FBAR and FATCA

The Foreign Bank Account Report (FBAR), also known as FinCEN Form 114, is a report required by the U.S. Department of the Treasury. U.S. persons (citizens, residents, or entities) must file an FBAR if they have financial interests in or signature authority over foreign financial accounts that exceed $10,000 at any point during the year. The FBAR must be filed annually, and penalties for non-compliance can be severe, including both civil and criminal fines.

The Foreign Account Tax Compliance Act (FATCA) was enacted to combat tax evasion by U.S. persons with assets held in foreign financial institutions. FATCA requires U.S. taxpayers to report their foreign assets on Form 8938 if the value exceeds certain thresholds—$50,000 for individuals or $100,000 for married couples filing jointly. This form is filed alongside your annual tax return (Form 1040) and has substantial penalties for failing to report foreign assets.

Avoiding Penalties: Filing FBAR and FATCA forms correctly helps businesses and individuals avoid steep penalties, fines, or even criminal charges for failing to report foreign financial interests.

Preventing Tax Evasion: Both FBAR and FATCA are part of the U.S. government’s efforts to prevent tax evasion by U.S. persons holding assets in foreign jurisdictions.

Ensuring Transparency: By complying with these reporting requirements, you help ensure that your financial dealings remain transparent and that you’re adhering to U.S. tax laws.

Facilitating Global Business: For businesses with international operations, FBAR and FATCA filing ensures compliance with international tax regulations and strengthens their global business reputation.