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Lowest Local Tax Rates for US Expatriates May Not Be Good Homes

The Wall Street Journal recently published an analysis by AIRINC, a Cambridge, MA firm who analyzes data based on international mobility, showing the lowest and highest local income tax rates for US expatriates.  The answers may be a bit misleading.  For example, in the study the lowest income tax rates (10%) were for Kazakhstan and Bulgaria – two countries who may not provide the greatest political stability or attractive environment for US Expats.

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While the local tax picture is extremely important to US expatriates, the major focus of the past year has been the impact of FATCA and the resulting impact on FBARs and the US tax returns of expatriates.  Many expats, and resident US taxpayers who are not citizens of the US find the IRS tax code and recent developments relating to offshore accounts and assets confusing.  Do you have to report all of your offshore bank accounts?  How do you value the house you own in South Africa?

These are complex matters, but the implications for US expats and resident US taxpayers are hazardous at best.  The time to come clean with the IRS and come into compliance with FATCA and FBAR reporting is upon us.  The IRS has access to bank account, investment holdings and real estate information from around the world.  They are able to tie those holdings back to specific US social security numbers and taxpayer IDs.

If you are an US expatriate with any offshore accounts or assets, or are a foreign citizen residing and working in the US we invite you to call us for a free consultation at 866-631-3470.  You must fully disclose all of your holdings, or expose yourself to penalties of 50% or higher, and in some cases criminal liability (resulting in jail or deportation).  There are options available, and while many supposed experts are recommending the “streamlined” option for all FBAR filers, this is a complicated and potentially treacherous path.  You would benefit from the experienced guidance of a seasoned tax attorney who can protect your interests and provide the protection of  the”attorney-client privilege.”