If you’ve received Form 1099, you may have noticed a checkbox labeled “FATCA filing requirement.” What does this mean? And what should you do if the FATCA filing requirement box is checked? Should you add a check if it isn’t?
Don’t panic! Here’s what you need to know.
What Is FATCA?
Many wealthy US citizens have attempted to evade taxation by hiding their money in overseas financial accounts. To combat this, the US requires all Americans with foreign assets above certain thresholds to report this using Form 8938: Statement of Specified Foreign Financial Assets.
The threshold depends on your filing status and location:
- Single taxpayers living abroad: $200,000 on the last day of the tax year or $300,000 at any point during the year
- Married taxpayers filing jointly living abroad: $400,000 on the last day of the tax year or $600,000 at any point during the year
- Single taxpayers living in the US: $50,000 on the last day of the tax year or $75,000 at any point during the year
- Married taxpayers filing jointly living in the US: $100,000 on the last day of the tax year or $150,000 at any point during the year
Of course, this may seem difficult to enforce. After all, if the IRS isn’t aware of your foreign assets, how will they know if you’re required to report them or not? The answer is FATCA.
In 2010, US lawmakers passed the Foreign Account Tax Compliance Act (FATCA). FATCA mandates that all foreign financial institutions must share information about any accounts belonging to US citizens.
As it stands, the vast majority of countries have agreed to honor the requirements of FATCA. This means that the IRS will almost always know if a US citizen is required to report their foreign assets, no matter where they live or where they’ve deposited their assets.
FATCA vs. FBAR
You may have heard of FATCA before. You may have heard of the FBAR as well. Some Americans living abroad confuse the two. And in some ways, they are related—but they also have important distinctions.
US citizens who have at least $10,000 deposited in one or more non-US bank accounts must report this by filing a Foreign Bank Account Report (FBAR). This is similar to the requirements established by FATCA, though the filing thresholds are different.
As an American living abroad, you may be required to file an FBAR or FATCA—or both. To learn what reporting requirements apply to you, consult an expat tax professional.
What Does the FATCA Filing Requirement Checkbox Mean?
Every Form 1099 sent out contains a “FATCA filing requirement” checkbox. This is true for virtually all variations of Form 1099, including:
- Form 1099-MISC
- Form 1099-INT
- Form 1099-DIV
- Form 1099-OID
- Form 1099-B
- Form 1099-R
This FATCA filing requirement checkbox is designed to notify the IRS whether the payer is reporting the details of this form in accordance with FATCA regulations. In some cases, this box will already be checked when you receive your Form 1099. Otherwise, it will simply be an empty box.
Should You Check the FATCA Filing Requirement Checkbox?
The FATCA filing requirement checkbox is primarily there for the payer. If you are not the payer listed on the Form 1099, you will never need to check it.
For example, if you accrued a certain amount of interest on money deposited in a foreign bank account, you may receive Form 1099-INT to show this. If the bank is required to report this interest to the IRS per the standards of FATCA, they will check the FATCA filing requirement box to signify that they are complying with that requirement.
However, the person receiving the Form 1099-INT in this example would not need to check the box if it is empty. The same is true for any other variation of Form 1099: unless you are the payer, you do not need to check the FATCA filing requirement box.
What Should You Do If the FATCA Filing Requirement Box Is Already Checked?
If the FATCA filing requirement box is checked, it may mean nothing for you. It’s merely informing you that the payer is reporting the details of this Form 1099 to the IRS. On the other hand, a check in this box may mean that you are required to file a FATCA report (via Form 8938) or an FBAR.
You should never disregard a check on a FATCA filing requirement box. Instead, contact a qualified tax professional to learn whether you’re required to file any additional forms. Failing to do so when required could result in steep penalties.
We Can Help!
FATCA requirements are nothing if not complicated. If the FATCA filing requirement box is checked on your Form 1099, we can help.
At Greenback Expat Tax Services, we’ve spent years helping expats meet their US tax obligations. If you’re not sure which forms you’re required to file, just contact us, and we’ll be happy to answer all your questions.
In fact, we can even prepare and file your expat taxes on your behalf.
Learn more about our services and flat-fee pricing to file your US expat taxes.
The IRS tax code is 7,000 pages. Want the cliff notes version for expats? Let us help.
