Form 8938
IRS form for US persons reporting specified foreign financial assets exceeding threshold values.
Definition
Form 8938 (Statement of Specified Foreign Financial Assets) is filed with US tax return by US persons with foreign financial assets exceeding thresholds. Single filer in US: $50K year-end or $75K anytime; thresholds higher for joint and abroad.
Context
Applies to US persons; not non-resident foreign LLC owners.
Example
A US-citizen LLC owner with $80K in foreign brokerage accounts files Form 8938 with their Form 1040.
Common pitfalls
- $10,000 penalty for failure to file.
- Different thresholds from FBAR; both may apply.
Why Form 8938 confuses non-resident founders
If you are a non-US founder researching how to run a Delaware LLC, Form 8938 is one of those IRS forms that keeps surfacing in blog posts and forum threads, and it is easy to assume it lands on your desk too. The short version is that it usually does not. Form 8938, the Statement of Specified Foreign Financial Assets, is built for US persons who hold assets outside the United States above certain dollar thresholds. A non-resident foreign individual who owns a single-member Delaware LLC and lives abroad is generally not a US person for this purpose, so the form is generally aimed at a different audience than you. The confusion is understandable because so much LLC content is written for Americans, and the same form names appear everywhere without anyone pausing to say who actually files them.
The reason this matters in practice is that fear of the wrong form distracts founders from the filings that genuinely apply to them. A foreign-owned single-member LLC has its own reporting world, centered on Form 5472 paired with a pro forma 1120, and that is where attention and budget belong. Spending hours worrying about Form 8938 when you are a non-resident is a bit like studying a driving manual for a country you will never drive in. This entry exists to draw the line clearly, explain who Form 8938 is for, and help you recognize the rare moments when your status might shift and bring it into scope. None of this is legal or tax advice, and your personal facts can change the answer, so treat it as orientation rather than a ruling.
What the form actually reports
Form 8938 is an informational return. It does not by itself create a tax bill. Instead it asks a US person to list specified foreign financial assets and report their maximum or year-end values, so the IRS has visibility into wealth held outside the country. Specified foreign financial assets include financial accounts maintained by foreign institutions, foreign stock or securities not held in a US account, interests in foreign entities, and certain foreign financial instruments and contracts. The form travels attached to the income tax return rather than being mailed on its own, which is one of the features that separates it from other foreign reporting obligations.
Because it is attached to the income tax return, the deadline for Form 8938 follows the return it rides with, including any extension granted to that return. A US person who extends a Form 1040 to October therefore extends the attached Form 8938 along with it. This linkage is worth holding in mind because it shapes how the form behaves compared with standalone filings. The values reported are generally drawn from account statements and year-end balances, converted into US dollars using published exchange rates for the relevant date. The form does not ask you to recompute gains or restate income, it simply catalogs the existence and size of the foreign holdings.
Who counts as a US person
The whole question of whether Form 8938 applies turns on the phrase US person, and that phrase is narrower and more technical than everyday English suggests. For individuals, a US person generally means a US citizen, a lawful permanent resident such as a green card holder, or someone who meets the substantial presence test by spending enough days in the United States across a rolling three-year window. A founder who lives in Lagos, Manila, Karachi, or Sao Paulo, visits the US rarely or never, and holds no green card is generally not a US person, and so generally falls outside Form 8938 entirely.
This is the crucial distinction for the typical Delaware LLC client served here. The LLC itself is a US-formed entity, but the owner is not automatically a US person just because they own a US company. Ownership of a US LLC does not transform a non-resident into a US taxpayer for worldwide asset reporting. The entity and the human are treated separately. Your Delaware LLC may have US filing duties of its own, yet your personal foreign brokerage account in your home country is generally invisible to Form 8938 as long as you remain a non-resident foreign person. The moment your personal status changes, the analysis changes with it, which is why the next sections walk through those triggers carefully.
How a single-member foreign-owned LLC is treated
A single-member LLC owned by one foreign person is, by default, a disregarded entity for US federal tax purposes. Disregarded means the IRS looks through the LLC and treats its activities as belonging to the owner, rather than taxing the LLC as a separate corporation. For a non-resident owner with no US-source income that is effectively connected to a US trade or business, this often results in no US federal income tax on the LLC profits, although the analysis depends heavily on the facts and is not a guarantee. What the disregarded structure does create, reliably, is an information reporting duty in the form of Form 5472 attached to a pro forma 1120.
Form 8938 generally does not enter this picture because it keys off the owner being a US person, not off the entity being a US company. The disregarded LLC reports its reportable transactions with its foreign owner on Form 5472, and that is a separate track from the personal foreign asset reporting that Form 8938 covers. It is worth internalizing that these two forms answer different questions. Form 5472 asks what money moved between the foreign owner and the US LLC. Form 8938 asks what foreign assets a US person holds. A non-resident owner of a Delaware disregarded LLC is squarely in the first conversation and generally not in the second, so the practical filing checklist for most readers here features 5472 prominently and 8938 not at all.
A worked example of a non-resident founder
Consider Amara, a software consultant living in Kenya who forms a single-member Delaware LLC to invoice international clients. She paid the $110 Certificate of Formation, will owe the $300 flat Delaware franchise tax due June 1 each year, obtained a free EIN by filing Form SS-4 with a turnaround of roughly 8 to 10 business days, and opened a Wise account to receive payments. She holds a personal savings account and a small brokerage account back in Nairobi. Does Amara file Form 8938? Generally no. She is not a US citizen, holds no green card, and does not spend enough days in the US to meet the substantial presence test, so she is not a US person and her Kenyan accounts are outside the form.
Amara's actual federal obligation tied to her foreign ownership is Form 5472 plus a pro forma 1120, reporting transactions such as the capital she contributed to fund the LLC and any distributions she took. That filing carries a $25,000 penalty for failure to file, which dwarfs the relevance of Form 8938 to her situation. Her energy is far better spent calendaring the 5472 deadline and the franchise tax than studying foreign asset thresholds that do not reach her. If Amara later moved to Austin on a visa and began meeting the substantial presence test, the picture would shift and Form 8938 could come into play for her Nairobi accounts, but as a non-resident running the LLC from Kenya, it stays off her list.
Form 8938 versus FBAR
Founders frequently encounter Form 8938 and the FBAR in the same breath, and they blur together because both deal with foreign holdings of US persons. They are nonetheless distinct filings administered under different rules. The FBAR is FinCEN Form 114, filed electronically through the FinCEN BSA E-Filing System, and it triggers when a US person's foreign financial accounts exceed $10,000 in aggregate at any point in the year. Form 8938 is an IRS form attached to the income tax return, with higher thresholds, and it covers a broader category of specified foreign financial assets, not only accounts.
The thresholds illustrate the gap. A single US-resident filer crosses the Form 8938 line at $50,000 of specified foreign financial assets on the last day of the year or $75,000 at any time during the year, with higher figures for joint filers and for US persons living abroad. The FBAR, by contrast, fires at the much lower $10,000 aggregate account balance. The result is that a US person can owe an FBAR without owing Form 8938, and in many cases both apply at once, requiring the same underlying accounts to be reported on two separate forms to two parts of the government. For the non-resident foreign founder, neither generally applies, which is the cleaner takeaway, but understanding the contrast helps you read the many articles that mention them together.
Thresholds and how they scale
When Form 8938 does apply to someone, the dollar thresholds are not a single number. They scale with filing status and with whether the person lives inside or outside the United States. A single filer or a married person filing separately while living in the US generally reports if specified foreign financial assets exceed $50,000 on the last day of the year or $75,000 at any time during the year. Married taxpayers filing jointly while living in the US face roughly doubled figures. US persons who qualify as living abroad face substantially higher thresholds again, reflecting that holding foreign assets is ordinary for someone resident overseas.
These tiers matter for a founder whose status is in transition, because the same portfolio can sit below the threshold one year and above it the next without any change in the assets themselves, simply because a move or a change in days present altered which threshold applies. The point at which you measure also differs between the year-end test and the anytime-during-the-year test, so a temporary spike in a foreign account value can matter even if the balance is modest by December. None of these figures change the fact that a genuine non-resident foreign person is generally outside the form, but they explain why the answer can flip for someone who relocates to the US mid-life and brings existing foreign holdings with them.
How this connects to formation and banking steps
Form 8938 sits at the far end of a journey that begins with formation. When you file the Certificate of Formation for $110 and pay the one-time $297 service price to get the entity stood up, you are creating a US company, not a US tax residency for yourself. That separation is the through-line that keeps Form 8938 generally off your list. The same logic carries into banking. Opening an account with Mercury, Wise, Relay, Lili, or Payoneer gives your LLC a place to receive funds, but the account belongs to a US LLC and is a US-side relationship, so it is not a foreign account that would feed a foreign asset report for you.
Where founders sometimes trip is in assuming that any account connected to their US business creates foreign reporting exposure, or conversely that forming a US company somehow erases reporting duties back home. Neither is right. The US LLC's accounts are US accounts. Your personal accounts in your country of residence remain governed by your status as a non-resident foreign person, which keeps them outside Form 8938. The formation and banking steps you complete here are building a clean US operating base, and they generally do not pull you into the US person reporting regime. The filings that do attach to your structure, principally Form 5472 with the pro forma 1120, are the ones to track alongside the franchise tax calendar.
The BOI report and why it is separate
Another reporting topic that swirls around new LLCs is beneficial ownership information, the BOI report filed with FinCEN. It is worth clearing up because founders sometimes lump every three-letter form together. As of the FinCEN Interim Final Rule of March 26 2025, domestic US-formed entities such as a Delaware LLC are exempt from the BOI reporting requirement, so a US-formed single-member LLC generally does not file a beneficial ownership report. That exemption is about the entity's ownership disclosure, an entirely different subject from Form 8938's focus on a US person's foreign assets.
Keeping these threads untangled saves real anxiety. BOI is about who ultimately owns and controls the company, and the 2025 rule lifted that burden for domestic LLCs. Form 8938 is about a US person's holdings abroad and has nothing to say about company ownership disclosure. The FBAR is yet another track concerning foreign accounts of US persons. A non-resident founder of a Delaware LLC is generally outside Form 8938 and outside the FBAR by status, and outside the BOI requirement by virtue of the entity exemption. The filing that remains firmly in scope is Form 5472. When you can recite that map cleanly, the noise from generic articles stops being alarming and becomes easy to filter.
Edge cases that can change the answer
The general rule that a non-resident is outside Form 8938 has edges, and an honest reference names them. The most common is a change in personal status. If you relocate to the United States and begin meeting the substantial presence test, or you obtain a green card, you can become a US person partway through a year, and your existing foreign accounts and securities can suddenly fall within Form 8938's reach for the portion of the year you qualify. A founder who builds a successful LLC and then moves to the US to be closer to the market is exactly the person who should revisit this form rather than assume the old answer holds.
Other edges involve elections and entity choices. If a single-member LLC elects to be taxed as a corporation, the look-through disregarded treatment ends and the analysis shifts, though that change affects the entity's tax posture more than it changes your personal Form 8938 status, which still keys off you being a US person. Joint ownership and marriage to a US person can also alter the landscape, since a spouse's status and joint assets pull in different thresholds. These are situations where general guidance reaches its limit and a professional review of your specific facts becomes worthwhile, because the cost of a wrong assumption on a $10,000-penalty form is not symmetrical with the cost of a consultation.
Penalties and the cost of guessing wrong
The penalty attached to Form 8938 for failure to file is $10,000, with additional amounts possible if the failure continues after the IRS provides notice. That figure is meaningful, but for the typical non-resident founder it is largely hypothetical because the form does not apply to them in the first place. The more financially relevant penalty in your world is the $25,000 attached to a missed Form 5472, which is the filing that genuinely attaches to a foreign-owned disregarded LLC. Ranking these exposures correctly is part of running the entity responsibly.
The deeper lesson is about where guessing wrong actually hurts. A non-resident who needlessly files Form 8938 wastes effort and may report assets the IRS did not ask them to report, which creates its own confusion. A person who has become a US person and wrongly assumes the old non-resident answer still holds risks a real penalty for a missed filing. Both errors come from not pinning down personal status first. Before deciding anything about Form 8938, the productive question is always the same. Am I a US person this year. If the honest answer is no, the form generally drops away. If the answer has become yes, the form deserves a careful look with someone qualified to read your facts, because the stakes justify the time.
Common misunderstandings, corrected
The first misunderstanding is that owning a US LLC makes you a US taxpayer for worldwide reporting. It does not. The entity is American, but your personal tax residency is determined by citizenship, green card status, and days present, not by company ownership. The second is that Form 8938 and the FBAR are the same filing with a different cover sheet. They are separate, with different thresholds, different filing channels, and different administering bodies, even though they often overlap for the US persons they do cover. The third is that your home-country bank account is automatically reportable because your business is American. For a non-resident, that account generally sits outside Form 8938 entirely.
A fourth misunderstanding is that the LLC's US bank account at Mercury, Wise, Relay, Lili, or Payoneer counts as a foreign account that triggers reporting for you. Those are US-side relationships of a US entity, not foreign accounts of a US person. A fifth is the belief that ignoring these distinctions is harmless because penalties feel remote. The penalties are real where the forms apply, and the way to stay safe is not to over-file everything in sight but to identify precisely which forms attach to your facts. For most readers here that means Form 5472 with a pro forma 1120, the $300 franchise tax due June 1, and the BOI exemption confirmed by the 2025 FinCEN rule, with Form 8938 generally noted and set aside.
Building a simple personal compliance map
A practical way to keep Form 8938 in its proper place is to write down a one-page map of your obligations and revisit it each year. Start with the entity column. Your Delaware LLC owes the $300 flat franchise tax due June 1, files Form 5472 with a pro forma 1120 reporting its transactions with you, and is exempt from BOI reporting under the March 26 2025 FinCEN Interim Final Rule. Those items are stable for a non-resident-owned disregarded single-member LLC and form the backbone of your calendar. Then add the personal column, which for a genuine non-resident is generally short, because Form 8938 and the FBAR key off being a US person.
The value of the map is that it makes status the explicit input rather than a hidden assumption. Each year you ask whether your personal status has changed, and only if it has do you re-examine the personal column for Form 8938 and FBAR exposure. This turns a fuzzy worry into a yearly checkbox. It also clarifies budgeting, since the entity obligations have concrete costs and deadlines while the personal foreign asset forms generally carry no cost for you at all as a non-resident. If you ever find yourself unsure whether a given year flips your status, that uncertainty is the signal to get a professional read rather than to default either to silence or to over-filing, because the right answer protects you on both sides.
Where Form 8938 sits among related terms
Form 8938 lives in a small neighborhood of foreign reporting terms that every founder eventually meets in passing. Its closest neighbor is the FBAR, FinCEN Form 114, which shares the foreign account subject matter but uses a lower $10,000 aggregate threshold and a separate FinCEN filing channel. Nearby sits Form 3520, which deals with US persons receiving large foreign gifts or transacting with foreign trusts, another US-person-focused filing that a non-resident founder generally does not touch. Understanding the cluster as a whole, rather than fixating on any one form, is what lets you place each correctly.
For the Delaware LLC founder, the term that actually anchors the practical world is Form 5472, the foreign-owned disregarded entity information return with its $25,000 penalty and its pairing with a pro forma 1120. That is the filing to learn deeply. Form 8938, the FBAR, and Form 3520 are worth recognizing so that generic content does not unsettle you, but they generally belong to US persons rather than to a non-resident owner of a US LLC. The clean mental model is this. Entity filings and the franchise tax are yours to manage. US-person foreign reporting forms, including Form 8938, generally are not, unless and until your personal status crosses into US person territory, at which point the right move is a careful, fact-specific review rather than a guess.