What is FBAR?
The Report of Foreign Bank and Financial Accounts (FBAR), now FinCEN Form 114, is a form that must be filed with the Financial Crimes Enforcement Network (FinCEN) each year to comply with provisions of the Bank Secrecy Act of 1970. It discloses foreign financial interests and signatory authority over foreign financial accounts.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is a law that empowers the IRS to investigate and penalize tax evasion by U.S. taxpayers with financial assets overseas. Form 8938, the Statement of Specified Foreign Financial Assets, is an attachment to your federal tax return on which you must disclose those assets to enable the IRS to ensure that any taxes on income earned on those foreign assets have been paid.
The Differences Between FBAR and FATCA Requirements
While the FBAR and FATCA reporting requirements are similar, there are several significant differences. You could own assets that must be disclosed on one but not the other, or must be disclosed on both.
The FATCA applies to individual citizens, residents, and non-resident aliens with taxable interests. FBARs are required for a broader range of entities, including trusts, estates, and domestic entities with interests in foreign financial accounts. Residents and entities in U.S. territories also have to file FBARs, but not FATCA forms.
Please contact us for more information. Our tax experts will help you in filing FBAR or FACTA.