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Solutions for International Clients

FACTA (Foreign Asset Reporting)

FACTA (the Foreign Account Tax Compliance Act) is a complex reporting and withholding regime enacted to force U.S. persons to disclose their offshore accounts, investments, and income.   U.S. Citizens and Green Card Holders (along with certain non-resident aliens) now must annually report to the Internal Revenue Service their foreign financial assets and the related income. 

The United States is entering into information sharing agreements with foreign financial institutions (banks) that requires them to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. 

The direct concern for U.S. taxpayers is that the IRS will independently obtain specific information about their unreported foreign assets and income and will assess onerous financial penalties and even prosecute them criminally.

The rules for foreign asset reporting went into effect in 2011 and currently only apply to individuals. From this year, you must report the maximum value of specified foreign financial assets, provided they exceed a threshold of $50,000 USD on the last day of the year, or $75,000 USD at any time during the year (for married individuals the threshold is doubled)

Foreign assets include foreign bank and brokerage accounts, foreign partnership interests, foreign mutual funds, foreign insurance products with cash values, and much more.   

Form 8938, “Statement of Specified Foreign Financial Assets” is used for the reporting and it gets filed annually with your personal tax return.  In many cases you must also separately report the existence of foreign financial accounts on the FBAR, “Report of Foreign Bank and Financial Accounts.”

Call us to discuss your filing requirements.  We are ready to help!

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