US tax deadline looming, but many expats unaware of their obligations

by Ray Clancy on June 13, 2014

Next week is the deadline for American expats to file their federal tax returns with the Internal Revenue Service but many are still in the dark about their obligations, it is claimed.

On 16 June all 6.3 million Americans living abroad need to have filed their return, but according to Greenback Expat Tax Services, some 40% have no knowledge of the Foreign Account Tax Compliance Act (FACTA).

us expat taxes

Many US expats are still in the dark about their tax obligations

It is a new IRS reporting requirement for individuals with overseas assets that carries serious penalties for lack of filing.

The research also found that another 37% didn’t know how they would be impacted by the Affordable Care Act, and 15% didn’t even know about the existence of Foreign Bank Account Report, or FBAR, another asset reporting tool used by the US Treasury.

‘If you or your employees work overseas you need to know about these rules, which aim to keep US taxpayers from hiding money abroad,’ said David McKeegan, co-founder of Greenback Tax Services.

He explained that FBAR must be filed if foreign bank account balances equal $10,000 or more at any point during the tax year, while FATCA Form 8938 must be filed if individuals hold offshore assets that exceed certain thresholds based on US resident status and filing status.

‘These reportable assets include foreign bank accounts, foreign pensions or other foreign investments. Expats should be aware of their obligation to declare, because failure to file the required FBAR or FATCA forms can result in steep penalties and even criminal prosecution,’ he pointed out.

‘While an increasing number of expats have renounced their citizenship to avoid these hassles over the last five years, our survey found that the overall percentage of expats taking these measures is actually quite low,’ he added.

The research also showed that only 18% of respondents were seriously considering giving up their citizenship, and only 5% have concrete plans to do so. Over one third of those who are considering renunciation cited the burden of filing US taxes as the reason.

‘Virtually all the expats we surveyed knew about the provisions of the Affordable Care Act, known as Obamacare, but 37% didn’t know how it affected them directly. That needs to change quickly as under the law, expats who are required to comply with the provisions may pay a penalty tax if they do not obtain acceptable health coverage,’ said McKeegan.

He believes that US expats need to be better informed about their tax obligations in order to stay compliant. ‘In the past, the IRS has been relatively lenient on expats who are delinquent on their filings, but a crackdown has begun, and it shows no signs of letting up,’ he said.

‘Whether you’re enjoying the skyline of Paris, landscapes of Madrid or beaches of Dubai, you can’t escape the truth of the saying: nothing is certain but death and taxes,’ he added.

 

{ 1 comment… read it below or add one }

calgary411 June 14, 2014 at 2:22 am

Imagine that!

How many more would be aware if the IsaacBrockSociety.ca crew hadn’t been banned and censored for what we were discussing on this subject at ExpatForum.com?

What was “her” (our moderator’s) name again?

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