Published: December 14, 2021 | Last Updated: November 4, 2024

Foreign Account Tax Compliance Act (FATCA)

Overview

The Foreign Account Tax Compliance Act, more commonly known as FATCA, became law in March 2010, and is designed to make sure U.S. taxpayers with foreign accounts pay the taxes they owe.

Actions

What do I need to know?

Essentially, if you’re a U.S. taxpayer with foreign financial assets of more than a certain amount, you may be required to report them to the IRS.

FATCA and other requirements for international taxpayers are complex topics. After you review this page, you may want to discuss your situation with a tax professional or legal advisor.

FATCA generally requires the reporting of foreign financial assets

FATCA generally requires the reporting of foreign financial assets, including some common ones:

Financial accounts held at foreign financial institutions;
Foreign stocks or securities not held in a financial account;
Foreign partnership interests; and
Foreign mutual funds.

And some less common ones:

Investment assets held by foreign or domestic grantor trusts for which you are the grantor;
Foreign-issued life insurance or annuity contracts with a cash-value; and
Foreign hedge funds and foreign private equity funds.

This information reporting from FATCA comes from two sources

The information reporting from FATCA comes from two sources:

U.S. taxpayers reporting their foreign financial accounts and offshore assets, and
Foreign financial institutions reporting about accounts held by U.S. taxpayers
- (or foreign entities in which U.S. taxpayers hold a significant ownership).

What should I do?

Figure out if you need to report your assets, and report them to the IRS

U.S. citizens, U.S. individual residents, and a very limited number of U.S. nonresident individuals who own certain foreign financial accounts or other offshore assets must report those assets to the IRS if they exceed certain amounts.

The amount is different depending on if you live inside or outside the U.S., and if you are filing as single, married filing jointly, or married filing separately.

The specific amounts are listed in the Instructions for IRS Form 8938, Statement of Specified Financial Assets.

Penalties apply if you fail to file an accurate IRS Form 8938, Statement of Specified Financial Assets.

You don’t have to file IRS Form 8938 if you don’t have to file an income tax return for the tax year, regardless of the value of your specified foreign financial assets.

How to report your foreign assets to the IRS

Foreign assets are reported on IRS Form 8938, Statement of Specified Foreign Financial Assets.

Fill out the form and attach it to your tax return.

How will this affect me?

There are penalties if you must file IRS Form 8938, Statement of Specified Foreign Financial Assets, and don’t, or if you file it and it is incorrect.

Taxpayers with foreign financial accounts may have to report information under both FATCA and Bank Secrecy Act regulations (FBAR). Separate penalties may apply for failing to file each form.

Remember that FATCA isn’t just about you reporting your own assets. Foreign financial institutions may provide third-party information reporting about financial accounts to the IRS, including the identity and certain financial information associated with the account. Be sure your information matches what the institution sends.

Wait, I still need help.

The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights. We can offer you help if your tax problem is causing a financial difficulty, you’ve tried and been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure just isn’t working as it should. If you qualify for our assistance, which is always free, we will do everything possible to help you.

Visit www.taxpayeradvocate.irs.gov or call 1-877-777-4778.

Low Income Taxpayer Clinics (LITCs) are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page on the TAS website or Publication 4134, Low Income Taxpayer Clinic List.

Resources and Guidance

FATCA