FATCA Filing Requirement [US Citizens Banking Abroad]

FATCA filing requirement for American citizens with financial accounts held outside of the US is an important consideration for any American looking to bank abroad.

That said, US citizens are not the only ones with requirements that need to be met. Financial institutions that bank US citizens also need to report.

In this article, we’re going to discuss what the FATCA filing requirement is and how to make sure the accounts you hold abroadΒ are kept compliant.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. FATCA Filing Requirement
  2. How Does FATCA Reporting Work?
  3. Requirement for FATCA Reporting
  4. Frequently Asked Questions
  5. Do You Want Help Opening a US Bank Account?

FATCA Filing Requirement

FATCA filing requirement is a reporting requirement placed on foreign financial institutions (FFI) where a US person (individual or entity) has an account. US persons also face reporting requirements, which are fulfilled by submitting Form 8938 and FBAR, when certain reporting criteria are met.Β 

How Does FATCA Reporting Work?

FATCA reporting works by requiring both foreign financial institutions and US persons to submit information on financial accounts and financial assets held outside of the United States. If an individual meets the reporting thresholds, these requirements can involve the submission of information directly to the IRS and the US Department of Treasury.

Who Reports FATCA?

FATCA reports are filled directly by foreign financial institutions (FFIs) to the IRS, informing them of financial accounts held outside of the United States by US persons. Importantly, this includes accounts held by both US persons and entities, including entities where a US person has signing authority.

That said, while foreign financial institutions are primarily influenced by these reporting requirements, individuals also have related reporting requirements that they must meet. With this in mind, let’s take a closer look at the reporting of foreign financial accounts and assets.

Do I Have to Report My Foreign Account?

Yes, you have to report your foreign account if the aggregate value of your foreign financial accounts surpassed 10,000 at any time during the last calendar year. This reporting requirement is satisfied by submitting the Report of Foreign Bank and Financial Accounts (FBAR) to the Financial Crimes Enforcement Network (FinCEN), which is a division of the United States Treasury Department. Importantly, submitting the FBAR does not impact a person’s requirement to file Form 8938 if they meet the reporting requirements.

Is Filing My Financial Assets Required?

If you have foreign financial assets in excess of reporting thresholds, you do need to report those assets to the Internal Revenue Service. This reporting requirement is satisfied by completing (and submitting) Form 8938 to the IRS. Importantly, submitting Form 8938 does not impact a person’s requirement to file an FBAR if they meet the reporting requirements.

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Requirement for FATCA Reporting

FATCA reporting requirements involve submitting information about foreign financial accounts and foreign financial assets by US persons. Where an individual (or entity) meets reporting requirements, they will submit information to the IRS and FinCEN.

IRS reporting requirements involve a statement of foreign financial assets with an aggregate value that varies depending on residency, marital, income, and asset value.

FinCEN reporting requirements involve a significantly lower threshold than the IRS, which are triggered when an individual (or entity) has foreign financial accounts that surpass 10,000 in aggregate value at any time during the calendar year.

Of course, foreign financial institutions (FFIs) also have FATCA reporting requirements that they must meet when US persons maintain accounts at their institution.

Frequently Asked Questions

Below are a few of the most common questions we receive from people looking into what the FATCA filing requirement is. If you have further questions you would like to ask our team, don’t hesitate to get in touch.

Is FATCA Only for U.S. Citizens?

No, FATCA is not only for U.S. citizens. Instead, FATCA applies to U.S. citizens, residents of the United States, certain non-resident aliens, and US entities. Filing requirements for these groups vary depending on the value of their financial accounts and financial assets. Those who qualify need to submit Form 8938 and FBAR to the IRS and FinCEN, respectively.

How Can I Avoid FATCA?

If you have a foreign financial account, you cannot avoid FATCA. However, if you are a US person living outside of the United States but do not have any foreign financial accounts, you will not fall under the purview of FATCA.

Who Is Exempt From FATCA Reporting?

The only individuals and entities that are exempt from FATCA reporting are those that do not qualify as β€œUS persons”. In other words, if you are a US citizen, US resident, or US corporation and you have a foreign financial account, FATCA will apply.

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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