IRS REQUIREMENTS AND PENALTIES FOR DISCLOSING OFFSHORE BANK ACCOUNTS

What is an Offshore Account and How Do I Disclosure Mine?

Reporting an “offshore” bank account is imperative if a U.S. taxpayer has international assets.

In 2010, the Foreign Account Tax Compliance Act (FATCA) was passed by Congress and signed into law. The purpose of FATCA was to crack down on the use of offshore accounts to evade taxes. While FATCA has likely accomplished this goal, it has also made life much more difficult for American expatriates.

For U.S. taxpayers receiving foreign income, it is essential to be aware of the American tax requirements for such income. The United States is the only major country that taxes its citizens and permanent residents on income earned anywhere in the world. When faced with such an aggressive government stance on foreign income, U.S. taxpayers receiving foreign income must be certain they are in legal compliance.

Placing funds in certain foreign banks and investments overseas might be sound financial planning, but there are strict Internal Revenue Service reporting rules that must be followed.