FATCA (Foreign Account Tax Compliance Act)
Definition
A U.S. law requiring foreign financial institutions to report accounts held by U.S. taxpayers to the IRS. On the individual side, U.S. persons with foreign financial assets exceeding $50,000 (single) or $100,000 (joint) at year-end must report them on Form 8938 filed with their tax return. Thresholds are higher for U.S. persons living abroad ($200,000/$400,000). FATCA is separate from FBAR requirements, and you may need to file both. Non-compliance can result in a $10,000 penalty per form.
Example
A U.S. citizen living in London has foreign bank accounts and investments totaling $250,000. She must file Form 8938 with her tax return and also file an FBAR since the balance exceeds $10,000.
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