So you have money in a foreign country and you are a US citizen/permanent residence, should you tell anyone about it? No, not your parents…may be not even your spouse, but… you better not ignore IRS. So says, Foreign Accounts Tax Compliance Act (FATCA).
First, if you have anything above $10,000 the foreign bank will report that to the USA, assuming that the specific country has entered into Intergovernmental Agreement (IGA) with the USA. What happens if there is no IGA with that country? Some say enforcing this would be unconstitutional. According to complaint filed on July 14, 2015, Republican presidential candidate Sen. Rand Paul (Ky.) has actually sued the Treasury department on that ground.
Second, if you have above $50,000, you need to report it along with your annual tax return, or else your income from US source could be subject to a 30% withholding. This reporting is in addition to the reporting requirement under Report of Foreign Bank and Financial Accounts (FBAR). Failure to comply with FBAR, if willful, may cost you $100,000 or 50% of the money in the account, whichever is the greater.
FACTA which was enacted in 2010 but didn’t take effect until July 1, 2014 deserves your attention. To get current alerts on this subject and ensure compliance please visit: http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
If you feel that you need to know more about FACTA, and/or have any question or need for professional assistance on related matters, please call us at (615)346-4016.
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