Americans who live outside of the United States are still required to follow strict tax laws. These tax laws can be very complex and difficult to navigate but it is very important for Americans living abroad to understand their tax reporting obligations before it’s too late.
Many Americans living abroad are not aware of the tax reporting obligations they are supposed to follow, and as a result, many end up facing harsh treatment and penalties from the Internal Revenue Service.
Reports show that in 2012, the IRS received 807,040 foreign bank account report submissions even though there are millions of U.S. citizens living abroad who are supposed to follow FBAR requirements. Many Americans living abroad fail to submit an FBAR due to not knowing about the requirements or not following them correctly.
Many Americans living abroad are becoming increasingly frustrated with the tax filing process and the treatment they receive from the IRS. Many U.S. taxpayer advocates say that the current requirements are too difficult for people to understand and adhere to, leading to the high number of taxpayers that fail for submit an FBAR or do not complete all of their requirements.
Individuals who fail to complete their tax reporting obligations while living abroad can face harsh consequences, including significant penalties and fines by the IRS. International tax obligations and requirements are complex. Individuals living abroad may want to consult a tax law attorney to discuss what obligations they need to complete to avoid any fines and penalties.
Understanding FBAR and other international tax laws and obligations will only help those living abroad avoid civil and even criminal matters in the future.
Source: The Yucatan Times, “Are you aware of the full extent of your tax reporting obligations as an Expat?” Jan. 15, 2014