Missed Form 8938 After Moving Back From London: Fix It
Missed Form 8938 after moving home from London? See how the thresholds change in the move year, the penalties, and how to catch up via streamlined filing.
A missed Form 8938 is common after an American executive moves home from London. In the move year, the higher thresholds for people living abroad usually stop applying, so UK accounts, ISAs and share-plan holdings can suddenly cross the much lower domestic limits. Missed years can normally be fixed in one filing package.
This guide covers the point most published material leaves out. When you move back, the switch from the abroad thresholds to the domestic ones is not set by your flight date. It depends on a rolling 330-day window and a tax-home condition. Executives who make frequent US business trips often fail that window earlier than they expect. The same move also decides whether the streamlined route is open for the catch-up, and for how long. At Jungle Tax we prepare these filings for senior people returning from the UK. What follows is the sequence we use: work out which threshold applied each year, work out which years were actually missed, then choose the right way to file them.
What Form 8938 is, and why the move year causes the problem
Form 8938, the Statement of Specified Foreign Financial Assets, is the FATCA disclosure attached to your Form 1040. It lists foreign financial accounts and certain foreign assets held outside an account, with each one's maximum value during the year and the income it produced. It adds no tax by itself. Its job is transparency, and the penalties for leaving it out are severe. The authoritative text is the IRS Instructions for Form 8938.
Whether you must file depends on two things: your filing status and whether you count as a "taxpayer living abroad". While you were in London with a foreign tax home, you used the higher abroad thresholds. Many executives with significant UK balances stayed under them, so they correctly filed nothing. Once you are back in the US, the same balances are measured against thresholds roughly four times lower. In practice, the year of the move is often the first year a filing obligation exists. It is also the year it is most often missed, because nothing about the accounts changed.
What are the Form 8938 thresholds in and out of the US?
The figures below come from the current IRS instructions. They have not been indexed for inflation since the regime began, so they apply to the 2025 and 2026 tax years in the same amounts. You must file if either the last-day test or the any-time test is exceeded.
| Filing status | Living in the US: last day of year | Living in the US: any time in year | Living abroad: last day of year | Living abroad: any time in year |
|---|---|---|---|---|
| Unmarried | More than $50,000 | More than $75,000 | More than $200,000 | More than $300,000 |
| Married filing jointly | More than $100,000 | More than $150,000 | More than $400,000 | More than $600,000 |
| Married filing separately | More than $50,000 | More than $75,000 | More than $200,000 | More than $300,000 |
Two points often get missed. First, the test uses the aggregate value of every specified foreign financial asset you hold, not each account separately. Second, the "any time" limb catches a year-end figure that looks safe if a bonus, a share vest or a property sale pushed the combined balance higher earlier in the year.
When do the "living abroad" thresholds stop applying?
This is the question that decides the move year. The instructions treat you as a taxpayer living abroad if your tax home is in a foreign country and you meet one of two presence tests:
- Bona fide residence test: you are a US citizen who has been a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year.
- Physical presence test: you are a US citizen or resident present in a foreign country for at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported.
The bona fide residence test cannot be met for the year you move back, because your foreign residence does not cover the whole tax year. That leaves the 330-day test, and its wording matters. The 12-month window can end on any day in the move year. So an executive who left London in early spring may still find a window, for example from April of the previous year to March of the move year, that contains 330 full foreign days.
The difficulty for senior people is US business travel. Only full days count. A day spent partly in transit over international waters, or a day in New York for a board meeting, is not a foreign day. Over any 12 months, 330 full days abroad leaves 35 days of slack. A transatlantic executive who spent five or six weeks a year at US headquarters fails the test in every window that includes the move, and may have failed it in some London years as well. That last point surprises many clients. The higher thresholds were never guaranteed for every London year, and each year has to be checked on its own facts.
The tax-home condition adds a second layer. Your tax home is generally your main place of business or employment. Once you take up a US role, it moves to the US. The instructions do not say how much of the year your tax home must be foreign, so our default is cautious. If you fail the 330-day test, or the position is marginal and your tax home was in the US for a substantial part of the year, we apply the domestic thresholds for the move year. Arguing for the higher thresholds is a defensible position only where the travel log clearly supports it. It should not be a hopeful assumption.
Which UK assets count toward the threshold?
Form 8938 is broader than the FBAR in some respects and narrower in others. For an executive returning from London, these are the usual items:
- UK bank and savings accounts, including joint accounts and accounts kept open after the move to receive final salary, expense repayments or a UK rental income stream.
- Cash ISAs and stocks and shares ISAs. The ISA wrapper has no US status at all. Each ISA is a financial account at a foreign financial institution and is reportable. Funds held inside a stocks and shares ISA are generally foreign mutual funds, which brings in separate passive foreign investment company reporting on Form 8621.
- UK general investment accounts and brokerage accounts at UK platforms.
- Employer share-plan holdings. Shares from a UK employer's plan held in a UK nominee account are reportable as a foreign financial account. Shares of a non-US company held directly, outside any account, are reportable as a specified foreign financial asset in their own right. Restricted shares and RSUs generally count only from the date they substantially vest (or from the transfer date if a section 83(b) election was made). Shares of a US-listed employer held at a US broker are not foreign assets.
- Cash-value life policies and investment bonds issued by UK or offshore insurers.
- Foreign pension and deferred compensation interests. These are a separate asset category with their own considerations, and we do not cover them here.
Values are measured in sterling and converted to dollars. The instructions direct you to use the US Treasury's Bureau of the Fiscal Service rate for the last day of the tax year, unless a different published rate is used and disclosed. That one rate is used for both the threshold test and the maximum values reported, even though sterling may have moved considerably during the year.
Worked example: a London-based CFO who moves to New York
The figures below are illustrative, using an assumed rate of $1.30 to £1 throughout.
Michael and Clare are both US citizens and file jointly. Michael spent six years in London as finance director of a UK-listed group. He returned to a New York role on 18 August 2025. In each London year he spent roughly 40 days at the US parent's offices, and he logged every trip. At 31 December 2025 the family still held:
| UK asset | Sterling value at 31 Dec 2025 | US dollars |
|---|---|---|
| Stocks and shares ISAs (two, one each) | £196,000 | $254,800 |
| Cash ISA | £22,000 | $28,600 |
| Vested UK employer shares in the plan nominee account | £64,000 | $83,200 |
| UK savings account | £18,000 | $23,400 |
| UK current account (kept for residual UK costs) | £6,000 | $7,800 |
| Total | £306,000 | $397,800 |
The highest combined value during 2025 was about £372,000 ($483,600), just before the London house deposit was returned and transferred to the US.
Move year (2025). Under the abroad thresholds, the year-end total of $397,800 is under $400,000 and the peak of $483,600 is under $600,000, so no filing would be due. But Michael's travel pattern means no 12-month window ending in 2025 contains 330 full foreign days, and his tax home moved to New York in August. The domestic joint thresholds apply: $100,000 at year end or $150,000 at any time. Both are exceeded several times over, so a Form 8938 was required with the 2025 return. Their preparer, who did not ask about UK accounts, did not include one.
London years (2023 and 2024). Before the deposit refund and a partial ISA withdrawal, the family's UK assets were around £420,000 at each year end ($546,000). That exceeds the $400,000 abroad threshold, so Form 8938 was due in both years. Because the 40 days of US travel also failed the 330-day test in those years, the domestic thresholds may well have applied anyway. Either way, the conclusion is the same: three consecutive Forms 8938 were missed. The FBAR was required in every year regardless, since the combined UK balances exceeded $10,000.
Income. The ISA dividends and gains, interest on the cash ISA and savings account, and dividends on the employer shares were never reported on the US returns. The UK treated them as exempt or covered by allowances, so there was no UK tax to credit against them. That omitted income is what decides which catch-up procedure fits, and it is what keeps the assessment period open, as explained below.
Why a missed Form 8938 keeps the whole return open
Section 6501(c)(8) of the Internal Revenue Code provides that where a required Form 8938 is not filed, the assessment period for the entire return stays open until three years after the missing information is provided. The normal three-year clock never starts. If the failure was due to reasonable cause and not willful neglect, the extension is limited to the items connected with the missing information. Otherwise the whole return stays open, including unrelated items such as your US wages and stock compensation.
A second rule adds to this. If you omitted more than $5,000 of income from specified foreign financial assets, the general assessment period is six years rather than three, whether or not a Form 8938 was filed. For a returning executive, both rules usually apply together: unreported ISA and dividend income, and a missing form. The practical consequence is that a missed Form 8938 does not fade away with time. Filing it is the only thing that starts the clock.
What are the penalties for a missed Form 8938?
- Failure to file: $10,000 per year.
- Continuing failure: a further $10,000 for each 30-day period, or part of one, that the failure continues beyond 90 days after an IRS notice, up to an additional $50,000. The maximum is therefore $60,000 per year.
- Accuracy-related penalty: 40% of any underpayment attributable to an undisclosed foreign financial asset, in place of the usual 20%.
- Fraud penalty: 75% of an underpayment due to fraud.
No penalty applies where the failure was due to reasonable cause and not willful neglect. The burden is on you to show the facts. A UK rule that would penalise disclosure is expressly not reasonable cause. In our experience, a credible reasonable-cause case for a returning executive is built on specific facts. Typical facts are relying on a competent preparer who never asked about foreign accounts, a reasonable belief that the abroad thresholds still applied, and prompt correction once the problem came to light. Simply not knowing about the form is rarely enough by itself.
How do you catch up a missed Form 8938?
There are three routes. Which one fits depends on whether income was omitted, whether the conduct was non-willful, and where you lived during the relevant years.
Route 1: amended returns with a reasonable-cause statement
If every item of UK income was already reported and taxed, and only the form is missing, the cleanest fix is a Form 1040-X for each affected year. Each one attaches the Form 8938 and a reasonable-cause statement. This matches the IRS's delinquent international information return submission procedures. Penalties are not automatically waived on this route, so the reasonable-cause statement must be properly evidenced.
Route 2: the Streamlined Foreign Offshore Procedures (SFOP)
Where income was omitted and the failure was non-willful, the Streamlined Foreign Offshore Procedures are usually the best outcome. There is no miscellaneous offshore penalty, and no failure-to-file, accuracy-related, information-return or FBAR penalties, provided the conduct was not fraudulent or willful. You file three years of delinquent or amended returns, six years of FBARs, a Form 14653 certification and payment of tax and interest.
Here is the point that matters most for returning executives. The SFOP non-residency requirement asks whether, in any one or more of the most recent three years with a passed due date, you had no US abode and were physically outside the US for at least 330 full days. Because the test is applied year by year, the move year does not need to qualify. If any one of the three London years did, the whole period is covered, including the move year. Note that this is a calendar-year test, different from the rolling window used for the Form 8938 thresholds. A London year in which you spent 40 days in the US fails it.
Route 3: the Streamlined Domestic Offshore Procedures (SDOP)
If none of the three most recent years meets the non-residency test, the domestic version applies. You file amended returns, six years of FBARs and a Form 14654 certification, and pay a 5% miscellaneous offshore penalty. It is calculated on the highest year-end aggregate value of the foreign assets that should have been reported, across the covered return and FBAR years. It also requires that original returns were filed for the covered years.
Why waiting moves you from SFOP to SDOP
The three-year window moves forward as each new return due date passes, and this is where delay costs money. In the example above, as of late 2026 the three most recent years are 2023, 2024 and 2025 (the 2025 extended due date has passed). Michael failed the 330-day test in each London year because of his travel, so this couple would be in SDOP. An executive with less US travel might have 2023 and 2024 as qualifying years. If that person waits until the 2027 due dates have passed, the window becomes 2025, 2026 and 2027, all years in the US, and SFOP is closed for good. On the family's peak UK balance of $546,000, the difference is a penalty of about $27,300. Your US travel calendar for the London years is therefore one of the most valuable documents in the file.
Step-by-step: putting the move-year catch-up together
- Rebuild your day count. From passport stamps, travel bookings and expense systems, list every US day for each London year and the move year. Test the 330-day window for each Form 8938 year and the calendar-year 330-day test for streamlined eligibility.
- List every UK asset. Include ISAs, nominee share-plan accounts, dormant savings accounts, investment bonds and accounts held jointly with a spouse. For each, collect year-end and maximum values for every open year.
- Set the threshold year by year. Apply the abroad or domestic figures based on your actual facts, not on where you were living on 31 December.
- Quantify omitted income. Recalculate ISA income, dividends, interest and gains under US rules, including PFIC treatment for UK funds. Apply any available foreign tax credits.
- Choose the procedure. Use amended returns with reasonable cause if no income was omitted. Use SFOP if a qualifying non-resident year is in the window. Otherwise use SDOP. Any indication of willfulness needs a different conversation before anything is filed.
- Prepare the package together. File returns, Forms 8938 and 8621, FBARs and the certification as one consistent set, with a narrative that matches the facts you documented.
- Set up the ongoing position. Decide which UK accounts to keep, and confirm that future returns include Form 8938 at the domestic thresholds every year you hold them.
How does Form 8938 differ from the FBAR after you move home?
The move changes your Form 8938 position. It does not change your FBAR position at all. The FBAR threshold is the same $10,000 aggregate wherever you live. Many returning executives therefore have a run of FBAR failures stretching back through the London years, quite apart from the 8938 issue. The IRS sets out the differences on its comparison of Form 8938 and FBAR requirements page.
| Point of difference | Form 8938 (IRS) | FBAR (FinCEN Form 114) |
|---|---|---|
| Threshold changes when you move home? | Yes: abroad to domestic figures | No: $10,000 aggregate everywhere |
| Where filed | Attached to Form 1040 | Separately, through FinCEN's BSA E-Filing System |
| Signature authority only (e.g. a UK company account) | Not reportable without another interest | Reportable, subject to exceptions |
| Foreign shares held directly, outside an account | Reportable | Not reportable |
| Effect on the statute of limitations | Keeps the return open under section 6501(c)(8) | No equivalent extension of the income tax return |
| Base civil penalty | $10,000, rising to $60,000 after notice | Inflation-adjusted non-willful penalty, assessed per report rather than per account following the Supreme Court's 2023 decision in Bittner |
Our FBAR penalty calculator gives an indicative view of FBAR exposure for each year. Penalty relief under the streamlined procedures covers both forms.
The UK side: what HMRC sees and what it does not
There is no UK equivalent of Form 8938, and moving to the US does not create one. However, the UK is not uninvolved. Under the UK-US intergovernmental agreement, UK banks, ISA managers and share-plan nominees identify account holders with US indicia and report their balances to HMRC, which passes them to the IRS. An American who kept UK accounts open after moving home should assume the IRS already has the balance data a missed Form 8938 would have disclosed. That is a strong reason to correct the position before you are asked.
On the UK side of the move, check that your final UK return reflects your leaving date correctly under the statutory residence test and any split-year treatment. HMRC's guidance is in RDR3: Statutory Residence Test. Existing ISAs can be kept after you leave UK residence, but generally no new subscriptions can be made. HMRC also expects you to tell your ISA manager, as set out on its ISAs if you move abroad page. The ISA stays tax-free in the UK while its income is fully taxable in the US. This mismatch is what turns a modest UK portfolio into a recurring US reporting obligation once you are home.
Situations that change the analysis
Your spouse is not a US person
If your spouse is a UK national, filing jointly requires a section 6013(g) election. Joint assets are then counted toward the threshold on a joint basis. Filing separately halves the thresholds, and assets you hold jointly are counted in full on your own return. Married-filing-separately is often chosen for good reasons, but it makes a missed Form 8938 more likely.
You moved back late in the year
A December return gives you the best chance of passing the 330-day window for the move year. Even so, a year-end tax home in the US and the size of the any-time limb mean the domestic thresholds are often the safer working assumption. We document whichever position we take.
Share awards vest after you leave
UK awards that vest after the move and are delivered into a UK nominee become reportable from the vesting date. They also raise sourcing questions for the income itself, because part of the award may relate to UK workdays. Our US-UK tax accountants deal with the double-tax position on these alongside the disclosure filings.
Conclusion
The year you return from London is when foreign-asset reporting is most likely to go wrong. The thresholds drop by a factor of four, US business travel often removes the abroad position earlier than you thought, and an unfiled Form 8938 leaves your entire return open. The good news is that the problem is usually manageable if you deal with it early. Your London years may still give you access to the Streamlined Foreign Offshore Procedures, but only while they remain in the three-year window. Every year of delay narrows that option. For clients whose UK holdings are part of a broader high-net-worth picture, we bring the catch-up and the ongoing returns into one coordinated filing position.
If you have returned to the US and UK accounts, ISAs or share-plan holdings were left off your returns, speak to us before the window moves. We will rebuild your day count, set the correct threshold for every year, and prepare the full package under the route that fits your facts. Contact our cross-border team to arrange a confidential consultation, or read more about our IRS streamlined filing service.
