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Most American expats have heard of FATCA. A few know what it means to them, but most don’t like it. But in reality, it’s the foreign financial institutions the United States obligates to report that like it far less than the taxpayer. Why? Because if the institutions do not comply, the U.S. government imposes a 30% withholding tax when they trade in U.S. markets.

The real threat to the American expat or U.S. taxpayer overseas is that their local foreign financial institution may deny them access to accounts or investment options due to the financial reporting obligations the institution may fall under for servicing Americans.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) generally requires that foreign financial institutions and other non-financial foreign entities report on the foreign assets held by their U.S. account holders. FATCA makes it easier for the IRS to enforce worldwide taxation on American expats and those subject to U.S. taxation.

Who is subject to FATCA?

U.S. Citizens, Green Card Holders, and U.S. Residents for Tax purposes are subject to FATCA.

  • Anyone born in the United States and those who have naturalized are U.S. citizens.
  • Anyone born outside of the United States but with a U.S. parent is generally a U.S. citizen.
  • Additionally, anyone who has had a green card for at least one day as a green card holder is classified as a U.S. person and is subject to FATCA. Certain exemptions apply.
  •  U.S. residents.

What types of foreign accounts are subject to FATCA?

Specified Foreign Financial Assets include foreign financial accounts and foreign non-account assets held for investment (as opposed to held for use in a trade or business), such as foreign stock and securities, foreign financial instruments, contracts with non-U.S. persons, and interests in foreign entities.

The FATCA bottom line.

FATCA is nothing to be afraid of; it simply means the IRS has more access to compare the date you are filing. It does not raise your tax liabilities; it’s just a law you must be aware of as an American Expat or U.S. Person with tax obligations in the United States. Proper and timely filing will ensure you stay compliant.
It is recommended you speak to your tax advisor to ensure you are filing correctly and including all the required forms.

Can Beacon Global Wealth Management help American Expats and U.S. persons overseas access FATCA reporting compliant investments?
BGWM work with a range of investment providers who specialise in compliant solutions for US-connected individuals. We can tailor our investments to ensure that clients who need to report back to the U.S. do so in a compliant and efficient manner.

We are also affiliated with specialist providers of tax guidance and fiduciary guidance for our clients and make referrals to such services where appropriate and required.

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Disclosure: Beacon Global Wealth Management are not tax experts and due to the complexities of the tax system and your aims and objectives, it is highly advisable that you seek an independent tax opinion. You are fully aware that BGWM are not Tax Advisers and as such cannot be held responsible should the applicable tax authority raise a claim against you for any future taxes.
The information on this page does not disclose all the risks and other significant issues related to the investments. Prior to transacting, potential investors should ensure that they have consulted with their financial adviser and fully understand the terms of the investments and any applicable risks.
Any views, opinions, or estimates expressed in this document reflect the current views and opinions of Beacon Global Wealth Management, however, these views, opinions, and estimates are subject to change.
The value of investment products may go down as well as up and any data on past performance, modeling, or back-testing contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modeling or back-testing. The value of any investment may fluctuate as a result of market changes. The information in this document is not intended to predict actual results and no assurances are given with respect thereto.