FATCA’s, FBAR’s and other F-words
If you are an American expat in France (or anywhere else, for that matter), you will already have been warned that U.S. filing requirements follow you to your new home. Aside from the usual tax reporting, there are two filing requirements that show up regularly for U.S. citizens and residents abroad: the FATCA and the FBAR. The FBAR is more common, but we will go over both.
The FATCA (Foreign Account Tax Compliance Act) includes an IRS requirement that you give notice of any financial assets you hold outside of the U.S. You will use a Form 8938 and attach it to your regular income tax return when you file that. So who has to file and what are your reporting?
Only individuals, rather than say, businesses or partnerships, file a form 8938.
You must file if you are living abroad and all of your foreign-held assets combined total more than $200k on the last day of the tax year OR more than $300k at any time during the year (the amounts change to $400k and $600k for married people filing jointly).
You must file if you are living in the U.S. (say before or after a move abroad) and you have more than $50k in assets abroad on the last day of the tax year or $75k at any time during the year (the amounts change to $100k and $150k for married people filing jointly).
You only need to report “Specified foreign assets,” which broadly speaking, means any sort of foreign bank account, investment account or “non-account” investments not meant for use in business or trade.
For more details on requirements and exceptions to the FATCA reporting requirements, check out the IRS summary here: https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers.
The FBAR (Foreign Bank and Financial Accounts) requirement can look remarkably similar to the FATCA, but this is an entirely different rule. It is geared toward the prevention of money laundering, and even if you don’t meet the asset threshholds for the FBAR, you may well be required to file an FBAR.
Like the FATCA, the FBAR notice is filed during tax season. But this time you don’t file it with your tax return. Instead you will use the BSA E-filing system online (https://bsaefiling.fincen.treas.gov/main.html) to report your information. You should do this by April 15, but the government gives everyone an automatic extension to October 15th. Yes, this automatic extension makes the April 15th date a bit academic, but it will match up better with your other tax filing requirements (you won’t be able to file your French tax returns until the spring). Once that is done, you will file your U.S. returns, taking a credit for those French taxes, in by taking advantage of the other IRS automatic extension, this one for U.S. expats filing their regular U.S. returns.
So who needs to file under the FBAR?
If you are already reporting everything on a FATCA consolidated reporting, you do not need to file an FBAR notice, too.
If you are not filing the information as part of the FACTA notice and your foreign-held accounts (bank or investment) had more than $10k combined in them at any time during the year, you need to file an FBAR notice.
The FBAR applies to individuals AND to corporations, partnerships, LLC’s, trusts and estates.
Once you meet the requirements for filing an FBAR notice, you should make sure to report ALL foreign held accounts, even those Paypal or money transfer accounts.
For FBAR purposes an account is in your name if you any financial interest in the account; that includes any account where you are just a signatory on someone else’s account.
For more information on FBAR requirements and exceptions, check out the IRS summary here: https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar. The IRS also provides a handy chart comparing the requirements for these two acts here: https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements.
And one last note: somewhere in this process you will realize that you are dealing with different currencies (i.e. dollars and euros). To make the exchange calculations, use this link: the IRS’s Treasury Reporting Rates of Exchange.