FATCA is a federal law that requires all US taxpayers, even those living outside of the US, to report their non-US financial accounts yearly. It also requires all non-US financial institutions to search their records for suspected US persons and report their identities and assets to the US treasury. There are serious penalties that could affect you if you don't file…even if you didn't know you were supposed to.
There are generally two forms needed to report your offshore accounts. The first is called the FBAR, and the second is IRS Form 8938.
Reporting Thresholds
An individual must report their offshore accounts on an FBAR if:
- the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
The second form you would need to complete is called Form 8938, which is sent to the IRS. The reporting thresholds are a bit more involved on Form 8938, and vary based on if you file jointly or not, and if you live abroad or in the US:
- If you are single or file separately from your spouse and have more than $200,000 of specified foreign financial assets on the last day of the tax year or more than $300,000 at any time during the tax year and you live abroad.
- If you are single or file separately from your spouse and have more than $50,000 of specified foreign financial assets at the end of the tax year or more than $75,000 at any time during the tax year and you live in the US.
- If you file jointly with your spouse and have more than $400,000 of specified foreign financial assets on the last day of the tax year or more than $600,000 at any time during the tax year and you live abroad (even if only one spouse resides abroad).
- If you file jointly with your spouse and have more than $100,000 of specified foreign financial assets at the end of the tax year or more than $150,000 at any time during the tax year and you live in the US.
- If you do not have to file an income tax return for the tax year you do not have to file form 8938 regardless of the value of the specified foreign financial assets
With both forms, there are various penalties that can affect you for filing incorrectly or not filing at all. As we continue our series on FATCA we'll talk more in depth about penalties, and what to do if you realize you should have been reporting accounts but have not.
If you need assistance with any unfiled or misfiled foreign reporting forms, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com. Any information you share will be kept confidential.
