FATCA Reporting
You are an innocent expat working abroad, and saving money wisely in your local financial institution. However, in the eyes of the IRS, you might just be Goldfinger, and hiding money. That’s why the IRS requires taxpayers with money in foreign accounts to report those monies.
Lawmakers enacted the Foreign Asset Tax Compliance Act (FATCA) in 2010 as part of a crackdown on U.S.taxpayers who hide money in foreign bank accounts.
FATCA generally requires U.S. taxpayers with “specified foreign financial assets” (SFFAs) to report certain information about those assets on Form 8938, Statement of Specified Foreign Financial Assets.
Specified Foreign Financial Assets include
(1) all your foreign financial accounts, and
(2) other foreign financial assets you hold for investment, including foreign stocks, bonds, and mutual funds; foreign hedge funds; private equity funds; foreign trusts and estates; and interests in privately held foreign entities.
The reporting threshold depends on how you file and where you live:
If you live in the United States and are unmarried or married filing separately, you must file if the value of all your SFFAs exceeds $50,000 at the end of the tax year or $75,000 at any time during the tax year.
If you live in the United States and are married filing jointly, you must file if the value of all your SFFAs exceeds $100,000 at the end of the tax year or $150,000 at any time during the tax year.
If you live outside the United States and are unmarried or married filing separately, you must file if the value of all your SFFAs exceeds $200,000 at the end of the tax year or $300,000 at any time during the tax year.
If you live outside the United States and are married filing jointly, you must file if the value of all your SFFAs exceeds $400,000 at the end of the tax year or $600,000 at any time during the tax year.
Your failure to report your foreign financial assets on Form 8938 results in a penalty of $10,000, with an additional maximum penalty up to $50,000 for continued failure to file after receiving IRS notification to file. You also face a penalty on any understatement of tax attributable to nondisclosed foreign financial assets.
Make sure you get the reporting right- we can help! Contact TaxProOne today.
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