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What Is FATCA? And Who Should Be Reporting Foreign Accounts On Their Tax Returns?

Taxgirl KPE December 29, 2020 481

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Foreign bank accounts aren’t necessarily for mustache-twirling villains and the superwealthy, but they do trip up plenty of people when it’s time to file their taxes. With foreign accounts becoming more common among everyday people and the minimum amount required to file being so low, it can be easy to not even realize you need to file an FBAR. Missing an FBAR on your taxes can wind you in hot water with the IRS and rack up hefty fines. But what is FATCA and the FBAR, and what happens if you didn’t file?

What are FATCA and FBAR? How foreign accounts are taxed in the U.S.

On this week’s episode of the Taxgirl podcast, we’re joined by Matthew Lee. Matthew is a former U.S. Department of Justice trial attorney who is now a partner at Fox Rothschild with a focus on federal tax controversy and foreign account tax. He’s helped hundreds of people handle their non-compliance tax issues, including the FATCA and FBAR. We discuss what is FATCA and what is the FBAR, as well as who should be filing, and the penalties for not doing so.

Listen to Kelly and Matt talk about FATCA reporting:

  • What is FATCA? — Foreign Account Tax Compliance Act
  • What is the FBAR? — Foreign Bank Account Report
  • The perception of an offshore bank account
  • What type of person gets in trouble with FATCA?
  • When you need to file the FBAR
  • When do people realize they need help with FATCA?
  • How Schedule B has informed people of FATCA
  • The IRS cracking down on offshore bank accounts
  • The difference between willful and non-willful non-compliance
  • How hard is it to argue non-willful non-compliance with the IRS?
  • The line where non-compliance will be criminally prosecuted
  • Different forms for disclosures, including Form 8938, Form 5471, and Form 3520
  • Penalties for non-compliance
  • Fighting the IRS on FATCA
  • What is the ODVP and how did it help?
  • Are crypto assets supposed to be reported via FBAR?
  • How and where to get the right advice on handling non-compliance tax issues?

More about Kelly Phillips Erb:

Kelly is the creator and host of the new Taxgirl podcast series. Kelly is a practicing tax attorney with considerable experience and knowledge. She works with taxpayers like you every day. One of the things that she does is help folks out of tax jams, and hopefully, keep others from getting into them.

Kelly’s Website – Taxgirl

Fox Rothschild – Matt Lee’s biography

Matt Lee – Email

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Taxgirl KPE

Kelly Erb is a tax attorney, tax writer and podcaster.

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