FBAR and FATCA Reporting

The Foreign Bank Account Report, or FBAR, is a filing requirement for U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, must fill out if they have more than $10,000 in bank accounts outside of the United States at any time during the year. The enforcement has intensified over recent years as these days, increased its focus towards retrieving taxes from US citizens’ money and their investments abroad.

The FBAR (form 114) FinCEN Form 114 must be filed online while keeping the following information relating to the declared accounts for six years following filing:

  1. The account numbers
  2. The name on each account
  3. The types of accounts.
  4. The name and address of the foreign institution (/s) where the accounts are held.
  5. The maximum value of each account during the relevant tax year.

As the federal government increasingly looks for foreign tax evasion, it is more important for tax practitioners to make sure clients are in compliance with the filing requirements of FinCEN Form 114, Report of Foreign Bank and Financial Accounts.

Individuals who are required to file FBARs need expert advice to ensure proper compliance not only with the FBAR filing requirements but possibly with other reporting requirements such as the Foreign Account Tax Compliance Act (FATCA), P.L. 111-147. FATCA requires filing Form 8938, Statement of Specified Foreign Financial Assets, with the federal income tax return, a separate requirement from the FBAR filing.

How Can We Help With FBAR

We provide complete insight into the tax complexities that applies to Resident Individuals in the United States, including Green Card Holders and US Citizens. We also assist its customers with:

  1. Total compliance
  2. Consultation and Impact Analysis
  3. Foreign Tax Credit
  4. The name and address of the foreign institution (/s) where the accounts are held.
  5. Preparation of Tax Amendments and Delinquent FBAR
  6. IRS Representation Last but not least, all this is for a fraction of the cost charged by other firms.
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Professional FBAR And FATCA Reporting

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Any United States person who has a financial interest in or signature authority over foreign financial accounts, and the aggregate value of these accounts exceeds $10,000 at any time during the calendar year, must file an FBAR.

FBAR (Report of Foreign Bank and Financial Accounts) is used to report foreign financial accounts held by U.S. taxpayers to the Financial Crimes Enforcement Network (FinCEN). It helps the U.S. government identify individuals who may be using foreign accounts to evade taxes or engage in other illicit activities.

FBAR stands for Report of Foreign Bank and Financial Accounts. It is a form used by U.S. taxpayers to report their foreign financial accounts to the U.S. government.

The deadline for FBAR filing is April 15th of the following year. However, an automatic extension until October 15th is granted for FBAR filings.

Yes, failure to comply with FBAR filing requirements can result in severe penalties. The penalties may include monetary fines, criminal charges, and imprisonment, depending on the extent of the violation.

FATCA and FBAR are two distinct reporting requirements for U.S. taxpayers with foreign financial interests. The main differences between FATCA (Foreign Account Tax Compliance Act) and FBAR (Report of Foreign Bank and Financial Accounts) lie in their scope, purpose, and reporting obligations. FATCA focuses on the reporting of foreign financial assets by U.S. taxpayers and imposes obligations on both individuals and foreign financial institutions. On the other hand, FBAR specifically requires U.S. taxpayers to report their financial accounts held outside the United States. Understanding these differences is crucial to ensure compliance with both FATCA and FBAR obligations. Contact our tax professionals to navigate these requirements effectively.

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FATCA, or the Foreign Account Tax Compliance Act, is a U.S. tax law enacted to combat tax evasion by U.S. taxpayers with foreign financial accounts. It requires foreign financial institutions (FFIs) to report information about financial accounts held by U.S. taxpayers to the Internal Revenue Service (IRS). FATCA works by establishing reporting and due diligence obligations for FFIs to identify and report accounts held by U.S. persons.

FATCA compliance applies to both U.S. taxpayers with foreign financial accounts and foreign financial institutions. U.S. taxpayers holding specified foreign financial assets with an aggregate value exceeding certain thresholds are required to report these assets on their annual tax returns and may need to file additional forms, such as Form 8938. FFIs are obligated to report information about U.S. account holders and comply with due diligence and reporting requirements outlined by FATCA.

Under FATCA, foreign financial institutions must report various details about U.S. account holders, including their names, addresses, taxpayer identification numbers, and account balances. They also need to disclose income, dividends, and proceeds from the sale of financial assets associated with U.S. accounts. Additionally, U.S. taxpayers must report their foreign financial assets and income on specific forms, such as Form 8938 and FinCEN Form 114 (FBAR).

FATCA imposes significant obligations on foreign financial institutions (FFIs). They are required to identify and report financial accounts held by U.S. taxpayers to the IRS or their local tax authorities. FFIs that fail to comply with FATCA may face penalties or be subject to withholding taxes on certain U.S.-source payments.

FATCA covers a wide range of financial accounts and assets held by U.S. taxpayers, including bank accounts, brokerage accounts, certain insurance products, and investment funds. It also includes equity or debt interests in foreign financial institutions and certain non-financial foreign entities.

Yes, there are certain exemptions and exceptions to FATCA reporting. For example, some retirement accounts, certain governmental entities, and certain low-value accounts may be exempt from reporting requirements. However, the specific exemptions and exceptions can vary depending on the jurisdiction and specific circumstances.

Penalties for non-compliance with FATCA can be severe. Both U.S. taxpayers and foreign financial institutions failing to meet their FATCA obligations may face monetary penalties, account closures, or other legal consequences. The penalties can vary based on the nature and extent of the non-compliance.

FATCA affects U.S. taxpayers with foreign financial accounts by requiring them to disclose and report their foreign assets and income to the IRS. This includes reporting the details of their financial accounts, income earned from these accounts, and any applicable foreign tax credits or deductions.

Foreign governments play a crucial role in implementing FATCA by entering into intergovernmental agreements (IGAs) with the United States. These agreements facilitate the exchange of information between the U.S. and foreign tax authorities, ensuring compliance with FATCA. IGAs help streamline the reporting process and provide a framework for cooperation between countries.

A tax professional with expertise in FATCA compliance can provide valuable guidance and assistance to individuals and businesses. They can help navigate the complex requirements of FATCA, ensuring accurate reporting and compliance with the law. Here are some ways a tax professional can assist:

  1. a) Expert Knowledge: Tax professionals have in-depth knowledge of FATCA regulations and requirements. They stay updated with the latest changes and can provide accurate guidance on reporting obligations.
  2. b) Account Classification: Determining whether an account is reportable under FATCA can be complex. A tax professional can review financial accounts and assets to ensure proper classification and reporting.
  3. c) Reporting Preparation: Tax professionals can assist in preparing the necessary forms and reports, such as Form 8938 and FinCEN Form 114 (FBAR), ensuring accurate and timely submission to the IRS.
  4. d) Due Diligence: Tax professionals can help foreign financial institutions (FFIs) comply with due diligence requirements by implementing appropriate procedures to identify U.S. account holders and ensure proper reporting.
  5. e) Compliance Review: A tax professional can review existing compliance procedures to identify any gaps or areas of improvement. They can help develop robust systems to ensure ongoing compliance with FATCA requirements.
  6. f) Penalty Mitigation: In case of non-compliance or potential penalties, tax professionals can provide guidance on mitigating penalties and resolving compliance issues effectively.
  7. g) International Tax Considerations: FATCA intersects with various international tax laws and agreements. A tax professional can provide guidance on how FATCA interacts with other tax obligations, such as tax treaties and foreign tax credits.
  8. h) Audit Support: In the event of an IRS audit or investigation related to FATCA compliance, a tax professional can provide representation and support throughout the process.
  9. i) Education and Training: Tax professionals can educate individuals, businesses, and foreign financial institutions about FATCA obligations, helping them understand the requirements and avoid potential compliance pitfalls.
  10. j) Stay Updated: Tax professionals stay informed about any changes or updates to FATCA regulations, ensuring clients are aware of new obligations or exemptions.

By working with a knowledgeable tax professional, individuals and businesses can ensure their FATCA compliance is accurate, efficient, and aligned with the requirements of the law.

FBAR Compliance for U.S. Citizens & Entities

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