FATCA AND FBAR PROCESSING
If an US resident has more than $10,000 in bank accounts outside of the country at any point in the year, they are required to report the Foreign Bank Account Report, or FBAR.
Although it has been in effect since 1970, its enforcement has stepped up recently as the US has focused more on recovering taxes from the money and assets of US residents overseas.
The following information on the stated accounts (form 114) Fin CEN Form 114 is filed online:
Each account's name.
Types of accounts.
The name and location of the foreign institution (or institutions) that hold the accounts.
The highest balance in each account for the applicable tax year.
By coming into direct contact (alone or in with conjunction with another individual) with the bank or
other financial institution that manages the financial account, an individual (alone or in partnership with
another individual) has the power to influence the disposition of assets held in a foreign financial
• As a scenario, Rahul, a resident of the United States, holds power of attorney over the Florida accounts
of his elderly parents but has never used it. If the power of attorney grants her signing authority over
the financial accounts, Rahul must submit an FBAR. The FBAR filing obligation is independent of whether
the power is ever used.
Reach to Tax O experts if you haven't filed / report the FBAR- In a clear case that you didn't realize you
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The IRS must receive a Form 8938, Statement of Specified Foreign Financial Assets, from certain U.S. taxpayers who have financial assets located outside of the country. In general, the total value of these assets must exceed $50,000 in order to be reportable; but, in rare circumstances, the amount may be greater.
The annual tax return filed by the taxpayer must include the Form 8938.
Regardless of the amount of their indicated foreign financial assets, U.S. taxpayers who are not required to file an income tax return for the tax year are not required to file Form 8938.
There could be a $10,000 penalty for neglecting to record foreign financial assets on Form 8938 and a fine of up to $50,000 for continuing to fail after IRS notification. Additional substantial understatement penalties of 40% will be applied to tax underpayments related to hidden foreign financial holdings. Criminal sanctions may also be imposed. Folks who live in the US and must submit Form 8938 to file their income tax returns.
You're single and your designated foreign financial assets total worth exceeds $50,000 on the
Last day of the tax year or $75,000 at any point in the tax year.
You are married or joint tax return and the total value of your foreign account is exceeding
$100,000 on the last day of the tax year or more than $150000 at any time during the tax year
you are filing married filing separately and the total value of your foreign assets is more than
$50,000 on the last day of the tax year or more than $75000 at any time during the tax year
Include one-half of the value of each specified foreign financial asset you possess with your spouse when determining your total amount of specified foreign financial assets for the purposes of applying this limit. If you are obliged to complete Form 8938, you must however declare the total value.