FATCA & FBAR
We are FATCA & FBAR experts:
FATCA stands for Foreign Account & Tax Compliance Act.
FATCA promotes cross border tax compliance by implementing an international standard for the automatic exchange of information related to US taxpayers. FATCA is intended to increase transparency for the Internal Revenue Service (IRS) with respect to US persons that may be investing and earning income through non-US institutions. FATCA regulations require tax authorities to obtain detailed account information for US taxpayers on an annual basis. While the primary goal is to gain information about US persons, FATCA imposes tax withholding where the applicable documentation and reporting requirements are not met.
FATCA is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their US clients.
FATCA requirements affect US with holding agents and US multinational companies, but the greatest impact is on Foreign Financial Institutions (FFIs).
In general, a withholding agent is required to withhold 30% on a with holdable payment made to a Foreign Financial Institution (FFI) or to a Non-Financial Foreign Entity (NFFE), unless the FFI or NFFE meets certain requirements. In addition, an FFI must withhold 30% on any pass through payment made to a recalcitrant account holder, as well as to payments made to another FFI unless that FFI meets certain requirements.
If you had more than $50,000 in your foreign country in your Bank/Securities/Deposits/Assets then you are required to file FATCA Report using Form 8938 with the IRS along with your Income Tax Return before April 15 of every year.
Global tax transformation provides an opportunity for FFIs to identify possible improvements to their tax reporting process. The new FATCA regulations allow FFIs to gain visibility into local country and global compliance and reporting so they can streamline processes.
In addition, the regulations help identify local and global tax planning opportunities, ultimately freeing up resources and budget to support more strategic tax activities.
FBAR stands for Foreign Bank and Financial Accounts
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114). The FBAR filing requirement is not part of filing a tax return. The FBAR Form 114 is filed separately and directly with FinCEN.
Who needs to file an FBAR? Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during the calendar year then it is mandatory to file FBAR with IRS by 30th June for the calendar year
Taxpayers with foreign assets may have FATCA & FBAR filing requirements by 30th June for the calendar year.
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