This is a guest post by Andrea Karpinski of USA/UK Financial Concierge Ltd.
Informed Choice works with UK resident investors, but we thought that this blog about the implications of FATCA for US taxpayers living in the UK might be of interest to some of our website visitors.
Foreign Account Tax Compliance Act (FATCA) guides foreign financial institutions through the steps they must take to ensure any of their clients who are US taxpayers declare all earnings or profits from offshore assets on their tax returns.
The Foreign Account Tax Compliance Act (FATCA) is a 388-page rule book issued by the US Treasury outlining exactly what foreign financial institutions must do to maintain their obligations under law.
The responsibility for reporting lies with the financial institution or adviser managing the asset rather than the individual. In theory, the US Treasury has to control fewer financial institutions than taxpayers – and the Treasury can exact penalties to make the institutions toe the line far easier.
However the burden also falls on individual US expats and the concern over what will happen to their taxes is increasing as the deadline approaches.
“When taxpayers avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden. FATCA is an important part of the US government’s effort to address that issue, and these regulations implement FATCA in a way that is targeted and efficient.
We believe these efforts will serve as a complement and catalyst to the ongoing global efforts to combat offshore tax evasion.” said Acting Assistant Secretary for Tax Policy Emily S. McMahon.
FATCA is aimed at foreign financial institutions and US taxpayers with investments overseas.
Photo credit: Flickr/jnn1776
