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FBAR and FATCA Services

FBAR and FATCA Reporting in the USA: A Comprehensive Overview

When it comes to reporting foreign financial accounts and assets, U.S. taxpayers must comply with two key regulations: FBAR (Foreign Bank Account Report) and FATCA (Foreign Account Tax Compliance Act). Understanding the requirements of these regulations is essential to avoid penalties and remain in compliance with U.S. tax laws.

What is FBAR?

FBAR refers to the Report of Foreign Bank and Financial Accounts. U.S. persons (including citizens, residents, and certain non-resident individuals) are required to file an FBAR if they have a financial interest in or signature authority over foreign financial accounts exceeding an aggregate value of $10,000 at any time during the calendar year.

Key Points About FBAR:

  • Filing Threshold:The $10,000 threshold is cumulative. This means that if the total value of all your foreign accounts exceeds $10,000 at any point during the year, you must file an FBAR.
  • Filing Deadline: The FBAR is due annually on April 15th, with an automatic extension to October 15th available.
  • Filing Method: FBAR is filed electronically through the FinCEN’s BSA E-Filing System (Financial Crimes Enforcement Network).
  • Penalties: Failure to file an FBAR can result in significant penalties. Non-willful violations can result in fines of up to $10,000 per violation, while willful violations can lead to fines of $100,000 or 50% of the account balance, whichever is greater, per violation.

What is FATCA?

FATCA is the Foreign Account Tax Compliance Act, a law that requires U.S. taxpayers to report specified foreign financial assets if their total value exceeds certain thresholds. FATCA also mandates foreign financial institutions to report information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

Key Points About FBAR:

  • Reporting Thresholds: The thresholds for FATCA reporting vary depending on your filing status and whether you live in the U.S. or abroad:
  • Single/Married Filing Separately : $50,000 on the last day of the tax year or $75,000 at any time during the year.
  • Married Filing Jointly : $100,000 on the last day of the tax year or $150,000 at any time during the year.
  • Living Abroad: Higher thresholds apply—$200,000 on the last day of the year or $300,000 at any time for singles and $400,000/$600,000 for joint filers.
  • Form 8938 : FATCA reporting is done on IRS Form 8938, which is filed along with your annual tax return.
  • Penalties : Failure to file Form 8938 can result in a $10,000 fine, with additional penalties up to $50,000 for continued non-compliance, and potential criminal charges for willful violations.

Personalized Advice

We at MinimumTax, offer tailored advice to help you determine your reporting requirements based on your financial situation and residency status. Our team is here to help you navigate the nuances of both FBAR and FATCA to avoid penalties and stay compliant.

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