Levins Tax Law
Schedule your initial consultation:
866-485-7019

Understand federal rules regarding offshore accounts

It is not a good or realistic idea to use an offshore bank account as a tax shelter. It is illegal, and the IRS always has had a penchant for cracking down on tax evaders. The government agency requires U.S. citizens to report ownership of foreign assets or have financial interest or signature authority for financial accounts in foreign countries. Failure to do so may lead to the IRS confiscating up to half of the account balance.

Many Americans do have offshore bank accounts, some of whom are retirees with second homes in other countries, people who frequently travel and others who inherit accounts from overseas relatives. If you do have offshore accounts, please make sure you understand the rules, the guidelines and responsibilities that come with owning them.

Reporting taxes on all income

The IRS has rules, and one of them is that U.S. citizens must pay taxes on all income no matter where earned. In applying this rule to offshore accounts: All interest and capital gains earned via foreign investments need to be reported on U.S. federal tax returns. A few foreign banks inform the IRS about this information under the Foreign Account Tax Compliance Act.

In recent years, the IRS has focused on eliminating the use of tax shelters, making agreements with countries to expediate the release of banking records from tax havens such as Switzerland. This likely means it is only a matter of time for tax evasion charges to catch up to someone with offshore accounts.

Another rule to remember is that U.S. residents, companies and estates must annually file a Report of Foreign Bank and Financial Accounts (FBAR) report if they have at least one financial offshore account with a value that exceeds more than $10,000 at any time during that calendar year.

No Comments

Leave a comment
Comment Information
Email Us For a Response

Resolve Your Tax Problems

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Framingham Office
1671 Worcester Road
Suite 304
Framingham, MA 01701

Framingham Tax Law Office

Boston Office
38 Newbury Street
6th Floor
Boston, MA 02116

Boston Tax Law Office

By Appointment Only