Navigating F-A-T-C-A and F-B-A-R: Key Deadlines, Thresholds, and Penalties

If you’re a U.S. taxpayer with foreign financial accounts or assets, staying on top of filing requirements under the Foreign Account Tax Compliance Act (F-A-T-C-A) and Foreign Bank and Financial Accounts Report (F-B-A-R) is critical. Understanding the due dates, thresholds, and the reasons behind these reports can save you from hefty penalties.

Understanding the Requirements

FACTA

F-A-T-C-A (Foreign Account Tax Compliance Act):

Who Should File: Taxpayers who own certain foreign financial assets must file Form 8938 if the value of these assets surpasses specific thresholds.

Thresholds:

Living in the U.S.:

Single/Married Filing Separately: $50,000 at year’s end or $75,000 at any point in the year.
Married Filing Jointly: $100,000 at year’s end or $150,000 at any point in the year.

Living Abroad:

Single/Married Filing Separately: $200,000 at year’s end or $300,000 at any point in the year.
Married Filing Jointly: $400,000 at year’s end or $600,000 at any point in the year.

Due Date: Form 8938 is filed with your annual federal income tax return. This is due April 15, but if you have filed for an extension, the deadline extends to October 15.

F-B-A-R (Foreign Bank and Financial Accounts Report):

FBAR

Who Should File: Any U.S. person with a financial interest in or authority over one or more foreign financial accounts whose aggregate value exceeds $10,000 at any time during the calendar year must file FinCEN Form 114.
Due Date: This form is filed electronically and has a standard deadline of April 15, but you receive an automatic extension to October 15 without additional paperwork.

Why Filing Is Important?

Avoiding Hefty Penalties: Failure to file these forms can result in severe penalties:

For F-A-T-C-A, the penalty starts at $10,000, with additional penalties of up to $50,000 for continued non-compliance. A 40% penalty applies to underreported tax involving foreign financial assets.
For F-B-A-R, non-willful violations can result in fines up to $10,000 per violation, while willful violations can result in the greater of $100,000 or 50% of the account balance.

Legal Consequences: Non-compliance can even lead to criminal charges in severe cases of deliberate tax evasion.

Extended Audit Periods: If you don’t file these reports, the statute of limitations is extended, meaning the IRS can continue to investigate for longer periods.

Why Work with a CPA Firm?

With so much at stake, understanding your specific obligations under F-A-T-C-A and F-B-A-R is essential. Working with an experienced C-P-A firm like GNS can help you navigate the complexities of international tax compliance, ensuring you meet deadlines, file accurately, and avoid penalties.

Reach out to GNS today, and let us guide you through this complex process. Your financial security matters, and we’re here to protect it.