FATCA Compliance
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Your International Tax CPA
The Foreign Account Tax Compliance Act requires U.S. taxpayers with specified foreign financial assets above reporting thresholds to disclose those assets to the IRS annually. Manay CPA identifies every FATCA obligation you carry and manages every required disclosure accurately and on time.
- FATCA Compliance for U.S. Persons with Foreign Financial Assets
- Form 8938 Preparation and Filing Included
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Expert FATCA Compliance
For us, FATCA compliance is one of the most critical — and most commonly overlooked — international tax obligations carried by U.S. taxpayers with foreign financial assets. The penalties for non-compliance are severe, the IRS has robust foreign information exchange programs that identify non-filers, and the window for voluntary correction narrows every year that a required disclosure is missed.
Navigating FATCA Asset Obligations
FATCA was enacted to combat offshore tax evasion by requiring U.S. taxpayers to report specified foreign financial assets directly to the IRS on Form 8938 — which is filed with the annual income tax return — and by requiring foreign financial institutions to report account information for U.S. persons directly to the IRS through intergovernmental agreements. The result is a dual reporting system that allows the IRS to cross-reference taxpayer disclosures against the foreign institution reports it receives — identifying U.S. taxpayers who hold foreign assets but have not reported them. Failure to comply with these disclosure rules can result in draconian penalties that often start at $10,000 per violation, regardless of whether any tax is actually owed. By meticulously reconciling your foreign financial data with U.S. reporting standards, we eliminate the risk of discrepancies that lead to audits and ensure your international portfolio remains fully compliant.
Specified foreign financial assets that must be reported on Form 8938 include foreign financial accounts, foreign stock or securities not held in a financial account, interests in foreign entities, and financial instruments or contracts with a foreign counterparty. The reporting threshold varies based on filing status and whether the taxpayer lives in the United States or abroad — ranging from $50,000 for single filers living in the U.S. to $600,000 for joint filers living abroad. Assets above the threshold must be reported regardless of whether they generated any income during the year.
Manay CPA identifies every specified foreign financial asset in your profile that triggers a FATCA reporting obligation, calculates the aggregate value of your reported assets, prepares Form 8938 with complete and accurate asset descriptions, and files it with your annual tax return — coordinating the FATCA disclosure with every other international reporting obligation you carry including FBAR, Form 5471, and Form 3520 where applicable.
The Rising Risk of FATCA Non-Compliance
FATCA’s information exchange provisions have created an unprecedented level of transparency between the IRS and foreign financial institutions. More than 100 countries have entered into FATCA intergovernmental agreements that require their financial institutions to report U.S. account holder information to their local tax authorities, which then transmit that information to the IRS. This means the IRS often knows about foreign accounts before the taxpayer discloses them — and the absence of a Form 8938 matching the account data received from abroad is precisely how many FATCA examinations are initiated.
Complete Form 8938 Asset Reporting
Manay CPA identifies every asset that qualifies as a specified foreign financial asset under FATCA, calculates the maximum aggregate value of all reportable assets during the tax year, and prepares Form 8938 with complete descriptions and values for every required disclosure — filed with your annual return before the due date.
Our team understands the distinctions between FATCA and FBAR reporting — which assets are reported on each form, which thresholds apply, and how the two overlapping reporting regimes must be coordinated — so every foreign asset in your profile is disclosed through the correct channel with complete and consistent information.
File Your Return the Right Way
The U.S. tax code is far more complex than a basic W-2 and standard deduction. Self-employment, rentals, capital gains, and foreign assets each carry unique reporting rules. A single oversight or misclassified item costs you real money—either in overpaid tax or in penalties assessed later.
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Table of Contents
Form 8938 Reporting Thresholds Vary by Filing Status and Place of Residence
The threshold for Form 8938 reporting is not a single number — it varies based on your filing status and whether you live in the United States or abroad. Single filers living in the U.S. must report if the aggregate value of specified foreign financial assets exceeds $50,000 on the last day of the tax year or $75,000 at any point during the year. Joint filers living in the U.S. have thresholds of $100,000 and $150,000 respectively. Taxpayers living abroad have significantly higher thresholds.
Manay CPA determines the correct reporting threshold for your specific filing status and residency situation, calculates the aggregate value of all specified foreign financial assets at both the year-end date and the annual maximum, and confirms whether reporting is required before preparing Form 8938 — ensuring that the filing requirement is correctly assessed rather than assumed.
FATCA and FBAR Are Overlapping Obligations That Must Both Be Satisfied Independently
A foreign financial account that exceeds the FATCA reporting threshold must be disclosed on Form 8938 filed with the income tax return. The same account — if the aggregate balance of all foreign financial accounts exceeded $10,000 at any point during the year — must also be reported on the FBAR filed separately with FinCEN. Both obligations must be satisfied independently — filing one does not satisfy or substitute for the other.
Manay CPA coordinates FATCA and FBAR compliance for every client with overlapping reporting obligations — ensuring that every foreign account is disclosed on the correct form through the correct channel with consistent information that does not create discrepancies between the two disclosures that would attract IRS attention.
Professional Guidance on Streamlined Disclosures
U.S. taxpayers who failed to file required Form 8938 disclosures in prior years on a non-willful basis — meaning the failure was due to negligence, inadvertence, or a misunderstanding of the law rather than a deliberate attempt to hide assets — can use the IRS Streamlined Filing Compliance Procedures to come into compliance with significantly reduced penalties.
The domestic streamlined program imposes a 5 percent miscellaneous offshore penalty on the highest aggregate balance of unreported foreign assets. The offshore streamlined program — available to taxpayers living outside the United States — imposes no penalty. Both programs require the filing of amended or original returns for the three most recent tax years and FBARs for the six most recent years. Manay CPA manages the complete streamlined filing process for qualifying clients — from the initial eligibility assessment through the submission of all required amended returns and certifications.
Frequently Asked Questions
What is FATCA and who is required to comply with it?
FATCA — the Foreign Account Tax Compliance Act — requires U.S. citizens, resident aliens, and certain non-resident aliens to report specified foreign financial assets on Form 8938 when the aggregate value of those assets exceeds the applicable reporting threshold. FATCA also requires foreign financial institutions to report U.S. account holder information to the IRS through intergovernmental agreements. Any U.S. taxpayer who holds foreign bank accounts, foreign securities, interests in foreign entities, or financial instruments with foreign counterparties above the applicable threshold is required to file Form 8938 with their annual income tax return.
What is the difference between FATCA Form 8938 and the FBAR?
Form 8938 is filed with your annual income tax return and reports specified foreign financial assets to the IRS under FATCA. The FBAR — FinCEN Form 114 — is filed separately with the Financial Crimes Enforcement Network and reports foreign financial accounts. Both may be required for the same foreign accounts, but they are separate filings with different thresholds, different asset definitions, different filing deadlines, and different penalty structures. Filing one does not satisfy the obligation to file the other. Manay CPA manages both obligations as part of a coordinated international tax compliance program.
What assets must be reported on Form 8938?
Specified foreign financial assets reportable on Form 8938 include financial accounts maintained at foreign financial institutions, foreign stock or securities not held in a financial account, interests in foreign entities including partnerships and corporations, and financial instruments or contracts that have a foreign counterparty. Real estate held directly — not through a foreign entity — is not a specified foreign financial asset and is not reported on Form 8938. However, real estate held through a foreign entity is a reportable asset to the extent of the interest in the entity.
What are the penalties for failing to file Form 8938?
The penalty for failing to file Form 8938 when required is $10,000 per tax year. If the failure continues for more than 90 days after IRS notification, an additional penalty of $10,000 per 30-day period — up to $50,000 — applies. A 40 percent accuracy-related penalty also applies to any underpayment of tax attributable to assets that were not properly reported. These penalties apply whether or not any additional tax was owed on the unreported assets. Manay CPA manages FATCA compliance proactively to ensure Form 8938 is filed for every year it is required.
Can Manay CPA help if I have never filed Form 8938 despite having qualifying foreign assets?
Yes. If you have previously failed to file required Form 8938 disclosures, we assess whether the failure was non-willful — which would qualify you for the streamlined filing procedures with significantly reduced penalties — and manage the complete catch-up process including amended returns for the three most recent years, FBAR filings for the six most recent years, and the certification of non-willfulness. Acting proactively through the streamlined procedures is significantly less costly than waiting for the IRS to identify the non-compliance through its foreign information exchange programs.
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