Offshore Bank Accounts
An offshore bank account is an account in a financial institution not located in your country of residence. These days, thanks to online banking, it’s much easier for Americans to maintain a foreign banking account. The U.S. State Department estimated that 8.7 million Americans lived abroad in 2015 and many more had offshore bank accounts. These offshore accounts aren’t just for the 1 percent; anyone can open an account. But it’s important to know how offshore bank accounts affect your taxes before you open one.
DOES THE IRS REGULATE OFFSHORE BANK ACCOUNTS?
Over the last decade, the IRS has been making a significant push for Americans to report their offshore assets. In doing so, the IRS has been successful in collecting millions of dollars in offshore accounts to be taxed. Tax regulations on foreign accounts have existed since 1970. U.S. taxpayers must file international financial reports with a total value exceeding $10,000 during the previous calendar year.
ARE OFFSHORE BANK ACCOUNTS TAXABLE?
By law, all U.S. taxpayers are obligated to pay taxes on all income. It doesn’t matter where the taxpayer earned the revenue. Make sure your report any interest or gains obtained from foreign investments on federal tax reports. Here are a few other essential items to note when considering how an offshore bank account will affect your taxes.
- Taxpayers must report on all income earned even if they’ve paid foreign taxes on their income
- U.S. citizens with funds in offshore bank accounts exceeding $10,000 must report it on their taxes
- There are penalties and interest charges for improperly reporting your taxes. Penalties can range from $10,000 to hundreds of thousands of dollars.
If you think you’re at risk for facing tax evasion charges, call the experts at Platinum Tax Defenders today. Our team of tax attorneys, including those who have had direct experience with the IRS, is here to help.
DO OFFSHORE BANKS HAVE TO REPORT TO THE IRS?
Under the Foreign Account Tax Compliance Act (FATCA), foreign financial institutions are required to report directly to the IRS. International institutions must report information about financial accounts held by U.S. taxpayers. Institutions must also share information regarding financial statements owned by foreign entities in which U.S. taxpayers hold significant ownership. If international financial institutions do not comply, FATCA will cut off companies from access to critical U.S. financial markets. More than 100 nations agree with this law. You have a higher chance of being caught by not reporting on these accounts. The risk of being caught is higher because more foreign banks are sharing information with the IRS.
UNDISCLOSED OFFSHORE BANK ACCOUNTS
Millions of Americans have offshore bank accounts. However, according to the U.S. State Department, in 2015 less than 1 million taxpayers filed FBARs to declare foreign assets. Individuals can face $500,000 in fines and a prison sentence of up to 10 years for failing to file taxes.
FAILING TO PAY TAXES ON OFFSHORE BANK ACCOUNTS
What’s riskier than not disclosing your bank accounts? Failing to pay taxes on income earned and deposited into a foreign bank account. The government has the authority to bring civil and criminal charges against those who do not pay their taxes. Civil and criminal charges can be delivered even if it was by accident. You must report all foreign accounts to the IRS. Also if those accounts aren’t making any taxable income at the time, you must report foreign accounts. U.S. taxpayers who maintain offshore bank accounts and do not comply with reporting requirements are breaking the law. According to the IRS, taxpayers can face severe penalties and fines. Taxpayers can also face the possibility of criminal prosecutions.
IRS VOLUNTARY DISCLOSURE PROGRAM FOR OFFSHORE BANK ACCOUNTS
If you have foreign investment earnings that you haven’t previously reported on your taxes, you can still come forward. The IRS has a program called the Offshore Voluntary Disclosure Program. This program is for taxpayers who have failed to report foreign financial assets. Taxpayers who fail to report foreign financial assets may be subject to potential criminal liability or substantial civil penalties. The program allows taxpayers to come forward and pay all tax due for those assets. The program was designed to give taxpayers protection from criminal liability and terms for resolving their local tax obligations.
The deadline for applying for the program is typically a few months after the tax due date. If you think you might be a candidate for this program, get in touch with Platinum Tax Defenders today. We’ll assess your situation and determine the best next step for you to get tax relief. We can help you remove any potential penalties.
AVOID PENALTIES OR TAX EVASION CHARGES FOR OFFSHORE ACCOUNTS
By being proactive, taxpayers have a good chance of mitigating penalties and lessening chances for criminal prosecution. The FBAR filing is a wary requirement for individuals with bank accounts abroad. They must come forward, admit that they have been shielding income from the IRS, and cross their fingers for protection from criminal investigations. This type of gamble is worth it, but only if you are protected. Therefore, contact a professional who can best assist you with this type of situation. Our team at Platinum Tax Defenders is here to help.
Platinum Tax Defenders
WHO WE ARE
Platinum Tax Defenders is a full-service tax resolution firm in Los Angeles that has been helping taxpayers resolve their IRS and State tax issues since 2011. Our team of tax attorneys, accountants, and enrolled agents have a combined more than 90 years of experience in the financial services industry. Our team is ready to provide tax relief services to clients facing wage garnishments, bank levies, liens, and other challenges.
WHAT WE DO
Platinum Tax Defenders is a full-service tax resolution firm that includes a tax attorney, IRS enrolled agents and certified public accountants specializing in providing tax relief services for taxpayers facing IRS or State tax debt. We work with the IRS on your behalf to come up with reasonable payment options and settlements. Our tax professionals are knowledgeable and experts in tax negotiations. The consequences of unpaid taxes vary by each individual taxpayer’s situation. But unpaid tax debt can lead to wage garnishment, property liens, and bank account levies.
Platinum Tax Defenders will help you reach a tax resolution plan before it’s too late. We offer fast response protection to our clients and a commitment to gaining major tax reductions. Whether this is your first time facing a tax problem, or you have previously hired a tax relief firm in Los Angeles to resolve your tax debt, we have a track record of consistently garnering IRS settlements for our clients.
WHY TRUST US
At Platinum Tax Defenders, we’ve developed an impeccable reputation for doing what’s best for our clients, 100 percent of the time. We are honest and upfront with you about your tax debt situation, and the type of tax resolution services we can provide. Each individuals’ tax situation is different, and we’ll do whatever we can to negotiate with the IRS to help you reach a tax relief plan that works for you. We are experts in our field and work diligently to resolve the specific tax issues that each of our clients faces. Platinum Tax Defenders offers fair and honest tax resolution services, and you can count on us to operate professionally and legally.
Many tax relief services in Los Angeles tend to make unrealistic promises. You can count on us to always be honest and upfront about your financial situation, and what type of tax resolution results you should expect.