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Under the Foreign Accounts Tax Compliance Act (FATCA), U.S. citizens and permanent residents are required to report funds held in foreign financial accounts, as well as interests they have in overseas businesses. Failure to comply with FATCA reporting requirements can lead to civil penalties.
An experienced tax lawyer can advise you on whether your offshore holdings require you to report your accounts to the federal government. Let a Fairfax FATCA lawyer navigate the process of reporting these accounts and resolving any outstanding tax issues.
FATCA has broad requirements related to reporting foreign-held financial assets to the U.S. Treasury Department. In addition to offshore bank accounts and ownership on foreign businesses, you also must report any interest in currency swaps, trusts, partnerships, or even insurance policies.
Many financial institutions are required to provide information to the Treasury Department regarding American-held property overseas. This includes banks and other financial entities, which are required to send notice that certain accounts or assets are in the name of American citizens or permanent residents.
Reporting is not necessary for every asset or account in another country. This is only necessary if the total amount of foreign holdings exceeds a specific threshold amount. That amount varies depending on a few different factors.
For example, U.S. taxpayers who file individually and live in the U.S. are required to report their foreign assets if they total $50,000 at the end of a tax year or $75,000 at any point during the year. Those thresholds increase to $100,000 and $150,000 respectively for married couples living in this country and filing jointly.
The threshold is much higher for taxpayers who live abroad. They only need to submit a report when their total accounts are valued at over $200,000 at the end of the tax year or $300,000 at any point.
It is understandable to have questions about whether you meet the threshold for reporting, but you do not have to figure it out on your own. Let a FATCA attorney in Fairfax guide you when it comes to reporting assets or addressing past non-compliance. While there are penalties that come with failing to comply, an attorney can assist you with disclosing these errors and addressing any deficient tax payments.
FATCA is not the only reporting requirement related to foreign-held accounts. U.S. taxpayers must also comply with the Foreign Bank Account Reporting Accounts (FBAR).
This act mandates taxpayers—both citizens and legal residents—to report money held in overseas banks to the IRS. There are some similarities and differences between these two statutes.
The reporting requirements for FBAR are lower. Taxpayers have an obligation to report foreign bank accounts holding more than $10,000 at any point in a tax year. This threshold is the same whether a person files jointly or not. There are situations where a taxpayer may not need to report under FBAR if they have already complied with FATCA, and a Fairfax attorney can advise when this is an option.
The IRS may initiate an audit if you did not report your FATCA holdings. You can utilize the Streamlined Offshore Procedures to come into compliance, and receive a smaller civil penalty than if you did not move to disclose.
If you have questions about the reporting process or are concerned about noncompliance, now is the time to speak with a Fairfax FATCA lawyer. Resolving these issues as soon as possible can work in your favor and prevent future penalties or audits. Call today to learn about your options.
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.
