I have a Power of Attorney for my mother's foreign bank account. I'm just there in case she needs help one day. Do I need to file Form 8938?

[jrandomwinner]

The IRS "Instructions for Form 8938" states that anyone with an interest in a specified foreign asset needs to report it, and they define an interest in this way: 

"You have an interest... if any income, gains, losses, [etc] ... are... included on your income tax return"... [and in the next paragraph]  "You have an interest... even if no income, gains, losses, [etc] ... are... included on your income tax return"...

There is a recommended answer on this forum that states "You do not have to file form 8938 if you do not have an interest in these accounts", as if the answer is, if you only have a power of attorney, you don't have to file an 8938. 

Can anyone clarify?

[KarenJ · Accepted solution]

From what I can determine for a foreign financial account for which you have signature authority, you do not need to file Form 8938 unless you have an interest in the account, however you will need to file an FBAR if the account exceeds the $10,000 at any time during the calendar year.

For the FBAR Signature authority: you have authority to control the disposition of the assets in the account by direct communication with the financial institution maintaining the account.

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

[jrandomwinner]

I visited the IRS webpage your link goes to.  There, they do appear to imply that you only have an interest in a foreign asset if income or losses from it would have to be reported on your tax return.  The implication is that if you don't own the asset but merely have signing authority on behalf of someone else, i.e. as a PoA, i.e. you don't earn any income from it, you don't have to file an 8938.  However, as I stated in my question, in the IRS instructions for Form 8938, page 6, they clearly state that "you have an interest" whether you would have to report income or losses from the foreign asset on your tax return, or not.  Since the IRS on the page you referred me to appears to be contradicting page 6 of the IRS Form 8938 instruction document, I remain at a loss as to what to do.  

Your answer is helpful as I had not seen a page where the IRS describes what it sees as the difference between the IRS 8938 and Treasury's FBAR.  I'll refer them to that page if I don't file an 8938 and I find an IRS auditor at my door.  Thank you.

[KarenJ]

Thanks for your response.  Please file Form 8938.  We should go with the instructions over the IRS website.  I do not want you to see an auditor at your door!

[jrandomwinner]

I now believe I misunderstood the IRS statements about what an "interest" in a foreign asset is.  

The first paragraph under the headline "Interests in Specified Foreign Financial Assets" on page 6 of the IRS Instructions for Form 8938 essentially states "you have an interest... if any income [etc]... would be required to be reported... on your income tax return".  The second paragraph adds "... even if no income [etc.] ... [is] included or reflected on your income tax return...".  

I originally thought the two paragraphs taken together meant that whether you were required to report information about it on your tax return or not, because you had signing authority, you had to file an 8938.  Now I believe these two paragraphs mean you only have to file an 8938 if you had sufficient interest, i.e. that you could potentially receive income or suffer a loss, that you would be required to report on your tax return if you actually received income or suffered a loss, whether you reported an income or loss on your return or not.