Foreign Account Tax Compliance Reporting Requirements (FATCA) filing and FBAR

[sivanyk1234]

Could you please comment on (HIRE Foreign Account Tax Compliance: Reporting Requirements) FATCA filing. Is this applicable for Indian NRI accounts. In addition to FBAR are we supposed to file FATCA forms also. I am very confused about this.

Thanks.

[kkassociate]

Highlights of the article:

The IRS is using a once-obscure tax form called the Foreign Bank Account Report, or FBAR, to force taxpayers to provide information on income they earn or bank accounts they hold overseas. It is threatening tough action against taxpayers who don't file the form and has greatly broadened those subject to filings beyond direct owners of offshore accounts. The requirement applies to U.S. citizens and residents who have offshore accounts totaling $10,000 at any point during the year.

The penalties for offshore income violations are now among the toughest in the tax system. Those who have inadvertently failed to report offshore income, even just a few hundred dollars, could be subject to a $10,000-a-year penalty going back several years.

For those the IRS considers willful tax evaders, it is much worse. The IRS can impose a penalty of $100,000, or one half the value of the account, whichever is greater, per year.

Although taxpayers are exempt from filing if the total value of accounts never tops $10,000 at any point during a year, there is no exemption for even small amounts of income if the account goes above that point.


FBAR Quirks

Because the FBAR technically is part of the bank secrecy act (Title 31) rather than the income tax code (Title 26), it contains traps for those who are used to tax law. Unlike income tax forms, FBAR forms must be received by the due date, not just mailed by it. There is no electronic filing, and forms must be mailed to a special address in Detroit rather than a taxpayer's usual IRS service center, although they may also be hand-delivered to a local IRS office.

Taxpayers who want to challenge FBAR penalties cannot do so in Tax Court, where they don't have to pay the tax, penalties and interest up front, notes Chamberlain Hrdlicka's Sheppard. Instead, taxpayers must pay the total liability -- which can be huge as a result of the penalties -- and sue for a refund in U.S. District Court. Also surprising to taxpayers (and perhaps their advisers) is that FBAR penalties are not dischargeable in bankruptcy.

You need to file this Form every year before June 30th.

Regards,
KKA

[junkaccount]

Is the $10,000 limit per person? We file our tax return in US as Married Filing jointly. We have some accounts in India that are separate and some joint. How does that work?

[kkassociate]

The FBAR forms are filed by individual and there is no MFJ status available. In case of joint account the account is reported on the FBAR form of person who is the primary holder to the account. If both the person have the signing authority then the account is reported on both FBAR forms.

We assist in filing USA and India tax returns, you can email us at [email][email protected][/email]

Regards,
KKA

[kohlid]

I understand the requirement for declaring the income from Interest in India.

However I wanted to understand the taxes on rental income earned in India.

For instance if one is a US citizen or Green Card holder in USA and getting rental income in India for 1 lacs per month (12 lacs per annum). Paying the taxes on income in India after deducting the 30% maintenance, real estate taxes and interest on Mortgage.

Do we need to report the income in USA also?
I understand that it is required and one can claim the taxes paid in India as deduction, however i want to understand the tax implications as reporting the income in USA puts it over the income in USA and hence at much higher rate as compared to the taxes paid in India on that income.

Any suggestions how this should be handled.
Appreciate any input.

[greyfri]

I understand the requirement for declaring the income from Interest in India.

However I wanted to understand the taxes on rental income earned in India.

For instance if one is a US citizen or Green Card holder in USA and getting rental income in India for 1 lacs per month (12 lacs per annum). Paying the taxes on income in India after deducting the 30% maintenance, real estate taxes and interest on Mortgage.

Do we need to report the income in USA also?
I understand that it is required and one can claim the taxes paid in India as deduction, however i want to understand the tax implications as reporting the income in USA puts it over the income in USA and hence at much higher rate as compared to the taxes paid in India on that income.

Any suggestions how this should be handled.
Appreciate any input.

Yes, you need the report the income in the US. You can claim deduction for taxes paid in India, and also deduct maintenance, real estate taxes, interest etc. the same way you would on a property in the USA. You might have to pay at a higher rate because of that :-(

[r2maa]

Please read the instructions EVERY YEAR that come with the FBAR forms.
This year I see some new requirements, including how to calculate $ value for the foreign amount.
Note that the forms should be RECEIVED by them before June 30th, and there is no Extension.
Fedex etc., might take 2 to 3 days to send it, and the instructions provides a different address for such cases (it seems).

[okonomi]

here you go...

Dear Sir,
I am in the process of fililng FBAR form and wish to know whether the value of shares held by me in Indian Dmat Account is to be disclosed in the form or only the balances in my NRO and NRE accounts are to be disclosed.
Secondly I am a partner in a partnership firm, Am I suppose to disclose the value of my capital account in the form too.
Thirdly, whether my shareholding in a private limited company need to be disclosed or not?

Please let me know asap.

Welcome to the forum.

Please peruse the forum and understand the structure. You will see subforums and threads under sub forums. There are finance, tax, general discussions, R2I etc sub forums for example. When you click on a sub forum, you will see threads under it. There is an FBAR related thread in finance sub forums.

Will reply by Fedex do? or a personal phone call?

Post your query in a related thread in the subforums and perhaps a knowledgeable member will respond as and when he/she finds time. The admins manage and administrate the forum, they do not offer a free or a paid advisory service.

You have posted your query in Club Office - you need to find the finance sub forum and the FBAR thread. Perhaps read the thread and your query may already have been answered, else post there.

You will not receive any responses in club office here as admins will probably delete this thread.