What is FATCA?
Foreign Account Tax Compliance Act - US law requiring reporting of foreign assets and foreign financial institutions to report on US account holders.
Definition
The Foreign Account Tax Compliance Act (FATCA) is a 2010 US federal law requiring US taxpayers to report their foreign financial assets to the IRS if they exceed certain thresholds. FATCA also requires foreign financial institutions to report information about financial accounts held by US taxpayers to the IRS.
Who Needs to Know This?
US taxpayers with foreign financial assets exceeding $50,000 on the last day of the tax year or $75,000 at any time during the year (thresholds are higher for married filing jointly and those living abroad).
Key Deadline
Filed with annual tax return (April 15 or extension)
Potential Penalties
$10,000 penalty for failure to file, up to $50,000 for continued failure after IRS notification
Related Forms
Common Mistakes to Avoid
- 1Confusing FATCA with FBAR (they have different thresholds and forms)
- 2Not knowing thresholds are higher for expats living abroad
- 3Failing to report foreign pension plans
- 4Not understanding that FATCA and FBAR may both apply
Related Terms
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