The Foreign Account Tax Compliance Act—or FATCA—is a federal law that mandates foreign financial institutions and other entities to report American-owned assets overseas to the Internal Revenue Service (IRS). FATCA primarily targets compliance from foreign financial institutions but there are also individual requirements that an experienced tax attorney could advise you on.
All taxpayers with foreign financial assets are required to comply with FATCA if they meet the reporting thresholds. If you would like to learn more about your obligations under the law, a Washington DC FATCA lawyer might be able to help.
Many taxpayers or entities that live or are based in the United States, as well as U.S. citizens and residents living in another country, will be required to account for their foreign financial assets when they file their taxes. FATCA requirements apply not only to U.S. citizens but also to permanent residents and certain types of non-residents as well. Most domestic trusts, partnerships, and businesses must also comply with FATCA.
Whether or not it is necessary to report these foreign financial assets to the IRS will depend on the value of those assets, in addition to the person’s marital status. These requirements will also change depending on whether the taxpayer currently lives within the U.S. or in a foreign country. For example, an unmarried person who lives in the United States will be required to report their assets if they are valued at more than $50,000. For an individual living outside of the U.S. and filing jointly with their spouse, the minimum threshold could be as much as $400,000.
Reporting under FATCA is done through a document known as Form 8938. This form requires the taxpayer to report a wide array of foreign financial assets. Most common among these assets are accounts with foreign banks or other foreign financial institutions. There are other assets that can apply outside of bank accounts, however. Stock that is issued by a foreign corporation must be reported, in addition to foreign bonds, mutual funds, and life insurance.
Ownership stakes in foreign companies can also qualify for a FATCA filing. This also applies to anyone who has an interest in a trust or estate that resides in a foreign country. Determining whether an asset must be reported under FATCA could be clarified with the help of a Washington DC foreign tax compliance lawyer.
There are similarities between the reporting requirements under FATCA and those mandated through a form known as a Foreign Bank and Financial Accounts Report (FBAR). However, there are important distinctions between the two, and FATCA compliance does not eliminate the need to also keep up with necessary FBAR filings.
The primary difference between these two requirements is the entity to which a report is filed. FATCA is an IRS requirement related to overseas assets, and it requires the taxpayer to file Form 8938 along with their tax return. FBAR, on the other hand, must be filed with the Department of the Treasury. A local FATCA attorney could further explain how FATCA requirements are different from other forms of mandatory reporting.
If you have overseas financial accounts, you must comply with FATCA requirements and report them to the IRS. It can be tricky when accounting for foreign assets, which is why it may be wise to have legal help in setting everything in order. Let a Washington DC FATCA lawyer review your situation and advise you on your next steps. Call today to get started.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.