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2022 FATCA and FBAR Comparison: Which Form(s) Do You Need to File?

News, Offshore Account Update

Posted in on February 14, 2022

If you own an offshore bank account or other foreign financial assets, you may have an obligation to disclose these assets to the Internal Revenue Service (IRS) when you file your annual return in 2022. So, how can you determine if you need to file? If you need to file, should you file IRS Form 8938, an FBAR or both? Virginia FATCA lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

FATCA (IRS Form 8938) and FBAR Compliance in 2022

The reporting requirements for offshore bank accounts and other foreign financial assets have not changed significantly for 2022. The same assets remain subject to reporting under the Foreign Account Tax Compliance Act (FATCA) and the Bank Secrecy Act (BSA), and the same reporting thresholds remain in place this year.

FATCA (IRS Form 8938) Compliance in 2022

The FATCA (IRS Form 8938) filing requirement applies to U.S. taxpayers who owned “specified foreign financial assets” during the 2021 tax year. This includes offshore bank accounts as well as other financial assets held for investment purposes. It excludes non-financial assets, which the IRS defines primarily as foreign currency, foreign real estate, and tangible personal property held overseas.

The thresholds for FATCA (IRS Form 8938) reporting vary depending on two key factors: (i) filing status (i.e. filing individually or jointly), and (ii) country of residence (i.e. residing in the U.S. or abroad). You can learn about these thresholds in our in-depth overview of the FATCA reporting requirements.

FBAR Compliance in 2022

The Report of Foreign Bank and Financial Accounts (FBAR) reporting requirement applies to U.S. taxpayers who own foreign financial accounts (i.e. offshore bank accounts) exceeding the statutory threshold. This threshold currently stands at $10,000 in cumulative value at any time during the tax year. The “cumulative” aspect of this threshold means that U.S. taxpayers must report all of their foreign financial accounts if any one or more of their accounts, either alone or in the aggregate, has a total value of $10,000 or more.

Do You Need to File IRS Form 8938, an FBAR or Both?

U.S. taxpayers may have an obligation to file IRS Form 8938, an FBAR or both. Filing IRS Form 8938 does not satisfy the FBAR filing requirement, nor does filing an FBAR serve as a substitute for filing IRS Form 8938. This is true even if the same foreign financial account(s) trigger both filing requirements.

Failing to file IRS Form 8938 or an FBAR can lead to steep penalties—and it can even lead to criminal prosecution in some cases. As a result, in addition to ensuring compliance for the 2021 tax year, U.S. taxpayers should take the time to ensure that they have met their foreign asset disclosure obligations in prior years as well. Those who have not may need to consider making a voluntary disclosure in order to mitigate the consequences of their past filing mistakes.

Contact Virginia FATCA Lawyer Kevin E. Thorn to Learn More

If you have questions about foreign asset disclosure compliance, Virginia FATCA lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, can help. To arrange an initial consultation with Mr. Thorn, please call 703-752-3752, email ket@thornlawgroup.com or contact us confidentially online today.

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