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FBAR, FATCA, and PFIC Reporting Services
At Leading Taxes LLC, we understand that navigating international tax compliance can be complex, especially when dealing with foreign bank accounts or investments. The IRS requires U.S. taxpayers with foreign financial assets to report these holdings under various regulations like FBAR (Foreign Bank Account Report), FATCA (Foreign Account Tax Compliance Act), and PFIC (Passive Foreign Investment Company) rules. Our team of Certified Public Accountants (CPAs) and Enrolled Agents (EAs) can help you meet your reporting obligations accurately and avoid penalties.
FBAR (Foreign Bank Account Report)
The FBAR is required for U.S. taxpayers who have foreign financial accounts that exceed $10,000 in aggregate at any time during the calendar year. This report is submitted to the Financial Crimes Enforcement Network (FinCEN), not the IRS, but failing to file can result in severe penalties.
Who Must File FBAR?
- You must file an FBAR if:
- You are a U.S. citizen, resident, or entity (such as a corporation, partnership, or trust).
- You have a financial interest in or signature authority over one or more foreign financial accounts (including bank accounts, brokerage accounts, mutual funds, or trusts) that exceed $10,000 in total value at any time during the year.
What Accounts Are Reportable?
Common types of accounts that must be reported include:
- Foreign bank accounts: Savings, checking, and time deposits in banks located outside the U.S.
- Foreign business accounts: Accounts owned by foreign corporations or partnerships in which you have control or signature authority.
FBAR filing is mandatory even if the accounts do not generate any taxable income.
FATCA (Foreign Account Tax Compliance Act)
The Foreign Account Tax Compliance Act (FATCA) is another law requiring U.S. taxpayers to report certain foreign financial assets if the total value exceeds specific thresholds. Unlike FBAR, FATCA is reported directly on your tax return (Form 8938) and involves higher thresholds for reporting.
Who Needs to Report Under FATCA?
FATCA reporting is required if you are a U.S. taxpayer (citizen, resident alien, or certain nonresident aliens) and:
- For single filers, your foreign assets exceed $50,000 on the last day of the tax year or $75,000 at any time during the year.
- For married couples filing jointly, the threshold is $100,000 on the last day of the tax year or $150,000 at any point during the year.
These thresholds increase if you live abroad, making FATCA reporting more lenient for expatriates.
FATCA (Foreign Account Tax Compliance Act)
Reportable assets under FATCA include:
- Foreign bank and brokerage accounts: Similar to FBAR, any foreign financial institution holdings.
- Foreign stock or securities: Stocks or bonds issued by a foreign company.
- Foreign partnership interests: Interests in foreign partnerships or corporations.
FATCA penalties for noncompliance can be substantial, starting at $10,000 and increasing with continued non-reporting.
PFIC (Passive Foreign Investment Company)
The IRS classifies certain foreign investments as Passive Foreign Investment Companies (PFICs), which are subject to special tax rules. A PFIC is generally any foreign corporation that meets one of the following tests:
- Income Test: 75% or more of the corporation’s gross income is from passive sources (such as interest, dividends, rent, or royalties).
- Asset Test: 50% or more of the corporation’s assets produce passive income.
Common Examples of PFICs:
- Foreign mutual funds: Often considered PFICs because their income comes primarily from passive sources.
- Foreign-based ETFs (Exchange-Traded Funds): Many foreign ETFs also qualify as PFICs.
- Foreign real estate investment companies: If these companies derive income from passive sources (e.g., rental income), they may be classified as PFICs.
PFICs are subject to complex tax rules that often result in higher taxes and reporting requirements. If you own shares in a PFIC, you may need to file Form 8621 with your tax return, disclosing income, gains, and distributions from the PFIC.
How We Help with FBAR, FATCA, and PFIC Compliance
At Leading Taxes LLC, our team of CPAs and EAs specializes in foreign asset reporting and will ensure you stay compliant with all applicable regulations.
FBAR Services:
- Determine reporting requirements: We’ll assess whether you meet the FBAR filing threshold and gather the necessary information about your foreign accounts.
- Prepare and submit FBAR: We will complete and electronically submit your FBAR to FinCEN on your behalf, ensuring full compliance.
FATCA Services:
- Review foreign assets: Our team will review your foreign financial assets to determine if you meet FATCA thresholds.
- Form 8938 preparation: We will prepare and submit Form 8938, reporting your foreign assets accurately on your tax return.
PFIC Reporting:
- Identify PFIC holdings: We will evaluate your foreign investments to determine if they meet PFIC criteria.
- Form 8621 filing: We’ll handle the preparation and filing of Form 8621 to report your PFIC income, gains, or distributions.
Why Choose Leading Taxes LLC?
- Expertise in International Tax Compliance: With years of experience handling FBAR, FATCA, and PFIC reporting, our CPAs and EAs have the expertise needed to navigate these complex requirements.
- Comprehensive Services: We provide end-to-end support, from assessing your foreign assets to preparing and filing the required forms.
- Minimized Penalties: We ensure that you meet all deadlines and reporting requirements, helping you avoid significant penalties for non-compliance.
- Tailored Solutions: Every taxpayer’s situation is unique. We offer personalized guidance based on your financial situation and foreign holdings.
Let Leading Taxes LLC Handle Your Foreign Reporting Requirements. Whether you have foreign bank accounts, investment funds, or other financial assets abroad, Leading Taxes LLC will ensure your FBAR, FATCA, and PFIC obligations are met. Don’t let the complexity of international tax reporting overwhelm you—our team of professionals is here to help.
Contact us today for a consultation and take the stress out of international tax compliance.