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us expat tax guide – germany

Who needs to file Form 8938 in Germany?

Form 8938, Statement of Specified Foreign Financial Assets, is an important filing requirement for many US citizenship holders living in Germany. It’s part of the tax return package and must be filed alongside your Form 1040 if you meet certain thresholds.

The purpose of Form 8938 is to report cash or liquid assets if you hold over a certain amount. See the list of assets to consider below.

What counts towards the filing threshold?

To determine if you meet the filing threshold, you must consider all foreign financial assets. This includes bank accounts, investments, and significant assets like pension funds, which can easily push you over the threshold.

If you’re feeling confused about which ones to include, it may be best to get a tax professional to help you. They can accurately point out if you meet the threshold, along with which financial assets should be included in your Form 8938.

What are the filing thresholds for Form 8938?

  • Single or Married Filing Separately: The threshold is US$200,000 at the end of the year or US$300,000 at any point during the year.
  • Married Filing Jointly: The threshold increases to US$400,000 at the end of the year or US$600,000 at any time during the year but considers the assets of both filers.

What are the penalties for non-compliance with Form 8938?

Failing to file Form 8938 when required can result in severe penalties.

  • Taxpayers who fail to file Form 8938 may be subject to an initial penalty of $10,000 for not disclosing the required information about their foreign financial assets.
  • If the failure to file continues after IRS notifications, an additional penalty of up to $50,000 may be applied for continued non-compliance.
  • Apart from the fixed penalties, if the omission of foreign financial assets on Form 8938 leads to an understatement of tax liability, an additional penalty of 40% of the understatement may be charged.
  • Non-filing of Form 8938 can also lead to the IRS extending the statute of limitations to six years for the entire tax return, potentially opening up earlier tax years to further scrutiny and adjustments.

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