As you may have heard or seen in the media, the United States government has ramped up its efforts to combat tax evasion through a law known as FATCA. The law has significantly influenced the information reporting relationships between the U.S. and foreign governments. The law also has practical tax compliance implications for U.S. expats, including the requirement to file FATCA Form 8938.
When is FATCA Form 8938 Reporting Required?
If you reside outside the U.S. and have a bank account or investment account in a foreign financial institution, you are generally required to include FATCA Form 8938 with your U.S. federal income tax return if you meet the following thresholds:
You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.
In addition to listing the accounts and their maximum values during the tax year, the FATCA Form 8938 requires taxpayers to list income reported on the tax return relating to the accounts. As to these, various tax items must be specified (interest, dividends, royalties, etc.), the amount reported must be provided, and the corresponding reporting on the tax return must be provided (i.e., which form and line or which schedule and line).
First, the failure to file the form can result in a civil penalty of $10,000 per form. This penalty is increased by $10,000 (up to a maximum of $50,000) for each 30-day period that the failure continues for more than 90 days after the IRS mails you a notice of your failure to file.
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