If your business has overseas accounts or assets, you need to know about FATCA and FBAR reporting requirements:
These apply to U.S. businesses and individuals who hold certain assets in a foreign country. If that’s you, then it’s vital to understand and comply with these two reporting requirements. Failing to do so means falling out of compliance with U.S. laws and potentially incurring significant civil penalties.
Here’s what you need to know.
Both FATCA and FBAR are reporting forms that apply to individuals and businesses that pay U.S. taxes and also hold assets in countries other than the U.S. The information they contain overlaps quite a bit.
However, these forms are different in several important ways. Businesses should be aware of these differences so they can determine which to file.
The two forms serve distinct purposes: one is related to tax evasion and the other to money laundering.
FATCA exists primarily to ensure that individuals and businesses are paying enough in taxes. By requiring domestic entities to disclose financial assets held abroad, the IRS gains the necessary information to collect taxes on those assets where applicable, meaning that filing this form may affect your tax liability.
FBAR isn’t about taxes, at least not directly. Instead, it’s about financial crimes more broadly, with a focus on money laundering and international financial transaction laws. This form requires businesses and individuals to disclose foreign bank accounts and other financial assets. It’s separate from tax filings and has a different set of enforcement mechanisms and penalties. No additional taxes are added based on this form.
The two forms have differing reporting thresholds as well. FATCA’s reporting thresholds are staggered, with differing levels for various categories. They are also higher: the lowest threshold is for a single U.S. person living in the USA all year.
Individuals and specified domestic entities (closely held domestic corporations or partnerships where either 50% of gross income is from passive sources or 50% of assets generate passive income, as well as some trusts) in this category hit the threshold at $75,000 of reportable assets at any point in the year or $50,000 on the final day of the tax year.
Additionally, FATCA requires reporting some assets that aren’t included with FBAR, including business and trust ownership and some kinds of foreign entity contractual investments.
FBAR is simpler in comparison: Any U.S. taxpayer or domestic business entity with over $10,000 total (aggregate value) in foreign financial accounts must file FinCEN Form 114.
The forms themselves are different as well:
The IRS oversees FATCA (Form 8938). FinCEN (a division of the U.S. Treasury Department) handles FBAR (FinCEN Form 114).
Yes, in some senses. FATCA and FBAR have distinct requirements, such as the differing reporting thresholds, as well as what kinds of assets count toward those thresholds. But some foreign accounts must be reported on both forms.
An easy mistake is to assume that assets reported on one form are already accounted for and thus don’t need to be reported a second time — reporting income twice seems like it could lead to double taxation, after all. However, this assumption is incorrect and can lead to significant penalties if a business fails to file a required report.
For example, let’s say a U.S.-based business has $1 million USD spread across a few different foreign accounts and financial instruments. There will likely be some difference in exactly which accounts and instruments must be reported to the IRS and which to FinCEN. But no matter how those assets are organized, the business is sure to meet the FBAR threshold of $10,000 and the higher FATCA threshold. As a result, this business would need to file both forms.
Another much smaller business holds just $20,000 in foreign accounts, falling well under the FATCA reporting threshold but still over the FBAR threshold. This business is obligated to file the FBAR (FinCEN Form 114) but would not need to fill out FATCA.
Think of it this way: You’re reporting the same assets to two distinct agencies that do different things with that information. One ensures you’re taxed appropriately, while the other simply watches out for signals of financial crimes.
Quick note on how virtual addresses fit into the mix: Businesses using a virtual address as part of their operations can generally do so for tax purposes. But it’s absolutely crucial that all foreign financial account reporting aligns with the registered business address (which may be a virtual address, but isn’t necessarily so). This is important so that businesses can avoid address-related discrepancies during compliance checks.
Failing to file Form 8938 (FATCA) or FinCEN Form 114 (FBAR) may lead to steep penalties and fines for businesses. You may also increase your risk of a costly and time-consuming IRS audit, something no business wants to go through.
These are the penalties under FATCA:
FBAR has a different and much steeper set of penalties:
Complying with FATCA and FBAR starts with healthy accounting practices, but there are other steps you can take. Follow these best practices to get and stay compliant with both sets of requirements.
Getting compliant with FATCA and FBAR filing requirements — and maintaining that compliance over time — is vitally important for U.S.-based individuals and businesses with overseas business assets. The requirements aren’t all that difficult to understand, but determining your business’s financial specifics (and thus whether you’re required to file either or both forms) may be a challenge.
The actionable strategies we’ve provided can help you navigate IRS and FinCEN reporting requirements so that you can avoid costly penalties and keep your business moving forward.
Another strategy for reducing complexity and advancing your business may be a virtual address and virtual mailbox with Stable. Stable receives all your business mail including tax documents, then we scan and digitize them so you can access them from anywhere and take appropriate action, like sharing them with team members or accountants — all in the cloud.
Easier digital access to your tax documents from anywhere means no more scrambling to find a form that’s lost in a drawer (or sitting on a desk hundreds of miles from where you are right now!). With all the needed information accessible in your Stable dashboard, it’s easier to find what you need so you can stay compliant.
That’s why Stable is the perfect solution for American expats living abroad, as well as busy business leaders managing businesses and operations that span multiple countries.
Get started with Stable today: Get your address
If your business has overseas accounts or assets, you need to know about FATCA and FBAR reporting requirements:
These apply to U.S. businesses and individuals who hold certain assets in a foreign country. If that’s you, then it’s vital to understand and comply with these two reporting requirements. Failing to do so means falling out of compliance with U.S. laws and potentially incurring significant civil penalties.
Here’s what you need to know.
Both FATCA and FBAR are reporting forms that apply to individuals and businesses that pay U.S. taxes and also hold assets in countries other than the U.S. The information they contain overlaps quite a bit.
However, these forms are different in several important ways. Businesses should be aware of these differences so they can determine which to file.
The two forms serve distinct purposes: one is related to tax evasion and the other to money laundering.
FATCA exists primarily to ensure that individuals and businesses are paying enough in taxes. By requiring domestic entities to disclose financial assets held abroad, the IRS gains the necessary information to collect taxes on those assets where applicable, meaning that filing this form may affect your tax liability.
FBAR isn’t about taxes, at least not directly. Instead, it’s about financial crimes more broadly, with a focus on money laundering and international financial transaction laws. This form requires businesses and individuals to disclose foreign bank accounts and other financial assets. It’s separate from tax filings and has a different set of enforcement mechanisms and penalties. No additional taxes are added based on this form.
The two forms have differing reporting thresholds as well. FATCA’s reporting thresholds are staggered, with differing levels for various categories. They are also higher: the lowest threshold is for a single U.S. person living in the USA all year.
Individuals and specified domestic entities (closely held domestic corporations or partnerships where either 50% of gross income is from passive sources or 50% of assets generate passive income, as well as some trusts) in this category hit the threshold at $75,000 of reportable assets at any point in the year or $50,000 on the final day of the tax year.
Additionally, FATCA requires reporting some assets that aren’t included with FBAR, including business and trust ownership and some kinds of foreign entity contractual investments.
FBAR is simpler in comparison: Any U.S. taxpayer or domestic business entity with over $10,000 total (aggregate value) in foreign financial accounts must file FinCEN Form 114.
The forms themselves are different as well:
The IRS oversees FATCA (Form 8938). FinCEN (a division of the U.S. Treasury Department) handles FBAR (FinCEN Form 114).
Yes, in some senses. FATCA and FBAR have distinct requirements, such as the differing reporting thresholds, as well as what kinds of assets count toward those thresholds. But some foreign accounts must be reported on both forms.
An easy mistake is to assume that assets reported on one form are already accounted for and thus don’t need to be reported a second time — reporting income twice seems like it could lead to double taxation, after all. However, this assumption is incorrect and can lead to significant penalties if a business fails to file a required report.
For example, let’s say a U.S.-based business has $1 million USD spread across a few different foreign accounts and financial instruments. There will likely be some difference in exactly which accounts and instruments must be reported to the IRS and which to FinCEN. But no matter how those assets are organized, the business is sure to meet the FBAR threshold of $10,000 and the higher FATCA threshold. As a result, this business would need to file both forms.
Another much smaller business holds just $20,000 in foreign accounts, falling well under the FATCA reporting threshold but still over the FBAR threshold. This business is obligated to file the FBAR (FinCEN Form 114) but would not need to fill out FATCA.
Think of it this way: You’re reporting the same assets to two distinct agencies that do different things with that information. One ensures you’re taxed appropriately, while the other simply watches out for signals of financial crimes.
Quick note on how virtual addresses fit into the mix: Businesses using a virtual address as part of their operations can generally do so for tax purposes. But it’s absolutely crucial that all foreign financial account reporting aligns with the registered business address (which may be a virtual address, but isn’t necessarily so). This is important so that businesses can avoid address-related discrepancies during compliance checks.
Failing to file Form 8938 (FATCA) or FinCEN Form 114 (FBAR) may lead to steep penalties and fines for businesses. You may also increase your risk of a costly and time-consuming IRS audit, something no business wants to go through.
These are the penalties under FATCA:
FBAR has a different and much steeper set of penalties:
Complying with FATCA and FBAR starts with healthy accounting practices, but there are other steps you can take. Follow these best practices to get and stay compliant with both sets of requirements.
Getting compliant with FATCA and FBAR filing requirements — and maintaining that compliance over time — is vitally important for U.S.-based individuals and businesses with overseas business assets. The requirements aren’t all that difficult to understand, but determining your business’s financial specifics (and thus whether you’re required to file either or both forms) may be a challenge.
The actionable strategies we’ve provided can help you navigate IRS and FinCEN reporting requirements so that you can avoid costly penalties and keep your business moving forward.
Another strategy for reducing complexity and advancing your business may be a virtual address and virtual mailbox with Stable. Stable receives all your business mail including tax documents, then we scan and digitize them so you can access them from anywhere and take appropriate action, like sharing them with team members or accountants — all in the cloud.
Easier digital access to your tax documents from anywhere means no more scrambling to find a form that’s lost in a drawer (or sitting on a desk hundreds of miles from where you are right now!). With all the needed information accessible in your Stable dashboard, it’s easier to find what you need so you can stay compliant.
That’s why Stable is the perfect solution for American expats living abroad, as well as busy business leaders managing businesses and operations that span multiple countries.
Get started with Stable today: Get your address
If your business has overseas accounts or assets, you need to know about FATCA and FBAR reporting requirements:
These apply to U.S. businesses and individuals who hold certain assets in a foreign country. If that’s you, then it’s vital to understand and comply with these two reporting requirements. Failing to do so means falling out of compliance with U.S. laws and potentially incurring significant civil penalties.
Here’s what you need to know.
Both FATCA and FBAR are reporting forms that apply to individuals and businesses that pay U.S. taxes and also hold assets in countries other than the U.S. The information they contain overlaps quite a bit.
However, these forms are different in several important ways. Businesses should be aware of these differences so they can determine which to file.
The two forms serve distinct purposes: one is related to tax evasion and the other to money laundering.
FATCA exists primarily to ensure that individuals and businesses are paying enough in taxes. By requiring domestic entities to disclose financial assets held abroad, the IRS gains the necessary information to collect taxes on those assets where applicable, meaning that filing this form may affect your tax liability.
FBAR isn’t about taxes, at least not directly. Instead, it’s about financial crimes more broadly, with a focus on money laundering and international financial transaction laws. This form requires businesses and individuals to disclose foreign bank accounts and other financial assets. It’s separate from tax filings and has a different set of enforcement mechanisms and penalties. No additional taxes are added based on this form.
The two forms have differing reporting thresholds as well. FATCA’s reporting thresholds are staggered, with differing levels for various categories. They are also higher: the lowest threshold is for a single U.S. person living in the USA all year.
Individuals and specified domestic entities (closely held domestic corporations or partnerships where either 50% of gross income is from passive sources or 50% of assets generate passive income, as well as some trusts) in this category hit the threshold at $75,000 of reportable assets at any point in the year or $50,000 on the final day of the tax year.
Additionally, FATCA requires reporting some assets that aren’t included with FBAR, including business and trust ownership and some kinds of foreign entity contractual investments.
FBAR is simpler in comparison: Any U.S. taxpayer or domestic business entity with over $10,000 total (aggregate value) in foreign financial accounts must file FinCEN Form 114.
The forms themselves are different as well:
The IRS oversees FATCA (Form 8938). FinCEN (a division of the U.S. Treasury Department) handles FBAR (FinCEN Form 114).
Yes, in some senses. FATCA and FBAR have distinct requirements, such as the differing reporting thresholds, as well as what kinds of assets count toward those thresholds. But some foreign accounts must be reported on both forms.
An easy mistake is to assume that assets reported on one form are already accounted for and thus don’t need to be reported a second time — reporting income twice seems like it could lead to double taxation, after all. However, this assumption is incorrect and can lead to significant penalties if a business fails to file a required report.
For example, let’s say a U.S.-based business has $1 million USD spread across a few different foreign accounts and financial instruments. There will likely be some difference in exactly which accounts and instruments must be reported to the IRS and which to FinCEN. But no matter how those assets are organized, the business is sure to meet the FBAR threshold of $10,000 and the higher FATCA threshold. As a result, this business would need to file both forms.
Another much smaller business holds just $20,000 in foreign accounts, falling well under the FATCA reporting threshold but still over the FBAR threshold. This business is obligated to file the FBAR (FinCEN Form 114) but would not need to fill out FATCA.
Think of it this way: You’re reporting the same assets to two distinct agencies that do different things with that information. One ensures you’re taxed appropriately, while the other simply watches out for signals of financial crimes.
Quick note on how virtual addresses fit into the mix: Businesses using a virtual address as part of their operations can generally do so for tax purposes. But it’s absolutely crucial that all foreign financial account reporting aligns with the registered business address (which may be a virtual address, but isn’t necessarily so). This is important so that businesses can avoid address-related discrepancies during compliance checks.
Failing to file Form 8938 (FATCA) or FinCEN Form 114 (FBAR) may lead to steep penalties and fines for businesses. You may also increase your risk of a costly and time-consuming IRS audit, something no business wants to go through.
These are the penalties under FATCA:
FBAR has a different and much steeper set of penalties:
Complying with FATCA and FBAR starts with healthy accounting practices, but there are other steps you can take. Follow these best practices to get and stay compliant with both sets of requirements.
Getting compliant with FATCA and FBAR filing requirements — and maintaining that compliance over time — is vitally important for U.S.-based individuals and businesses with overseas business assets. The requirements aren’t all that difficult to understand, but determining your business’s financial specifics (and thus whether you’re required to file either or both forms) may be a challenge.
The actionable strategies we’ve provided can help you navigate IRS and FinCEN reporting requirements so that you can avoid costly penalties and keep your business moving forward.
Another strategy for reducing complexity and advancing your business may be a virtual address and virtual mailbox with Stable. Stable receives all your business mail including tax documents, then we scan and digitize them so you can access them from anywhere and take appropriate action, like sharing them with team members or accountants — all in the cloud.
Easier digital access to your tax documents from anywhere means no more scrambling to find a form that’s lost in a drawer (or sitting on a desk hundreds of miles from where you are right now!). With all the needed information accessible in your Stable dashboard, it’s easier to find what you need so you can stay compliant.
That’s why Stable is the perfect solution for American expats living abroad, as well as busy business leaders managing businesses and operations that span multiple countries.
Get started with Stable today: Get your address
