Foreign Account Tax Compliance Act (FATCA):-
1. Foreign Account Tax Compliance Act (FATCA) - Form 8938, is introduced from calendar year 2011 with an intention to improve tax compliance of foreign income & assets.
2. The report is to be filed in Form 8938 and attached to the Federal Income Tax return.
3. FATCA applies to a US citizen ; resident alien and a Non-Resident alien who elects to be treated as resident alien if his interest in foreign financial assets exceeds US$50,000 as on 31st December or US$75,000 during the tax year.
4. In case of married couple tax-payers, these limits are raised to US$100,000 and US$150,000 respectively ; whereas for tax-payers living abroad, these limits are raised to US$200,000 and US$ 300,000 respectively for individuals and US$400,000 and US$600,000 for joint returns.
5. Specified Foreign Financial Assets :-
.01 Specified Foreign Financial Assets would include overseas bank accounts ; mutual fund investments ; investments in stocks and securities and all other overseas assets held for investments not being trade or business.
.02 This will also include investment in shares of private limited company ; insurance policies ; interest in partnership firms and / or trusts.
.03 This would include erstwhile investments in India retained prior to migration to USA as also any assets received by way of inheritance or partition of family assets.
6. Failure to file Form 8938 by due date or filing an incomplete form attracts penalty of $10,000.
7. IRS weblink : https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers
Our Professional Services :
We offer professional services regarding Foreign Account Tax Compliance Act (FATCA) by way of preparing annexures to FATCA.