May 2018 JD Supra
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FATCA is still Standing! was published by JD Supra on 5/17/18.

Tax Reform came and went and FATCA is still standing.  While U.S. Corporations are now moving to a Territorial tax system, Individual U.S. Taxpayers living abroad ARE STILL REQUIRED to REPORT their worldwide income.

Prior to the passage of The Tax Cuts and Jobs Act (TCJA), the U.S had a worldwide “extra-territorial” tax system for U.S. citizens, Permanent Residents and Domestic U.S. corporations.  All of their worldwide income was subject to U.S. tax reporting and tax payment where required.  The TCJA shifted the “extra-territorial” tax system for Domestic U.S. Corporations to a “territorial” tax system.

 U.S. Individual Taxpayers continue to be subject to the “extra-territorial” tax system.  There was speculation that due to aggressive lobbying efforts, the Tax Reform would repeal FATCA and implement a “resident based” taxation system.  U.S. Individual Taxpayers living abroad hoped that Tax Reform would stop their double reporting and required tax payment as it has with U.S. Corporations.  When the dust settled, FATCA remained. 

What happens to the U.S. Individual Taxpayers living abroad?

U.S. Citizens and U.S. Green Card Holders that live oversees continue to have to report (and pay taxes when required) on their worldwide income.   They continue to be responsible for:

  • Annual U.S. Tax Returns
  • Annual Reports of Foreign Bank and Financial Accounts (FBAR/FINCEN114)
  • Statements of Foreign Financial Assets (Form 8938)
  • Information Returns of US Persons with Respect to Certain Foreign Corporations (Form 5471) 
  • Returns of US Persons with Respect to Certain Foreign Partnerships (Form 8865)
  • Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts (Form 3520)  and  Annual Information Return of Foreign Trust With a U.S. Owner  (Form 3520-A)
  • Return by a U.S. Transferor of Property to a Foreign Corporation  (Form 926)                                  

U.S. Citizens and U.S. Green Card holders living abroad ought to further investigate the changes and impact of the TCJA before filing their taxes. 

Don’t be a victim of your own making.  If you are a U.S. Taxpayer living abroad, consult with a licensed expert tax specialist before filing taxes and submitting reports.