FATCA Reporting – A Guide for US Persons Holding Foreign Financial Assets

Del Sol CPA
May 21
4 min read

Updated: May 27

If you’ve lived and worked overseas as an American citizen (or any other category of US person), there’s a good chance you’ve encountered, and perhaps struggled with, understanding your US tax reporting obligations while abroad. This article is part of a series designed to guide you through the murky, and sometimes frustrating waters of US tax reporting and compliance.

In the next post, we’ll be focusing on the Foreign Account Tax Compliance Act (FATCA). You can view all the articles in the series here.

Although FATCA may not exactly be a household name for US expats, it's a critical piece of legislation that shouldn’t be overlooked. Whether you're a long-term expat or a recent arrival to foreign shores, understanding your responsibilities under FATCA is essential to ensure you're on the right side of the law and to avoid serious penalties. In this guide, we'll break down FATCA, its reporting requirements, exemptions, and offer practical tips for US expats living overseas.

Note: The details in this post are based on the latest information as of May 22nd, 2025, and may be subject to future revisions. The latest information about the FATCA can always be found on the IRS website, or provided by a tax professional.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is a 2010 US federal law requiring US persons to report their non-US foreign financial assets annually on IRS form 8938. FATCA reporting is required in addition to the annual requirement for filing an FBAR (Report of Foreign Bank and Financial Accounts). Its primary goal is to help combat tax evasion by US taxpayers holding financial assets abroad.

Filing Requirements for Form 8938

Taxpayers Living Abroad

If you reside outside the US and must file a US income tax return, you must also submit Form 8938 if your foreign financial assets exceed the following thresholds:

Married Filing Jointly: Required if total foreign financial assets exceed $400,000 on the last day of the tax year or $600,000 at any time during the year. Only one Form 8938 is needed for a jointly filed return, covering all specified foreign assets held by either spouse—even if only one resides abroad.
Single or Married Filing Separately: Required if foreign financial assets exceed $200,000 on the last day of the tax year or $300,000 at any time during the year.

Taxpayers Living in the US

If you reside in the US and must file a US income tax return, Form 8938 is required if your foreign financial assets exceed these thresholds:

Unmarried Individuals: Required if assets exceed $50,000 on the last day of the tax year or $75,000 at any time during the year.
Married Filing Jointly: Required if combined foreign financial assets exceed $100,000 on the last day of the tax year or $150,000 at any time during the year.
Married Filing Separately: Required if foreign financial assets exceed $50,000 on the last day of the tax year or $75,000 at any time during the year. When calculating your threshold, include half the value of any jointly owned foreign assets, but report the full value of each asset when filing.

Fun fact:

Under FATCA (the Foreign Account Tax Compliance Act), foreign financial institutions are required to identify and report accounts held by US persons. The IRS may be notified when you open a local bank account in a country. Due to the added compliance burden, some financial institutions may even choose not to serve US clients at all.

Key Takeaways

If you are a US person with foreign financial assets, you are subject to FATCA requirements and may need to submit FATCA form 8938 with your annual tax return.
If you live overseas, you only need to file a FATCA report if the total value of your assets exceeds $200,000 on the last day of the tax year or $300,000 at any point during the year. ($400,000 and $600,000, respectively, if you are married)
Many different types of assets need to be reported under FATCA - not just your bank accounts. Read on for a more complete list.
Penalties for non-compliance are harsh: $10,000 per violation, plus an additional $50,000 for continued failure to file after IRS notification, and a 40% penalty for undisclosed (or under-disclosed) assets. Criminal penalties may also apply.
The higher thresholds for FATCA reporting (relative to FBAR) suggest that it generally targets higher-net-worth individuals – meaning more money is on the line, and the stakes are higher if you’re found to be non-compliant.

How can I get help with preparing my FATCA form?

We understand how stressful and frustrating it can be to deal with complex tax reporting obligations like the FATCA(肥咖) and FBAR(肥爸), and we’re here to help. In addition to standard tax filing and preparation services, the experts at Del Sol CPA and Associates are more than happy to offer you assistance with filing a timely and compliant FATCA form each year with your tax return.

If you have any questions or are seeking guidance, please don’t hesitate to reach out to our bilingual team of trained tax professionals for answers. We look forward to serving you!