FBAR and FATCA – Things You Should Know
When it comes to matters regarding your taxes, knowledge is most definitely power. Though you don’t need to possess the knowledge of a tax professional, it still pays to know a little more than the absolute minimum. After all, the more you know about tax and how the taxation system works, the less likely you will be to be stung by a back tax bill or something equally as sinister. For those of you who are now living as expats, or who simply hold a bank account overseas, FBAR and FATCA are two things you really should know about. Luckily, we’re feeling especially helpful today, which is why we’ll now be taking a look at FBAR and FATCA, as we look at what they are, and at a few other things you really should know about them. So, without any further ado, here’s a more detailed look at FATCA and FBAR.
What is FBAR? – To begin with, we’ll start things off by looking at what FBAR actually is. FBAR stands for Foreign Bank Account Reporting and it is basically a method utilized by the government of obtaining details regarding taxes and finances from overseas. Say for example, you now live your live as a US expat, you will still need to keep track of your financial accounts from overseas. You see, if you find that your bank exceeds a predetermined threshold, you need to file a FBAR. This informational form needs to be filed every year, electronically, via the US treasury Dept.
Things to know about FBAR – Now we’ll look at some things you should know about FBAR. These include:
You could face hefty penalties if you fail to file – If you fail to file a FBAR document, you could face very hefty penalties. As a heads up, if you fail to file, even though you knew you should, you either face the risk of losing 50% of your entire bank account, or a fine of $100,000. Which will depend on whichever is greater. If you genuinely did not know you should file, each time you violate you face a $10,000 fine. Put simply, DO NOT FAIL TO FILE FBAR!
The deadline recently changed – In 2017, the deadline for paying FBAR changed. If you live in the US you have until April the 18th to file. If you’re an expat living abroad, you have until the 15th June to file. However, as things recently changed, the US treasury extended the deadline to the 16th of October.
What is FATCA? – FATCA stands for Foreign Account Tax Compliance Act and it was designed to flush out tax cheats who were hiding money in offshore accounts. Put simply, it requires all US citizens to report any and all foreign assets directly to the IRS if certain thresholds are exceeded.
Facts about FATCA – Key FATCA facts include:
- FATCA, though similar to FBAR is still unique
- You could face initial $10,000 fines and further $50,000 fines per violation. Ouch!
- FATCA could result in overseas banking issues
- You should contact pro tax services for advice on FATCA