Best ways to get FBAR & FATCA Compliance for U.S Business

FBAR & FATCA

Introduction

What is FBAR & FATCA ?

FBAR (Foreign Bank Account Report) and FATCA (Foreign Account Tax Compliance Act) are two essential regulations implemented by the U.S. government to oversee and report foreign financial accounts owned by U.S. taxpayers. Their primary objective is to combat tax evasion and ensure adherence to U.S. tax laws for individuals and businesses engaged in international financial activities.

Why FBAR & FATCA Are Important ?

FBAR (Foreign Bank Account Report) requires U.S. citizens and residents to report foreign bank accounts if the combined value exceeds $10,000 at any point during the year. It’s filed annually with FinCEN, separate from the tax return.

FATCA (Foreign Account Tax Compliance Act) mandates reporting of foreign financial assets over specific thresholds, depending on filing status and residency. Individuals report these assets on IRS Form 8938 with their tax return. FATCA also requires foreign financial institutions to disclose accounts held by U.S. taxpayers.

Both FBAR & FATCA aim to prevent tax evasion by ensuring transparency of overseas assets.

Types Of FBAR & FATCA

Individual FBAR Filing

- For U.S. citizens, residents, and entities (including partnerships or corporations) who have control or ownership over foreign accounts.
- Who Files: Individuals with at least one foreign bank account exceeding the $10,000 threshold during the year.
- Account Types: Checking, savings, securities, or other financial accounts held in foreign banks or financial institutions.

Business FBAR Filing

- Businesses (including corporations, partnerships, or LLCs) that hold foreign accounts in their name.
- Who Files: U.S. businesses with foreign bank accounts that collectively exceed the $10,000 threshold during the tax year.
- Account Types: Foreign accounts held by the business entity for operational purposes

FBAR for Non-Residents

- U.S. persons who live abroad and hold foreign accounts are still required to file FBAR if their foreign accounts exceed the reporting threshold.
- Who Files: U.S. expatriates or dual citizens with foreign bank accounts exceeding $10,000.
- Account Types: Includes foreign bank accounts, foreign brokerage accounts, or other types of foreign financial accounts.

FBAR for Trusts and Estates

- Trusts and estates established by U.S. persons that have foreign accounts may also be required to file an FBAR.
- Who Files: Trusts and estates with foreign accounts exceeding $10,000.
- Account Types: Accounts held in the name of the trust or estate, such as foreign savings or checking accounts.

Individual FATCA Filing

- U.S. individuals who meet the asset threshold must report their foreign financial assets under FATCA.
- Who Files: U.S. persons (including citizens, residents, and certain non-resident aliens) with foreign assets exceeding:
  - $50,000 for individuals filing jointly, or
  - $100,000 for individuals living abroad, or
  - Higher thresholds for higher asset values.
- Asset Types: Foreign bank accounts, stocks, bonds, securities, and certain foreign trusts.

FATCA for Businesses and Entities

- Business entities (like corporations, partnerships, or trusts) with substantial foreign assets may need to file FATCA disclosures.
- Who Files: U.S. businesses and entities with foreign assets exceeding the thresholds.
- Asset Types: Foreign investments, real estate holdings, foreign bank accounts, and other assets held abroad.

FATCA for Foreign Financial Institutions (FFIs)

- Foreign financial institutions that have U.S. account holders are required to report the details of those accounts to the IRS under FATCA.
- Who Files: Foreign banks, insurance companies, mutual funds, and other financial institutions operating outside the U.S. that hold accounts for U.S. persons.
- Reporting Requirements: These institutions must provide annual reports detailing U.S. account holders’ names, addresses, and account balances.

FATCA for Trusts and Estates

- Trusts and estates with U.S. beneficiaries that hold foreign financial assets are required to report those assets under FATCA.
- Who Files: U.S. persons acting as trustees or executors for foreign assets on behalf of U.S. beneficiaries.
- Asset Types: Foreign investments, real estate, and foreign bank accounts held in the name of the trust or estate.

How FBAR & FATCA Services Work ?

FBAR is a reporting requirement for U.S. persons who have financial interests in or signature authority over foreign bank accounts, securities accounts, or other types of foreign financial accounts.

FATCA was enacted to require U.S. taxpayers to report specified foreign financial assets and foreign financial institutions to report on U.S. account holders.

FATCA primarily aims to increase transparency of foreign assets held by U.S. persons to combat tax evasion on a global scale.

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FBAR & FATCA

Introduction

What is FBAR & FATCA ?

Why FBAR & FATCA Are Important ?

Types Of FBAR & FATCA

How FBAR & FATCA Services Work ?

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