FBAR & FATCA
FBAR(Foreign Bank Account Report)
A U.S. person, including a citizen, resident(including tax-purpose resident), corporation, partnership, limited liability company, trust, and estate, must file an FBAR. Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income does not affect whether the account is a foreign financial account for FBAR purposes. If the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year, FBAR has to be reported. The form used to report FBAR is Fincen 114 form.
The due date to file for an FBAR is the same as the individual tax retuns filing deadline. You’re allowed an automatic extension of up to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR. Missing your FBAR filing can lead to a huge civil penalty, an amount as large as $100,000 or 50% of the account balance for each violation of the tax year.
FATCA(Foreign Account Tax Compliance Act)
The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore.
Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets.
U.S. taxpayers who hold foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) report information about those assets on Form 8938, which must be attached to the taxpayer’s annual income tax return.