Taxes can be intimidating not only for newbies but also for pros. It is crucial to understand why you need to file your tax returns and stay compliant. If you don’t know where to start, then take a look at this infographic. We explain why it is essential to fill your tax returns while being an American abroad and what you need to know to begin the process. And now enjoy reading!
The FATCA is an ongoing effort of the US government to combat offshore tax evasion. This law has filing requirements that affect American expats of all income levels.
The law requires financial institutions in those countries to report information about accounts held by U.S. people to the US government. It’s in addition to self-reporting by U.S. residents, citizens, and green card holders residing in other countries, This is why banks have been asking you about your ties to the U.S. when opening foreign accounts in recent years.
FBAR means Foreign Bank Account Report and it refers to FinCEN Form 114, Report of Foreign Bank and Financial Account. Requirements of FBAR filing are quite simple:
- You are a U.S. person for tax purposes hence U.S. citizen, dual citizen or Green Card holder living abroad;
- You have individually or jointly owned a foreign financial account or a signature and other authority over;
- And the aggregate value of those accounts exceeds $10,000 at any time during the calendar year.
Filing an FBAR is required if the total (aggregate) value of all of your financial assets is over $10,000 on any day in the tax year. It is can be a quite confusing situation for taxpayers who they aren’t the main holder of a financial account. Americans abroad mistakingly think they don’t need to disclose the foreign account on FBAR in this case. Well, you need to know that even the nominee must still file the form if the threshold was met.
