a non-U.S. person and held for investment outside a financial account.

7. Are foreign partnership interests specified foreign financial assets?

Yes. A capital or profits interest in a foreign partnership can be a specified foreign financial asset.

8. Are foreign trust or estate interests specified foreign financial assets?

Yes. An interest in a foreign trust or foreign estate can be a specified foreign financial asset, depending on the taxpayer’s rights, reporting position, and valuation rules.

9. Are foreign pensions specified foreign financial assets?

They can be. Interests in foreign pension plans and foreign deferred compensation plans may need to be included when applying the Form 8938 thresholds and reporting rules.

10. Is foreign real estate a specified foreign financial asset?

Directly owned foreign real estate is not a specified foreign financial asset. If the real estate is held through a foreign corporation, partnership, trust, or other entity, the ownership interest in that foreign entity may be reportable.

11. Is foreign currency a specified foreign financial asset?

Foreign currency held directly is not usually a specified foreign financial asset. Foreign currency held in a foreign financial account may be reportable because the account itself is reportable.

12. Do assets reported on another form still count toward Form 8938?

Yes. A specified individual includes the value of all specified foreign financial assets when determining whether they meet the Form 8938 threshold, even if some assets are also reported on another form listed in Part IV of Form 8938.

13. What are the Form 8938 thresholds for U.S. expats?

For taxpayers living abroad, the threshold is more than $200,000 on the last day of the year or more than $300,000 at any time during the year for unmarried taxpayers and married taxpayers filing separately. For married taxpayers abroad filing jointly, the threshold is more than $400,000 on the last day of the year or more than $600,000 at any time during the year.

14. How are specified foreign financial assets valued?

The value is based on fair market value, converted into U.S. dollars. Different rules can apply for accounts, jointly owned assets, foreign trusts, foreign estates, foreign pensions, and deferred compensation plans.

15. Does a specified foreign financial asset need to produce income to be reported?

No. A specified foreign financial asset can be reportable even if it produced no income, gains, losses, deductions, credits, distributions, or proceeds during the tax year.

16. What records should U.S. expats keep for specified foreign financial assets?

Keep account statements, investment statements, pension statements, entity ownership records, trust documents, valuation support, foreign tax records, distribution records, exchange-rate calculations, and copies of any Forms 8938, 8621, 3520, 5471, 8865, or FBAR filed.

Related forms

• Form 8938: FATCA reporting for U.S. expats
• FinCEN Form 114: FBAR reporting
• Form 8621: PFIC reporting
• Form 3520: Foreign trust and foreign gift reporting
• Form 5471: Foreign corporation reporting
• Form 8865: Foreign partnership reporting

When to get help

Professional guidance is important when:

• You have foreign bank, brokerage, pension, investment, trust, or insurance accounts.
• You own foreign stock, foreign partnership interests, foreign company shares, or foreign financial contracts outside an account.
• You are unsure whether an asset belongs on Form 8938, FBAR, or both.
• You own foreign mutual funds, ETFs, or other investments that may also require Form 8621.
• You have foreign pensions, trusts, or entities reported on other IRS forms.
• You are close to the Form 8938 threshold for taxpayers living abroad.
• You missed Form 8938 or FBAR reporting in a prior year.

Bright!Tax can identify specified foreign financial assets, determine whether Form 8938 applies, and coordinate FATCA reporting with FBAR, PFIC, foreign trust, and foreign entity forms. Get started with Bright!Tax.

Related Bright!Tax guides

• FBAR vs. Form 8938: Which one applies to you
• U.S. tax reporting requirements for expats with foreign investments

Official sources

• IRS: Instructions for Form 8938
• IRS: About Form 8938
• IRS: Comparison of Form 8938 and FBAR requirements
• Cornell Legal Information Institute: 26 U.S. Code § 6038D
• FinCEN: Report Foreign Bank and Financial Accounts

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

July 2026