The U.S. international tax reporting environment for both U.S. citizens with foreign activity, and for foreign nationals living, working or conducting business in the U.S. has become more treacherous than ever. New laws ensure there is no longer any viable choice but to comply fully with all filing requirements. HBL is ready to partner with you to find the tax avoidance strategies that best fit your situation, and to identify and avoid the tax compliance pitfalls you may face. Here are some details:
- U.S. citizens are taxed on their worldwide income, regardless of where it is earned. (The U.S. is one of the only countries in the world to do so.) This means you must file a U.S. tax return even if you have lived as a permanent resident of a foreign country for decades, making your income solely from within your country of residence – even if you owe no U.S. tax on the income.
- Further, an annual personal tax return is potentially just one of many U.S. filings you are required to make related to foreign income, investments and transactions.
- Failure to file can expose you to massive penalties, loss of passport and even criminal penalties. Many U.S. tax forms related to foreign activity now trigger $10,000 penalties – some automatic – for being incomplete or just one day late.
- Recent legislation effective 1/1/16 allows the IRS to revoke or deny your passport for some delinquent taxes, which can be assessed in lieu of your own tax filing if you fail to file. This is important in light of new laws. Each year more foreign institutions worldwide are fully complying with increasing U.S. demands to report all non-U.S. account holdings and earnings of U.S. citizens. The information is being matched against form filings to identify non-filers, and taxes and penalties are being assessed on the unreported activity.
- Foreign nationals living, working, or doing business in the U.S. need to know their options for tax avoidance, and whether their activity is reportable in the U.S. based on complex domestic rules and tax treaty provisions.