What is the Form 8938 threshold if I live in the UK?

If your tax home is in the UK and you meet the presence-abroad conditions, you file Form 8938 when your specified foreign financial assets are more than $200,000 on the last day of the tax year or more than $300,000 at any time during the tax year, filing single or married filing separately. Filing jointly, the figures are more than $400,000 on the last day or more than $600,000 at any time. The IRS page Do I need to file Form 8938, Statement of Specified Foreign Financial Assets, carries these figures, and they are repeated on the IRS Summary of FATCA reporting for US taxpayers page.

Do I have to file Form 8938 if my UK assets were only over the threshold for one month?

Yes. The test has two independent limbs and either one on its own creates the filing requirement. If the aggregate value of your specified foreign financial assets exceeded the any-time-during-the-year figure at any point, a Form 8938 is due for that year even though the balance on the last day of the year was well below the other limb. This is the most common reason a year gets missed, and it usually happens when sale proceeds or a bonus sit briefly in a UK account before being moved on.

Does my UK house count towards the Form 8938 threshold?

Not if you own it directly in your own name. The IRS Basic questions and answers on Form 8938 page confirms that foreign real estate held directly is not a specified foreign financial asset. There are two important qualifications. An interest in a foreign entity that holds real estate is reportable, so property held through a UK company is inside the test. And the cash proceeds of selling UK property are fully reportable from the moment they land in a UK bank account, which is exactly how a mid-year peak is created.

If I file Form 8938, do I still need to file an FBAR?

Yes, and the reverse is also true. They are separate requirements with separate thresholds, separate forms and separate filing routes. Form 8938 attaches to your income tax return. The FBAR is FinCEN Form 114, filed separately, and its threshold is an aggregate account value exceeding $10,000 at any time during the calendar year with no adjustment for filing status or residence. For most UK-resident Americans that means an FBAR every year and a Form 8938 in only some of them. Filing one does not discharge the other.

I have several unfiled years. Do I need a Form 8938 for all of them?

Almost certainly not. The threshold is tested independently for each tax year against that year's own values, that year's filing status and that year's presence-abroad position, so the answer legitimately changes from year to year. A portfolio that rises and falls, a filing status that changes, or an arrival year that fails the presence test and drops you into the lower domestic column will all produce different answers across a run of years. The correct approach is a per-year schedule of year-end and maximum values, not a single conclusion applied across the whole period.

Form 8938 Thresholds for US Expats Living in the UK

Q: What happens if I never filed a Form 8938 I should have filed?

The Form 8938 instructions set a $10,000 penalty for failing to file a complete and correct form by the due date, with an additional $10,000 for each 30-day period after 90 days from an IRS notice of failure, to a maximum additional $50,000, plus a 40 percent penalty on any underpayment attributable to an undisclosed specified foreign financial asset. No penalty applies where the failure is due to reasonable cause and not willful neglect, but you must affirmatively show the supporting facts. Separately, section 6501(c)(8) can hold the assessment period open for all or part of that income tax return until three years after you file the Form 8938.

US tax return preparation for expats turns on a threshold test that wealthy filers get wrong in both directions, and Form 8938 is where it happens. If your tax home is in the United Kingdom and you meet the presence conditions, no Form 8938 is due until your specified foreign financial assets exceed $200,000 on the last day of the tax year or $300,000 at any time during the year filing single or married filing separately, rising to $400,000 and $600,000 filing jointly. Those figures come from the IRS page Do I need to file Form 8938, Statement of Specified Foreign Financial Assets.

That is four times the domestic threshold, and the most misunderstood number in cross-border compliance. Many UK-resident Americans who come to us have filed a Form 8938 they never needed because their preparer used the $50,000 figure. As many have missed years they did need, because a lump sum passed through a UK current account in spring and was gone by December.

The threshold is tested twice for every tax year, once against the value on the last day and once against the highest point reached at any time during the year. Both limbs stand alone and both reset each year, so across a stack of unfiled returns some years require a Form 8938 and some do not. Working out which, with the arithmetic written down, is the job.

Who has to file Form 8938 as a US taxpayer living in the UK?

Three conditions must hold together. First, you must be what the Form 8938 instructions call a specified individual: a US citizen, a resident alien for any part of the tax year, a nonresident alien electing resident treatment to file jointly, or a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico. Almost every American in London falls into the first category; a green card holder living in the UK falls into the second.

Second, you must hold an interest in specified foreign financial assets. Third, their aggregate value must exceed your reporting threshold. A fourth condition is easy to overlook: the instructions state that if you do not have to file an income tax return for the year, you do not file Form 8938 even if your assets exceed the threshold. In a catch-up covering an unusually low income year, check before assuming a form was due.

What are the Form 8938 reporting thresholds by filing status?

There are four columns, and picking the wrong one is the most expensive error in this area. The figures below are from that page and the IRS Comparison of Form 8938 and FBAR requirements page.

Living abroad, single or married filing separately: more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the tax year
Living abroad, married filing jointly: more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the tax year
Living in the United States, single or married filing separately: more than $50,000 on the last day, or more than $75,000 at any time
Living in the United States, married filing jointly: more than $100,000 on the last day, or more than $150,000 at any time
By contrast the FBAR uses one fixed figure with no variation at all: an aggregate account value exceeding $10,000 at any time during the calendar year

The IRS wording is more than, so a total landing exactly on the figure is not over it. Confirm the current figures on the IRS page itself rather than from any secondary source, including this one.

What is the tax home test that unlocks the higher living-abroad thresholds?

The higher thresholds are not available simply because you have a London address. The instructions call the qualifying condition presence abroad, satisfied one of two ways. Either you are a US citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or you are a US citizen or resident present in a foreign country or countries at least 330 full days during any twelve consecutive months ending in the tax year reported.

Those are annual tests, not a status acquired once, which matters enormously in a multi-year review. The year you moved from New York to London in September usually fails both limbs: not a bona fide UK resident for a period covering that whole tax year, and not abroad 330 full days in a twelve-month window ending in it. For that year alone the $50,000 and $75,000 column applies, and a portfolio comfortably under the living-abroad thresholds can be far over the domestic ones. The same trap closes on the year you repatriate.

Why does the any-time-during-the-year test catch so many people?

Because it is the limb nobody checks. People look at a December statement, see a number under $200,000 and conclude no form is due. The limbs are independent and either one alone triggers the requirement: a year-end figure of $150,000 is irrelevant if the aggregate touched $320,000 in June. The patterns are predictable for this readership.

Proceeds of a share sale or a secondary sale of a private holding sitting in a UK current account for a few months before being wired to a US brokerage account
A UK bonus or a carried interest distribution received in spring and deployed into non-reportable assets during the year
Proceeds from selling a UK property held directly, where the property was never a specified foreign financial asset but the cash it converted into sits in a fully reportable UK account
A UK investment account that peaked at a summer market high and was substantially lower by 31 December
Money moved between two UK accounts, where each account reports its own independent high point

That last point deserves attention. The instructions let you rely on periodic account statements for an account's maximum value. If the same funds passed through a UK savings account in March and a current account in April, adding each account's independently stated maximum can produce an aggregate peak higher than anything you actually held at a single moment, and that can be the figure carrying you over $300,000. Where it is, document the position and the underlying statements.

What counts as a specified foreign financial asset for a UK-resident investor?

The IRS defines the category broadly, capturing far more than bank accounts.

Any financial account maintained by a foreign financial institution, covering UK current accounts, UK savings accounts, cash ISAs and investment accounts held with a UK bank or investment platform
Stock or securities issued by someone other than a US person and held directly rather than inside an account, including UK share certificates and shares in a UK private company held as an investment
Any interest in a foreign entity, including a partnership interest in a UK LLP and a shareholding in a UK limited company
Any financial instrument or contract held for investment with a non-US issuer or counterparty
UK-issued insurance and annuity contracts carrying a cash surrender value

The exclusions matter as much, and the IRS Basic questions and answers on Form 8938 page is explicit. Not reported are foreign currency held directly, foreign real estate held directly, directly held tangible assets such as art, antiques and collectibles, directly held precious metals including gold, the foreign equivalent of social security benefits, and accounts maintained by a US payor, including a US branch of a UK bank. Note the qualification on real estate: the London flat in your own name is outside the test, but an interest in a UK entity holding property is inside it.

One further category decides borderline years. Assets already reported on Forms 5471, 8621 and 8865 need not be listed again in the detail parts of Form 8938, and readers often take that to mean the values drop out entirely. They do not: the instructions require you to include their value in the threshold calculation. For an investor holding UK funds treated as PFICs alongside an interest in a UK company, that carve-in can decide the year.

How do you value UK assets and convert them to US dollars?

Valuation is at fair market value. The Basic questions and answers page confirms you may use periodic account statements or publicly available information from reliable sources, that appraisals are not required and reasonable estimates suffice. The instructions add that you may rely on periodic statements for an account's maximum value unless you know or have reason to know they understate it. For a non-account asset held for investment, use the value on the last day of the year.

Currency conversion is where sterling portfolios get caught. The instructions direct you to the US Treasury Bureau of the Fiscal Service exchange rate for purchasing US dollars, applying the rate on the last day of the tax year to figure an asset's maximum value, unless you rely instead on the rate in a statement issued at least annually by the institution. So one year-end rate is applied to the mid-year peak as well as the closing balance, and a portfolio flat in sterling across two years can be under the dollar threshold in one and over it in the next purely on the rate.

Joint ownership has its own rules, and the married filing separately rule surprises people. Spouses filing jointly file one combined Form 8938 and count a jointly owned asset once. Spouses filing separately each file their own, and both must include the maximum value of the entire jointly owned asset. A joint UK account peaking at $260,000 counts as $260,000 against each spouse's threshold test, not $130,000. Non-spouse joint owners likewise report the entire value.

Worked example: four unfiled years for a UK-resident American investor

The following is an illustration with figures computed for the purpose, not a real client. Marcus Ellery is a US citizen with a London tax home, a bona fide UK resident throughout, so the living-abroad column applies every year. He files single for three years and jointly with his US citizen wife in the fourth, and holds a UK current account, a UK savings account, a UK investment account, and shares in a UK private company held as an investment.

Year 1: current account high $30,000, year-end $20,000; savings $55,000 and $45,000; investment account $145,000 and $85,000; UK shares $30,000. Peak $260,000, year-end $180,000. Both under. No Form 8938
Year 2: sale proceeds land in the current account in April, taking its high to $95,000 before being wired to a US brokerage account in September, leaving year-end $15,000; savings $60,000 and $40,000; investment account $165,000 and $105,000; UK shares $30,000 falling to $12,000 after the partial sale. Peak $350,000, year-end $172,000. Year-end is nowhere near $200,000, but the peak clears $300,000. Form 8938 required
Year 3: current account $35,000 and $28,000; savings $70,000 throughout; investment account $175,000 and $160,000; UK shares $12,000. Peak $292,000, year-end $270,000. The peak is under $300,000 but the year-end clears $200,000. Form 8938 required, for the opposite reason to Year 2
Year 4: he marries and files jointly, so the thresholds become $400,000 and $600,000. His peak is $310,000 and year-end $292,000; his wife's UK accounts peak at $90,000 and close at $82,000. Combined peak $400,000, year-end $374,000. Neither limb exceeded. No Form 8938, in the year the household held the most

Two of the four years require a Form 8938 and two do not, and the two that do are caught by different limbs. Year 4 unsettles people: assets at their highest, threshold not met, because a change of filing status moved the column. All four are FBAR years, since the UK accounts alone exceeded an aggregate $10,000 in every one.

How is Form 8938 different from the FBAR?

They diverge on almost every axis, and satisfying one does nothing for the other. Form 8938 attaches to your income tax return and is due on that return's date including extensions. The FBAR is FinCEN Form 114, filed separately, due 15 April with an automatic extension to 15 October, per the IRS Comparison of Form 8938 and FBAR requirements page.

The threshold divergence is the practical one. The FBAR uses a flat $10,000 aggregate with no adjustment for filing status or residence, so for this readership it is an annual certainty, while Form 8938 starts twenty times higher for a single filer abroad. Scope diverges too. The FBAR reaches foreign financial accounts including those at foreign branches of US institutions; Form 8938 reaches accounts at foreign financial institutions plus non-account assets held for investment. UK company shares held directly are on Form 8938 and not the FBAR.

Why US tax return preparation for expats tests every year separately

A single-year answer is worthless across a stack of returns. The sequence we run for each year, independently, is this.

Fix the filing status for that year first: it selects the threshold column before anything else is calculated
Test presence abroad on that year's own facts, and accept that an arrival or departure year may drop into the domestic column
Build a per-year schedule listing every UK account and non-account asset with its year-end value and its highest value during the year
Add in the value of assets reported on Forms 5471, 8621 or 8865 for threshold purposes only
Convert at the Treasury Bureau of the Fiscal Service rate for the last day of that specific year
Apply both limbs and treat either one being exceeded as decisive
Retain the arithmetic for the years that came out under, because that workpaper is your evidence that no form was due

What happens if you omit a Form 8938, and how does section 6501(c)(8) keep the year open?

The instructions set failure to file a complete and correct Form 8938 by the due date including extensions at a $10,000 penalty. If you do not file within 90 days after an IRS notice of the failure, a further $10,000 applies for each 30-day period it continues, to a maximum additional $50,000. An underpayment arising from an undisclosed specified foreign financial asset can attract a penalty of 40 percent of that underpayment. No penalty applies where the failure is due to reasonable cause and not willful neglect, but the burden is on you to affirmatively show the supporting facts.

The exposure that concerns sophisticated clients more is the assessment period. Under section 6501(c)(8), if you fail to file Form 8938 or fail to report an asset you were required to report, the statute of limitations for that year may remain open for all or part of your income tax return until three years after you file the Form 8938. That is not a form-only consequence: it can hold open the return itself, including items unrelated to foreign assets. Section 6501(e)(1)(A)(ii) runs alongside it: omit more than $5,000 of gross income relating to specified foreign financial assets and tax for that year can be assessed within six years of filing.

Read section 6501(c)(8) against the threshold test, because the interaction is why year-by-year arithmetic is not academic. The provision is triggered by failure to file a form you were required to file. A year in which you were genuinely under both limbs required no Form 8938, so there is no failure, nothing for the provision to attach to, and the ordinary assessment period runs its course. Getting the calculation right on the under-threshold years is therefore itself a statute of limitations decision, which is why the schedule supporting a no-file conclusion belongs in the permanent file. The mirror point matters too: on a borderline year, filing the Form 8938 starts the three-year clock, whereas leaving it out on a judgement call leaves the year open until a form is eventually filed.

Comprehensive US tax return preparation and compliance work for UK-resident Americans means running this test for every year in scope, documenting the years that file and those that do not, and preparing a Form 8938 that reconciles line by line to the FBAR and the income on the return. Get the threshold column and the two limbs right and the rest is mechanical.