FATCA News 2017

Note: FATCA is sometimes mis-spelled FACTA.

Foreign Account Tax Compliance Act (FATCA)

Foreign Account Tax Compliance Act (FATCA) – FATCA IRSUnited States individual taxpayers must report information about certain foreign financial accounts and offshore assets on Form 8938, and attach it to their income tax return. This applies only if the total asset value exceeds the appropriate reporting threshold.

The Foreign Account Tax Compliance Act (FATCA) is a law that was passed in the United States. American citizens are taxed on their worldwide income no matter where they live. FATCA is aimed at combating US tax evasion by American Persons with financial assets outside the Country.

For that reason FATCA is meant to encourage proper reporting of all investment income and all dispositions of securities undertaken by a U.S. person regardless of where in the world the investment is held. Beginning July 1, 2014, non-U.S. financial institutions will be required to identify, document and report on accounts of $50,000 or more held by U.S. Persons.

If you have foreign financial assets, be sure to carefully read the new instructions for Form 8938, the form which details foreign financial assets (under FATCA) and which must be attached to your Form 1040 or 1040NR. The link to the instructions is: www.irs.gov/pub/irs-pdf/i8938.pdf

What is a U.S. person?

Under American tax law, you are considered a US person if you are:

  • A citizen of the U.S. (including an individual born in the U.S. but resident in Canada or another country, who has not renounced U.S. citizenship);
  • A lawful resident of the U.S. (including a U.S. green card holder);
  • A person residing in the U.S.

You also may be considered a U.S. person if you spend a considerable amount of time in the U.S. on a yearly basis. For example, some Canadian “snowbirds” may be considered an American for tax purposes. If you are unsure, contact your tax adviser.

FATCA has its roots in the IRS vengeance for foreign income and offshore account disclosures. FATCA requires foreign banks, investment funds and insurance companies to report American offshore accounts worth more than $50,000. Enacted in 2010, it is finally set to take effect in 2014.

The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.
  • FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
  • FATCA focuses on reporting:
  • By U.S. taxpayers about certain foreign financial accounts and offshore assets
  • By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest
  • The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.

Nations across the globe is complying. More than 80 countries – including virtually every one that matters – have so far agreed to the law. Over 77,000 financial institutions have signed up as well. All countries must put their agreement behind a law or face dire consequences. Even well know tax havens have joined up.

Frequent misspelled FACTA NEWS or FACTA ACT

FATCA NEWS | FATCA IRS | Facts about FATCA | Foreign Account Tax Compliance Act | FATCA GOV




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