The Foreign Account Tax Compliance Act (FACTA) is a U.S. federal law that was instated in 2010. The purpose of this law is to enforce all U.S. citizens to declare all non-U.S. financial accounts if If you are single or file separately from your spouse, you must submit a Form 8938 if you have more than $200,000 of specified foreign financial assets at the end of the year and you live abroad; or more than $50,000, if you live in the United States. If you file jointly with your spouse, these thresholds double. The FACTA Compliance needs to be done with the tax filing. FATCA tax filing services in Edison help ensure that all income and monies get reported as the law requires.
In layman’s terms, this means that if you are a U.S. citizen, you must pay tax on income from all of your foreign-held accounts, whether you live in the United States or not. This Act was put in place to discourage people from tax evasion activities and there are stiff penalties for those who don’t comply.
FACTA and the IRS has intricate agreements with foreign countries’ banks and financial institutions in order to gain access to customer and client databases, sharing personal and financial information. If the U.S. tax authorities want to find you, they will; and they will collect any money owed. Here are some of the consequences of not reporting foreign income to FATCA:
* Frozen bank accounts
* Loss of a passport, in which renewal can be denied
* Loss of tax refunds that are owed to you but haven’t been claimed
* Liens on assets, such as cars or homes
* Garnishment of wages
* Imprisonment – although rare, it does happen
The IRS, FACTA and other government agencies take their duties seriously; if you try to skip out on reporting income, or miss filing altogether, you may find yourself in very hot water! You may think that if you live in another country that you can avoid the U.S. taxman, but with information sharing and technology, you can be found easier than you think! That’s why FATCA tax filing services in Edison area, and other areas of the country, are so important to partner with.