
FATCA Affects Individuals
If you are an American (US Person) and live abroad, or if you invest offshore, this new law requires foreign financial institutions (FFIs) like your local banks, stock brokers, pension and hedge funds, insurance companies and trusts to report directly to the IRS with the details of all their clients who are US persons including the specifics of their personal accounts. The reporting requirements begin on January 1, 2014. Many foreign governments have already signed agreements with the US to exchange detailed information.
Stay in the loop – updates are on the way
There have recently been updates proposed to the regulations associated with FATCA, and we will be updating this section as soon as we can. Keep an eye on our website over the next few months, or better yet, book in a consultation in order to check your FATCA status and be sure that you are staying in compliance with the rules.
Foreign assets you should be reporting
In addition, under FATCA, US taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return.
This will impact you if:
- You are a US Citizen who has any form of investment held outside the US
- You are a US Citizen living outside the US who has not routinely filed annual tax returns as required by law
- You have not participated in any former or current voluntary disclosure program
- You have any investments in an FFI that chooses not to be FATCA compliant
What does this mean for you?
It is the obligation of the individual to ensure ‘true and accurate’ returns and forms are filed with the IRS on time so as to avoid penalties or in some cases, criminal prosecution. With the implementation of FATCA and other tools, the IRS has developed for finding non-compliant taxpayers, time is running out if you are not up to date with your filings. In addition, many banks and other foreign financial institutions will no longer be able to retain you as a client.
There are good options for getting caught up however, please see our section on Voluntary Disclosure.