Tax and reporting requirements are different for U.S. citizens (and Green Card holders) living in the U.S. as opposed to those living and banking abroad. In the past few years, the U.S. Tax authorities have confirmed what they suspected for a long time: there is a significant amount of income being earned by U.S. persons that is not be properly reported.
In general, the United States requires all U.S. persons, regardless of where they live, to file an income tax return on their worldwide income. Moreover, it requires all U.S. persons to report any financial accounts held outside of the United States (if the balance in all their non-U.S. accounts reach $10,000 or more in any given day).
The Foreign Account Compliance Act (FATCA) became part of U.S. federal law in 2010 so that the U.S. authorities could not only gather information from U.S. persons, but also from the financial institutions where they hold accounts.
Over the past five years most countries have signed FATCA agreements and Tax Information Exchange agreements with the United States promising that they would report annually about any accounts or shell corporations owned by U.S. Persons. FATCA requires foreign financial institutions to report this information to the IRS, giving the IRS another source of information on their taxpayers affairs (besides the tax return and FBAR that they file).
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding the thresholds, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).
How HCCI can help you
The U.S. government has made accurate reporting a priority. If you have not or are not sure that you have reported both income and assets properly, the U.S. government has offered ways for you to comply — and possibly without any penalties. HCCI can help you navigate this process to ensure you pay the least amount of tax, interest and penalties.