At Save Tax LLC, Our Experts helps you to file FATCA,
FATCA the Foreign Account Tax Compliance Act, is a U.S. law enacted to combat tax evasion by U.S. persons holding financial assets outside the United States. Here’s a concise overview of FATCA:
Understanding FATCA (Foreign Account Tax Compliance Act)
FATCA, enacted in 2010, requires foreign financial institutions (FFIs) to report information about financial accounts held by U.S. taxpayers to the IRS or face withholding penalties on certain payments. Key points about FATCA include:
- Reporting Requirements: FFIs must report specified information on financial accounts held by U.S. persons, or by foreign entities in which U.S. persons hold substantial ownership interests.
- Withholding Provisions: If an FFI fails to comply with FATCA, it may be subject to withholding on certain payments from U.S. sources, including gross proceeds from the sale of U.S. securities.
- Impact on U.S. Taxpayers: U.S. taxpayers with specified foreign financial assets exceeding certain thresholds must report those assets to the IRS annually using Form 8938, alongside their tax return.
- Global Reach: FATCA has a global reach, as FFIs worldwide are required to comply or face potential penalties.
- Intergovernmental Agreements (IGAs): To facilitate FATCA implementation, the U.S. has entered into IGAs with many foreign jurisdictions, allowing for streamlined reporting and compliance.
FATCA aims to enhance transparency in international financial reporting and reduce offshore tax evasion. For assistance with FATCA compliance or any related inquiries, our knowledgeable team is available to help.