Do you know America is the only first country in the world that enforces a tax duty on American citizens, no matter where they live or work (green card holders, and others)?
So, we are going to tell what things Americans Living Abroad need to report while filling their taxes. Let’s take a look those things related to American tax for us residents living abroad.
Reporting Worldwide Income
American citizens and green card holders are subject to federal income taxes on all of their worldwide income with no matter where they live or how they make their income. Also, the universal income expatriates report on their tax return requires be converting and presenting in US Dollars. They also need to keep detailed documentation on the amount and type of foreign income they are getting and what year they got it.
Revealing Foreign Bank Accounts And Other Financial Assets
Keep in mind that income isn’t the only thing you need to report. You have to tell the US government about any bank accounts, investment accounts or any other financial accounts held in foreign countries. What to report: If you have at least US$10,000 across all of your foreign financial accounts at any time during the year, then you have to disclose your foreign financial accounts on a FinCEN Form 114, Financial Accounts (FBAR) and Report of Foreign Bank.
Also, if you have at least US$50,000 across all your foreign financial accounts, then you have to disclose your foreign accounts on Form 8938 and statement of Specified Foreign Financial Assets when filing your tax return with the Internal Revenue Service. Keep in mind that there is no tax impact associated with Form 8938 or with the FBAR, penalties can be imposed if you do not file the disclosure as needed. The penalty for not filing an FBAR starts at $12,459 for non-willful violations while it could be $10,000 for not filing Form 8938 starts at. Also, the IRS can waive penalties if you can show that there was a sensible cause for why these forms were not filed. What important things you must know about foreign disclosures: 1) You will need to let your accountant know what is the highest balance in each of your foreign financial accounts. 2) It is important to avoid penalties. So be sure to review each year whether a Form 8938 or an FBAR needs to be filed.
Americans Living Abroad
American people and green card holders living in America, who failed to report their foreign bank accounts, could expect high penalties. These could rise to hundreds of thousands of dollars some times. Apart from this, those people were being charged with a criminal offense and are now being actively investigated as well. However, the American government and their Tax Authorities (IRS) to make allowances for them. Americans living abroad, who were not aware of this law, have the one-time choice to file their taxes via a special reprieve program. This prevents penalties and is known as the streamlined procedure.
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Important USA Tax News 