Form 8938 (FATCA) for Foreign LLC Owners (2026)

The Foreign Account Tax Compliance Act arrived in 2010 as the US response to offshore non-disclosure, and it works from two directions at once. On one side it obliges foreign financial institutions to report US-owned accounts to the IRS. On the other — the side that produces Form 8938 — it obliges the taxpayer to report the same assets directly. When both halves work, the IRS receives the same information twice and can compare them, which is precisely the design.

Unlike FBAR, Form 8938 is an ordinary IRS form. It rides along with Form 1040, 1120, 1065, or 1041, follows the return’s deadline and extensions, and is governed by the Internal Revenue Code rather than the Bank Secrecy Act. If you have no obligation to file an income tax return at all, you have no obligation to file Form 8938 — a rule with no FBAR equivalent, and one that resolves a good number of foreign founders’ questions immediately.

The doubled test is the part people misread. You are not choosing the more convenient number: if your assets ended the year at $40,000 but peaked at $90,000 in July, the single US-resident filer has crossed the $75,000 any-time threshold and must file, notwithstanding the modest year-end figure.

“Living abroad” is not a matter of self-description. It means meeting either the bona fide residence test or the physical presence test — broadly, a full tax year of foreign residence, or 330 full days abroad in a 12-month period. A US taxpayer who spends most of the year overseas without meeting one of those tests still uses the lower domestic thresholds.

What counts as a specified foreign financial asset

This is the category that makes Form 8938 wider than FBAR. It covers foreign financial accounts, and then keeps going:

• Foreign deposit and custodial accounts at foreign financial institutions.
• Stock or securities issued by a non-US person and held outside an account — including shares in your own foreign company.
• Any interest in a foreign entity: a foreign partnership interest, a foreign trust, a foreign estate.
• Financial instruments or contracts with a non-US issuer or counterparty — including certain notes, swaps, and options.
• Foreign pension and deferred-compensation interests, which FBAR frequently does not reach.

Directly-held foreign real estate is not reportable, nor is directly-held physical currency, art, or precious metal. But an interest in a foreign entity that holds the real estate is reportable — a distinction that catches investors who assumed a property structure kept them outside FATCA.

This deserves stating plainly, because a great deal of published advice implies otherwise. FATCA reporting is aimed at people the US taxes on worldwide income. A nonresident alien is taxed only on US-source and effectively connected income, so there is nothing for FATCA to police — and IRC §6038D simply does not reach them.

The substantial presence test is where founders drift into scope without noticing. Spend 183 weighted days in the United States — counting all days this year, a third of last year’s, and a sixth of the year before — and you become a US tax resident. From that year forward you file a US return on worldwide income, and Form 8938 and FBAR both become live questions for the first time.

The specified domestic entity rule

Since 2016, certain domestic entities file Form 8938 in their own right. The test at Treas. Reg. §1.6038D-6 requires the entity to be closely held — at least 80% owned by a specified individual— and formed or used to hold specified foreign financial assets. A foreign-owned LLC fails at the first hurdle: its owner is a nonresident alien, and therefore not a specified individual. The rule bites for US-owned holding structures, not for the typical nonresident founder’s LLC.

The substantial presence test is arithmetic, not intention. Count every day present in the US this year, plus one third of last year’s days, plus one sixth of the year before. Reach 183 — with at least 31 days in the current year — and you are a resident alien for tax purposes regardless of visa status or how you describe yourself.

The example shows how close a routine travel pattern gets. Four months a year in the US for three consecutive years lands at 180 counted days — three days short. A slightly longer trip in any of those years tips it over, and with it come worldwide taxation, Form 8938, FBAR, and a Form 1040 rather than a 1040-NR.

Two escape routes exist and both require action. The closer connection exception (Form 8840) can preserve nonresident status where you have a tax home and closer ties abroad, but it is unavailable once you have applied for a green card. And where a treaty applies, its residence tie-breakerarticle can resolve dual residence in your home country’s favour — one more benefit unavailable to residents of non-treaty countries, as set out in the tax treaty guide. Neither route changes the LLC’s Form 5472 obligation, which is indifferent to your residence.

The five-fold threshold gap and the wider asset definition mean the two forms produce genuinely different answers on the same facts. Someone holding $30,000 across foreign bank accounts files an FBAR and no Form 8938. Someone holding $120,000 of shares in a foreign private company, with no foreign bank account at all, files Form 8938 and no FBAR.

Note the asymmetry on who is bound. FBAR reaches any US person, and a US-formed LLC is a US person — so the entity can owe an FBAR that Form 8938 never touches. That mechanism is worked through in the FBAR guide for foreign LLC owners.

The continuation structure is the expensive part, and it is worth understanding the trigger: the 30-day clock does not start when you miss the deadline. It starts when the IRS mails a notice of failure to file. A taxpayer who responds promptly to that notice stops the ladder near its first rung; one who ignores the correspondence for six months reaches the cap.

The asymmetry is the practical takeaway. Form 8938 turns on your personal status; Form 5472 turns on the LLC’s ownership and activity. A nonresident founder can be entirely outside FATCA while their company sits squarely inside IRC §6038A.

Form 5472 is triggered by any reportable transaction with a foreign related party — and because a capital contribution is itself reportable, virtually every funded foreign-owned LLC has one. It is filed with a pro forma Form 1120, by mail or fax only, and carries a $25,000 penalty with no cap and no statute of limitations. Start from the Form 5472 guide, or check your position with the do-I-need-to-file qualifier.

Reviewing the three filings side by side usually resolves quickly: Form 8938 does not apply, FBAR applies only if the company banks outside the US, and Form 5472 applies every year without exception. That last one is also the only one with a five-figure automatic penalty attached, which is where attention belongs.

form5472.tax prepares, reviews, and files Form 5472 plus the pro forma Form 1120 for a flat $299 — against $547 at form5472.online and $1,999/year at doola. See the pricing page or start on the apply page. If you have crossed into US tax residency and now need Form 8938 as well, that is a personal return matter for a cross-border preparer — we file Form 5472, not Form 1040.