FATCA Compliance Guide | Form 8938 Requirements

FATCA Compliance: Reporting Requirements for US Persons with Foreign AssetsKey Takeaways FATCA requires US persons to report specified foreign financial assets on Form 8938 when balances exceed applicable thresholds Filing thresholds differ for domestic filers ($50,000/$75,000) versus those living abroad ($200,000/$300,000) FATCA and FBAR are separate requirements — filing one does not satisfy the other Foreign financial institutions worldwide report US account holder information to the IRS under FATCA Penalties for non-compliance include $10,000 per form plus a 40% accuracy penalty on underpayments attributable to undisclosed assets Expert tax defense is critical when facing FATCA compliance issues What Is FATCA? The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. FATCA was designed to combat offshore tax evasion by US persons through two primary mechanisms: requiring individual taxpayers to report their specified foreign financial assets, and requiring foreign financial institutions (FFIs) to report information about accounts held by US persons. FATCA represented a fundamental shift in international tax enforcement. Before FATCA, the IRS relied primarily on voluntary self-reporting and bilateral treaty requests to identify US taxpayers with foreign assets. FATCA created a global automatic information exchange system that makes it increasingly difficult for US persons to hide assets and income offshore. Form 8938: Statement of Specified Foreign Financial Assets Form 8938 is the individual taxpayer component of FATCA compliance. It requires US persons to report specified foreign financial assets when they exceed applicable reporting thresholds. The form is filed as an attachment to the taxpayer's annual income tax return — it is not filed separately like the FBAR . Who Must File Form 8938? Form 8938 must be filed by specified individuals and specified domestic entities that hold specified foreign financial assets exceeding the applicable reporting thresholds. 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