Table of contents:
What is FATCA and who must file Form 8938
FATCA stands for the Foreign Account Tax Compliance Act, which is a part of the Hiring Incentives to Restore Employment (HIRE) Act. It was enacted to enhance tax compliance among U.S. individuals who hold foreign accounts and assets.
As a result of FATCA, Form 8938 was introduced as an additional foreign account reporting requirement, separate from the FBAR, for U.S. persons who are obligated to disclose specific foreign assets to the IRS. Refer to the Difference between FinCEN 114 and Form 8938 and the IRS comparison of FATCA and FBAR requirements for more information.
The thresholds for reporting differ for individuals residing in the U.S. and those living abroad. You must file Form 8938 if your assets exceed the following values:
Single taxpayers living abroad: $200,000 on the last day of the tax year or $300,000 at any point during the year.
Married taxpayers living abroad: $400,000 on the last day of the tax year and $600,000 at any point during the year.
Single taxpayers living in the U.S.: $50,000 on the last day of the tax year or $75,000 at any point during the year.
Married taxpayers living in the U.S.: $100,000 on the last day of the tax year or $150,000 at any point during the year.
In addition to individual reporting requirements, foreign financial institutions are required to report on the assets of their American clients in order to avoid a 30% withholding on certain payments from the U.S. Once registered, financial institutions were assigned a Global Intermediary Identification Number (GIIN). You can find a list of banks with a GIIN on the IRS website.
Countries with the FATCA Intergovernmental Agreements (IGA)
The U.S. currently has active FATCA agreements, known as Intergovernmental Agreements (IGAs), with 105 countries:
Eight countries have finalized agreements and are scheduled to have active IGAs (Intergovernmental Agreements) soon:
Types of accounts reported on FATCA (Form 8938)
Checking account held in a non-U.S. domiciled bank.
Savings account held in a non-U.S. domiciled bank.
Non-U.S. mutual funds (additional filing requirements may apply for PFIC 8621).
Non-U.S. financial accounts held by either a foreign or domestic trust with which you are associated.
Non-U.S. hedge funds.
Non-U.S. private equity funds.
Non-U.S. life insurance policy with cash value.
Non-U.S. annuity contract.
Interest in a non-U.S. pension or deferred compensation plan (if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you).
❗ Important notes:
Property, precious metals, cash, and art should not be included in the list of your foreign bank accounts.
If you do not hold any foreign bank accounts, there is no requirement to prove the absence of such accounts.
If you closed a bank account during the tax year, you must report the account and its final balance on FBAR (FinCEN 114) and FATCA (Form 8938) reports.
Reporting non-U.S. stocks
If you hold stocks in an account located outside the United States and your total non-U.S. financial holdings exceed the threshold that requires you to file Form 8938, you may need to report the account in which the stocks are held. This typically applies to brokerage accounts or similar types of accounts.
You are not required to report the actual stock holdings that you hold.
When you sell stocks, the sales must be reported on your tax return.
If you own more than 10% of a private foreign company, it must be reported on Form 8938.
How to prepare and file FATCA (Form 8938)
Form 8938 is an integral part of Form 1040 and cannot be self-prepared as we are signing off on the project. When creating a Tax Questionnaire answer Yes to the question I have financial accounts outside the U.S. and list your foreign financial account details on the Non-US Financial Accounts tab.
Extension of time to file Form 8938
Form 8938 should be filed together with your income tax return (Form 1040) and is generally due by April 15th. However, if you are an expat, you automatically receive an extension of two months until June 15th. If needed, you can also request an additional extension to file until October 15th or even December 15th.
Note: FATCA reporting has a 6-year statute of limitations. There is no justifiable reason for you to close any of your foreign financial accounts because of FATCA. Doing so may raise suspicion with the IRS, signaling that you, as a U.S. expat taxpayer, are attempting to evade detection. If you have failed to file Form 8938 when it was required, it is recommended to file amended returns, FATCA, and FBAR reports through the Streamlined Foreign Offshore Procedures. For pricing information, refer to Streamlined Procedures services pricing on our website.