The Foreign Account Tax Compliance Act—commonly known as FATCA—became law in 2010. Since then, the federal government has required American citizens and residents to report specified financial assets, over the applicable threshold, that are held overseas. Because there is often a lot of money at stake and it is important to complete this process correctly, a trustworthy tax lawyer could assist with these filings.
There are potential penalties for a taxpayer who does not comply with FATCA reporting rules. Thankfully, this process could be made simple with the assistance of a Vienna FATCA lawyer. Additionally, a tax attorney can assist you if you have missed the filing deadline.
One of the most crucial aspects of FATCA is understanding what assets taxpayers have an obligation to report. It is not limited to money held in foreign bank accounts. In fact, a wide array of assets could qualify. A Vienna attorney could advise someone on the type of assets that require FATCA compliance, with the most common being:
Regardless of the type of assets a taxpayer holds, there are a few important factors that determine if filing a FATCA form is even necessary.
First, a taxpayer’s marital status will determine the reporting thresholds. The reporting threshold for a married couple is twice as much as for individuals. This can be important in cases where one spouse has substantial foreign assets but the other has none. A single individual who resides in the United States will have to report if their foreign financial assets is over $50,000 at the end of the year (or $75,000 at any point in the year), while the threshold for a married couple is $100,000 (or $150,000 at any point in the year).
In addition to marital status, the physical residency of the taxpayer will also determine the reporting. The threshold for taxpayers living in the United States is much lower compared to one who lives abroad – $200,000 for individuals and $400,000 for couples. This means that those living and working abroad are less likely to have disclosure requirements compared to individuals and couples who live in the U.S. but own investments abroad.
The process for complying with FATCA involves the use of a single form provided by the Internal Revenue Service (IRS), known as IRS Form 8938. As is the case with any form submitted to the IRS, it is filed under penalty of perjury. This means there are consequences that come with providing false information. The IRS also has the ability to summon records related to foreign banks during an audit if it suspects the taxpayer has not been forthcoming.
Form 8938 is filed along with standard tax returns. To make this process simpler, the deadline for FATCA disclosures falls on the same day as individual income tax returns are due. In most years, that is April 15. The federal government provides substantial leeway when it comes to meeting this deadline and extension are possible.
Failure to file a FATCA form can produce a $10,000 penalty, although that penalty could go higher if the taxpayer continues to be non-compliant.
When it comes to properly reporting your financial assets, the value of having peace of mind cannot be overstated. A Vienna FATCA attorney could help ensure that a taxpayer has fully complied with all filing requirements.
If you have questions or concerns about FATCA compliance, now is the time to seek legal help. The government can be lenient when it comes to extending the deadline to report but failure to comply with your obligations could lead to an investigation into your finances. A Vienna FATCA lawyer could help you resolve any conflicts and remain compliant with the IRS. Fill out a form to schedule a consultation at our highly respected tax firm.
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, Vienna, 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.