FATCA Foreign Account Tax Compliance Act
Initiated in 2011, this new tax law required all U.S. persons (expats & U.S. residents) to disclose Foreign Financial Assets, (as defined by FATCA) on their U.S. tax return using the new Form 8938. FATCA was strengthened internationally in 2014 as over 145,000 non-U.S. financial institutions signed onto FATCA and the new International Data Exchange Service (IDES), which obligated these non-U.S. institutions to report the existence of U.S. persons who hold/held an account in their institution as far back as 2008.
What is an FFA (Foreign Financial Asset)?
- Non-U.S. Bank or brokerage firm assets (cash, stocks, bonds) not traded on a U.S. exchange
- Ownership value in a non-U.S. business (corporation or partnership)
- Pension or Annuity from a private employer or business
What is not a FFA ?
- Real Property:
- Your primary home
- Vacation property
- Rental income property
- Social Security Benefits or Government Pension
Thresholds for reporting FFAs:
- $200,000 year-end value of all FFAs combined
- $300,000 value during the year of all FFAs combined
Married Joint Filers
- $400,000 year-end value of all FFAs combined
- $600,000 value during the year of all FFAs combined
Form 8938 is included with U.S. tax return filing.
Failure to file penalty, up to $10,000, is imposed for not including Form 8938 with your U.S. tax return if you meet the filing thresholds above.