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Expatriate Alert: 2 Critical Tax and Health Insurance Issue

May 20, 2014

What ex-pats should know about U.S. tax requirements and how they affect you.

Whether you live abroad for work-related or personal reasons, if you maintain your U.S. citizenship, you need to stay abreast of tax and other requirements that continue to affect you. Here are two items to keep in mind:

1. FATCA and FBAR reporting. The Foreign Account Tax Compliance Act (FATCA) requires certain U.S. citizens to report certain information about their foreign financial assets on Form 8938, “Statement of Specified Foreign Financial Assets,” along with their annual tax returns. For expatriates, the statement generally must be filed if the aggregate value exceeds one of the following thresholds (which are higher than those for taxpayers residing in the United States):

  • $200,000 ($400,000 for married couples filing jointly) at the end of the tax year, or
  • $300,000 ($600,000 for joint filers) at any time during the tax year

You may also need to file Financial Crimes Enforcement Network (FinCEN) Form 114, “Report of Foreign Bank and Financial Accounts (FBAR),” by June 30 of the following year for each year that the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year (the same threshold that applies to U.S. residents).
Noncompliance with FATCA and FBAR reporting can be costly — see our previous article for details.

2. ACA individual mandate. Beginning this year, the Affordable Care Act (ACA) generally requires U.S. citizens to have “minimum essential coverage” or face penalties. But U.S. citizens who aren’t physically present in the United States for at least 330 full days within a 12-month period are treated as having the requisite coverage for that period, as are U.S. citizens who are bona fide residents of a foreign country for an entire taxable year.

Minimum essential coverage also includes a group health plan provided by an overseas employer. And, under transitional relief, non-self-insured expatriate health insurance plans will satisfy the coverage requirements until Dec. 31, 2016.

These are only two of the myriad tax-related issues U.S. citizens residing abroad need to be aware of. To learn more about tax planning and compliance for expatriates, please contact us.

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