If you are US citizen, Resident or Expat and you hold accounts in a foreign bank or foreign financial institution with a balance that exceeds $10,000 at any time of the year, you are obligated to file Foreign Bank and Financial Accounts Report (FBAR). Five Elements of FBAR Filing: 1. You must file if you are a citizen or US Person 2. You have a financial interest in or signature authority over an account 3. That account is a Foreign Financial Account(s) 4. The aggregate value of the account(s) exceeds $10,000 at any time during the calendar year 5. Reportable Account Exceptions
FATCA was signed into law in 2010 and codified in Sections 1471 through 1474 of the Internal Revenue Code. The law was enacted in order to reduce offshore tax evasion by US persons with undisclosed offshore accounts. There are two parts to FATCA – U S taxpayer reporting of foreign assets and income on Form 8938 and reporting by a Foreign Financial Institution or FFI of foreign bank and financial accounts to the IRS. It is the latter that is resulting in FFI’s sending out that dreaded letter to suspected US account holders requesting US taxpayer identification and information referred hereafter as the FATCA letter.
Foreign Tax Credit can be claimed if you have income that you earn outside of the United States and you also pay income taxes in your country of residence. You can still claim even if you don’t personally earn income abroad but your spouse does and you file jointly. However, there are more requirements you need to cover if you want to claim FTC.
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