Aron Govil explains 16 things you need to know about FATCA and your US taxes

March 7, 2022
Aron Govil

Aron Govil

If you are a U.S. citizen or green card holder living abroad, or have foreign assets, you need to be aware of FATCA – the Foreign Account Tax Compliance Act says Aron Govil.

Here are 16 things you need to know about FATCA and your US taxes:

1. What is FATCA?

FATCA is a U.S. law that was enacted in 2010 in order to combat offshore tax evasion by U.S. taxpayers.

2. Who does FATCA apply to?

FATCA applies to individuals, estates, and trusts who are U.S. citizens or green card holders, as well as foreign entities (including corporations and partnerships) with substantial U.S. ownership.

3. What is a “U.S. person”?

A “U.S. person” is a U.S. citizen, green card holder, or foreign entity with more than 50% U.S. ownership.

4. What is considered a “foreign asset”?

A foreign asset is any asset located outside of the United States. This includes bank accounts, investments, real estate, and even businesses.

5. How does FATCA enforce compliance?

FATCA requires foreign financial institutions (FFIs) to report information about their U.S. clients to the IRS says Aron Govil. If an FFI fails to comply, they may be subject to significant penalties.

6. What is an FFI?

An FFI is a foreign financial institution, such as a bank, investment advisor, or broker.

7. What information does FATCA require FFIs to report?

FFIs are required to report the name, address, and U.S. taxpayer identification number (TIN) of their U.S. clients. They are also required to report the balances and account activity for all accounts held by U.S. taxpayers.

8. How does FATCA impact me if I am living abroad?

If you are a U.S. citizen or green card holder living abroad, FATCA requires your foreign financial institutions to report information about your offshore accounts to the IRS. This includes bank accounts, investments, and real estate. If you do not report this information yourself, you may be subject to significant penalties.

9. How does FATCA impact me if I am a U.S. taxpayer with foreign assets?

If you are a U.S. taxpayer with foreign assets, FATCA requires your foreign financial institutions to report information about your offshore accounts to the IRS. This includes bank accounts, investments, and real estate explains Aron Govil. If you do not report this information yourself, you may be subject to significant penalties.

10. What is the deadline for FFI compliance?

The deadline for FFI compliance is July 1, 2014. However, many FFIs have already begun complying with FATCA requirements.

11. What are the penalties for FFI non-compliance?

The penalties for FFI non-compliance can be significant. FFIs can be fined up to $1,000 per account per day, and may even be subject to criminal prosecution.

12. What is the deadline for individual compliance?

The deadline for individual compliance is June 30, 2015. However, you may want to begin reporting information about your foreign assets now in order to avoid any penalties.

13. What are the penalties for individual non-compliance?

The penalties for individual non-compliance can be significant. You may be fined up to $10,000 per account per year, and may even be subject to criminal prosecution.

14. How do I report my foreign assets?

You can report your foreign assets on Form 8938, which is attached to your federal tax return. You can find more information about Form 8938 on the IRS website.

15. What is the Foreign Account Tax Compliance Act (FATCA)?

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law that was enacted in 2010 in order to combat offshore tax evasion by U.S. taxpayers. FATCA applies to individuals, estates, and trusts who are U.S. citizens or green card holders, as well as foreign entities (including corporations and partnerships) with substantial U.S. ownership says Aron Govil.

16. How can I learn more about FATCA?

For more information about FATCA, you can visit the IRS website or contact your tax advisor.

Conclusion:

So, what is FATCA? The Foreign Account Tax Compliance Act (FATCA) is a U.S. law that was enacted in 2010 in order to combat offshore tax evasion by U.S. taxpayers. FATCA applies to individuals, estates, and trusts who are U.S. citizens or green card holders, as well as foreign entities (including corporations and partnerships) with substantial U.S. ownership.

If you are a U.S. taxpayer with foreign assets, FATCA requires your foreign financial institutions to report information about your offshore accounts to the IRS. This includes bank accounts, investments, and real estate. If you do not report this information yourself, you may be subject to significant penalties.

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