Why is my bank asking whether I am a US person?
Because the bank, not you, is the one being asked. FATCA has two halves: taxpayers report their foreign financial assets, and foreign financial institutions report the accounts they hold for US persons. The second half is backed by withholding, so an institution that cannot establish who its account holders are carries a cost of its own. That is why the letter arrives from a bank you may have used for decades, why it carries a deadline set by the bank rather than by a tax authority, and why it does not go away if you ignore it. Answer it accurately, and keep a copy of what you told them.
Does my bank reporting under FATCA mean I need not file?
No. The two halves of the regime are separate obligations owed by different people, and one does not discharge the other. Your bank’s report says that an account exists and what it held. Your own filing says what you hold and, on the return itself, what it earned. It is common to find that a bank has reported faithfully for years while the taxpayer-side statement was never filed at all — and the bank’s diligence is exactly what makes that visible. Treat a certification you have signed for a bank as a sign that the information is already moving, not as a filing you have made.
What happens if I ignore my bank’s FATCA certification request?
The institution acts to protect itself. It is the one carrying the exposure and it cannot wait indefinitely for a customer to reply, so it will apply whatever default treatment its own rules provide for an account it cannot certify — which can mean withholding on payments into the account, reporting it on an unresolved basis, or restricting what you can do with it. None of those outcomes is a tax decision about you, and none can be appealed to a tax authority, because no tax authority made them. The practical response is to establish your status, answer the request with documents, and deal separately with anything the bank has already done.
How does withholding enforce FATCA if nobody withholds from me?
The pressure is applied upstream. The regime does not rely on individuals volunteering information; it makes the flow of certain payments to a non-participating institution expensive, so the institution has a commercial reason to collect and report the information itself. You feel that indirectly — as a certification request, as questions when you open an account, as a form to sign when a plan is administered abroad. Understanding it explains something clients find baffling: the bank’s insistence is not officiousness and it is not negotiable at branch level. It is the mechanism, and the branch is the last place it can usefully be argued.
Does my country’s agreement with the United States change what I file?
It usually changes how the information reaches the United States rather than what you owe as a taxpayer. Many countries collect the account information from their own institutions and pass it on, which is why your bank may report to its local authority instead of directly. For you that changes the paperwork the bank asks for and the timetable it works to. It does not touch the taxpayer half of the regime. So the questions on your own file stay the same: which of my holdings fall in the reportable class, which filings do they belong on, and can I show how each figure was arrived at.
I am a US citizen abroad who has never heard of FATCA — what now?
Start with an inventory, not a form. List every account, plan, policy and shareholding you hold outside the United States, with the institution, the currency and the years you have held it. Almost every difficult question in this area is a classification question, and classification is impossible until the list exists. Then two things can be worked out: which items fall within the reportable class, and which of your years are still open. Only after that is it worth deciding what to file and in what order. Clients who begin by filling in a form usually have to start again, because the form asks questions the list answers.
What is a PFIC, and why do Canadian mutual funds cause trouble for US persons?
A passive foreign investment company is a non-US company that is mostly passive by income or by assets — which describes almost every Canadian mutual fund and ETF. For a US owner the default regime taxes distributions and gains punitively with an interest charge for the years the value built up. Two elections fix it, and both need annual information the fund may not produce for you. Holding the same exposure through US-domiciled funds usually avoids the problem entirely. See PFICs and Canadian mutual funds.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
