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Would Some One Explain What Is FATCA? Why Was It Introduced? What Impact Does It Have On A United States Citizen Living Abroad?

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Lisa Nason CPA, MST
Answer - 1:FATCA stands for The Foreign Account Tax Compliance Act (FATCA) Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return. It was introduced in order to improve tax compliance involving foreign financial assets and offshore accounts. For US citizens living abroad, you would potentially need to report your foreign bank account or other foreign financial assets – assuming that you exceed the threshold amounts required to file those forms.

Answer - 2:FATCA is legislation that was passed in the United States in 2010. FATCA is intended to prevent U.S. persons from evading U.S. federal income tax using financial accounts held outside of the United States. Although FATCA requires current reporting by U.S. persons, when FATCA is fully implemented, it will require non-U.S. financial institutions to enter into agreements with the IRS to report relevant information to the IRS regarding financial accounts held by identified U.S. persons. If a non-U.S. financial institution does not enter into an agreement with the IRS, the IRS will impose a 30% withholding tax on U.S. source payments (and potentially certain non-U.S. source payments no earlier than 2017) paid to the financial institution or their clients.
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