FBAR vs. FATCA: How Do They Differ?

Both FBAR and FATCA impose compliance requirements for certain offshore accountholders. However, FBAR and FATCA are not the same. The forms that are required under FBAR and FATCA are different forms, are filed to different entities, and the requirements of who must file will vary between the two forms.

Because you may have to file one or both forms if you have any offshore funds or are a signatory on any offshore accounts, it is vitally important that you know the rules for both FBARs and FATCA. Boston international tax lawyers can provide you with assistance in understanding FBARs vs. FATCA and can help you to make sure you comply with all laws applicable to your accounts so you do not face the possibility of civil penalties or criminal charges.

What are the Differences Between FBAR and FATCA?

FBAR stands for Report of Foreign Bank and Financial Accounts. FBARs have to be filed directly with the office of Financial Crimes Enforcement Network (FinCEN). The form that must be filed is FinCEN 114. FBARs are required of any U.S. connected individuals who have one or more offshore accounts, or who have signature authority on one or more accounts, if those accounts have a combined balance exceeding $10,000 at any time during the course of the year.

FATCA stands for the Foreign Account Tax Compliance Act (FATCA). When FATCA was introduced by Congress in 2010, it created a new compliance requirement for certain individuals including U.S. citizens, aliens, and some non-residents.

FATCA requires that Form 8938, Statement of Specified Foreign Financial Assets, be filed directly with the IRS. This form has to be filed by an unmarried taxpayer with $50,000 in offshore accounts on the last day of the tax year or $75,000 in accounts at any point in the year. The form also has to be filed by married taxpayers with $100,000 or more of assets on the last day of the year or $150,000 in assets at any time.

Taxpayers living outside of the U.S. may also have to submit Form 8938 to the IRS, but the account thresholds are higher. For those living outside of the U.S., the form only has to be filed for single people with $200,000 in offshore accounts at the end of the tax year or $300,000 at any time over the course of the year.  For married taxpayers living outside of the U.S., the reporting threshold is $400,000 or $600,000.

If you believe you may be required to file FBARs or to file Form 8928 under FATCA, it is important that you know the filing deadlines and that you understand exactly what the law requires of you. Boston international tax lawyers like Kevin Thorn can help you to understand FBAR and FATCA requirements and can assist you in complying with disclosure laws so you can appropriately report your offshore accounts. We can also assist you if you failed to file required forms in the past and you want to take proactive steps to try to reduce or avoid any civil penalties or criminal actions going forward.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989