Report foreign financial assets to the IRS

U.S. taxpayers, whether living abroad or in the United States, who own financial assets outside of the United States and meet the filing requirements , need to report the fair market value of the assets on an annual basis to the IRS on Form 8938 which is submitted with the taxpayer’s income tax return.

YOU CAN’T HIDE

FATCA also requires foreign financial institutions, such as banks, insurance companies, mutual funds and brokers/dealers to report certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

ELIGIBILITY U.S. citizens

Any non-citizen who meets the substantial presence test

A non-resident alien who makes an election to be treated as a resident alien for purposes of filing a joint tax return, and

A non-resident alien who is a bona fide resident of American Samoa or Puerto Rico.

AND

If you are a taxpayer living abroad:

You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year.

OR

You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Which types of foreign assets are reportable

Financial (deposit and custodial) accounts held at foreign financial institutions

Yes

Financial account held at a foreign branch of a U.S. financial institution

No

Financial account held at a U.S. branch of a foreign financial institution

No

Foreign financial account for which you have signature authority

No, unless you otherwise have an interest in the account as described above

Foreign stock or securities held in a financial account at a foreign financial institution

The account itself is subject to reporting, but the contents of the account do not have to be separately reported

Foreign stock or securities not held in a financial account

Yes

Foreign partnership interests

Yes

Indirect interests in foreign financial assets through an entity

No

Foreign mutual funds

Yes

Domestic mutual fund investing in foreign stocks and securities

No

Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor

Yes, as to both foreign accounts and foreign non-account investment assets

Foreign-issued life insurance or annuity contract with a cash-value

Yes

Foreign hedge funds and foreign private equity funds

Yes

Foreign real estate held directly

No

Foreign real estate held through a foreign entity

No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate

Foreign currency held directly

No

Precious Metals held directly

No

Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles

No

‘Social Security’- type program benefits provided by a foreign government

No


Determine the total value of foreign financial assets

Report the maximum fair market value of the foreign financial asset for the taxable year. Convert the valuation into US dollars by using end of the year exchange rate.

Report of Foreign Bank and Financial Accounts (FBAR)

If the filing requirements for the FBAR are met, you are still required to file the FBAR in addition to Form 8938. The Form 8938 does not replace the FBAR.

Due Date

The Form 8938 is due by the due date, including the extended due date, if applicable, of your income tax return. It is filed together with you income tax return.

penalties

The taxpayer can be penalized up to $10,000 for their failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000. A 40 percent penalty on any understatement of tax attributable to non-disclosed assets can also be imposed. In addition, criminal penalties may also apply.