The Foreign Account Tax Compliance Act, otherwise known as FATCA, is set for implementation on July 1, 2014. The law was passed four years ago as part of a 2010 stimulus act. After years of delays, it’s now here, which means it’s time for Americans abroad to determine how they will handle the new law.

FATCA’s aim is to force Americans overseas to report any foreign-held assets. Foreign assets include anything held in an account with a foreign financial institution or any foreign assets that are not held with an American financial institution. Individuals must file a form 8938 with their income tax return if they hold more than $50,000 of such assets.

While the law’s goal was to reduce tax fraud, it could have several unintended consequences. It’s important for Americans overseas to get ahead of the legislation and take action.

The first step is to determine whether you are required to file under FATCA. Keep in mind that assets held in foreign branches of American institutions are not considered foreign assets. The assets must be held by you directly or with a foreign institution.

You may also want to check with your institutions to see how they will handle FATCA. Foreign institutions are facing strict reporting requirements if they have American clients. Failure to meet those requirements could result in steep penalties. Some institutions have responded to the legislation by simply refusing new American clients. Others have taken the drastic step of asking their current American clients to take their business elsewhere.

Looking for new institutions may not be ideal, but if that is what will happen, it would certainly be better to know about it in advance. Be proactive and talk to your institution to see what impact FATCA could have on your account.

Be sure to keep accurate records about your foreign assets throughout the year. Save your statements, and have those ready at tax time. If you’re meet the reporting requirements of FATCA, you’ll need to file a form 8938 with your tax return. Your financial institutions will also be disclosing your information to the IRS, so it’s important to be accurate on that form.

What if you don’t want to report your foreign assets to the IRS? Your only option is to renounce your citizenship. Beware, though. That option comes with its own tax complications. First, you’ll have to certify that you’ve been tax-compliant for the past five years. If you’ve had past tax problems, renunciation of citizenship could be challenging.

You’ll also owe an exit tax when you renunciate. The IRS treats all of your assets as if you sold them the day before you renunciated. That could trigger a hefty capital gains tax. If much of your wealth is the result of capital gains, renunciation could be a costly strategy.

The bottom line is that FATCA is here, and it’s time to get prepared. A deVere Group financial advisor could help you determine your FATCA requirements and recommend FATCA-compliant strategies to help you manage your tax liabilities