5.31.2019

FATCA Form 8938 Primer For Expats

FATCA  Primer For American Expats 

 



FATCA: Foreign Account Tax Compliance Act


I am not a tax expert nor am I an accountant. I am just a expat living in the Philippines who needed to know if the FATCA Form 8938 is applicable to me. I'm not one of those lucky people. And seriously, they are lucky because if they are married like me and filing a joint return and living in the Philippines throughout the entire year, then in order to be required to fill out a Form 8938 they would have to have a foreign financial interest of at least $400,000. 

Reportable Assets:

  • Any financial account maintained by a foreign financial institution, except as indicated above
  • Other foreign financial assets held for investment that are not in an account maintained by a US or foreign financial institution, namely:
    • Stock or securities issued by someone other than a U.S. person
    • Any interest in a foreign entity, and
    • Any financial instrument or contract that has as an issuer or counter-party that is other than a U.S. person.
The “except as indicated above” in the top bullet is referring to this:
financial accounts maintained by:
  • a U.S. payer (such as a U.S. domestic financial institution)
  • the foreign branch of a U.S. financial institution - or
  • the U.S. branch of a foreign financial institution
And this note from the IRS is interesting:
If you do not have to file an income tax return for the tax year, you do not need to file Form 8938, even if the value of your specified foreign assets is more than the appropriate reporting threshold.
For instance, If I am married filing jointly and living the full year in the Philippines and I have $400,000 (at the end of the year) parked in some CD or something else and earning a 5% annual return. The filing threshold would be $24,000 if I and my spouse are both under 65. If my only income for the year is the $20,000 paid in interest on the 400k I would not have to file a tax return and that negates the requirement to file Form 8938. 

While this is true, many tax sites I have read still advise submitting the Form 8938 even though you are not technically required to do so. Just in case. And this is the same advice that is given to expats regarding their actual tax returns. It is a good idea to keep filing a return every year even if your income is below the filing threshold.

Summary of Form 8938 Filing Thresholds:


Living in Philippines at least 330 days during the tax year


Total value on last day of the year
Total value at any time during the year
Single
$200,000             
$300,000
Married filing separately
$200,000             
$300,000
Married filing jointly
$400,000             
$600,000


Living in Philippines fewer than 330 days during the tax year


Total value on last day of the year
Total value at any time during the year
Single
$50,000
$75,000
Married filing separately
$50,000
$75,000
Married filing jointly
$100,000             
$150,000

What a difference a day makes. If I live in the Philippines for 329 days during the tax year, then my filing threshold is cut by 75%!


Further Reading



You may have escaped Form 8938, but you are more likely to be required to file an FBAR.

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