© 2012 Deloitte LLP. Private and confidential. FATCA Update for Individuals Alex Jones November 2013

© 2012 Deloitte LLP. Private and confidential. FATCA, Form 8938 and Medicare Practical Issues 2

© 2012 Deloitte LLP. Private and confidential. Form Foreign financial asset reporting The thresholds Filing status Residing InValue on last day of year Value on any day of year Unmarried or married filing separately US$50,000$75,000 Married filing jointly US$100,000$150,000 Unmarried or married filing separately Foreign country $200,000$300,000 Married filing jointly Foreign country $400,000$600,000 3

© 2012 Deloitte LLP. Private and confidential. Form Foreign financial asset reporting What practical issues are we coming across? Foreign Pension plans (apart from social security or “other similar” plans) ARE SFFAs, as are deferred compensation plans – this takes many individuals above the threshold Valuation – rules are very vague...do the best you can with information available to you. 3 step test – any information on value? Any distributions? If neither $0 can be OK... What if you are close to threshold? Disclosure considerations Trust and estates – do you “know or have reason to know...of the interest” “Held for investment” – stock will always be an SFFA (even if in a trading company) but what about capital contribution to a foreign partnership – does it depend on how capital has been used? Differences between FBAR and 8938 e.g. with FBAR report accounts of entity (in some cases, depending on ownership) with 8938, report entity If in doubt - report?? Penalties – we have seen some recently for FBARs 4

© 2012 Deloitte LLP. Private and confidential. Form 8960 – Net investment Income tax Not actually part of FATCA rather Obamacare 3.8% additional charge on net Investment Income Applies to individuals whose modified Adjusted Gross Income exceeds $250k for Married Filing Joint, $125k Married Filing Separate and $200k Single 3.8% charge on the lower of Net Investment income or the difference between MAGI and the threshold amount. IRS have issued a draft form 8960 but not yet the instructions or Regulations An IRS office has suggested the charge will not be covered by foreign tax credits, and potentially no relief in the UK either Investment income includes; interest, dividends, annuities from non-qualified plans, rental royalties, net capital gains and passive activities of partnerships, s- corporations and trusts Investment expenses allocable to investment income will reduce the amount subject to charge. Question whether the charge applies to the growth in UK pension plans. 5

© 2012 Deloitte LLP. Private and confidential. 6 Questions ?

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