Why Should I Open An Offshore Bank Account?

You can protect your money, increase your wealth, and protect your assets with an offshore bank account. In this blog, we tell you everything you need to know about opening a foreign bank account. If you want to protect your money and grow your wealth, you may consider opening an offshore bank account. According to a recent student, United States banks are only the 40th safest in the world. That’s a long way down the list of the most reliable banks in the world. Each year, there seem to be more risks to keeping your money in a U.S. bank. If a local bank goes under, who can protect your money? Should your bank go under, you may have a hard time getting your money back. For that reason, opening an offshore bank account may be your answer. By opening a foreign bank account, you get:

–    Higher interest rates

–    Greater diversification

–    Peace of mind knowing your money is safe

Having a bank account overseas may seem easy, but it’s not always so easy. Read on to learn all the ins and outs about opening a bank account offshore. 

Is It Legal To Have An Offshore Bank Account?

There are many rules and regulations to know about before deciding to open up a bank account overseas. However, as long as you are complying with U.S. laws and those regulating your overseas bank, it’s not illegal. It’s not illegal to open a bank account overseas, but it is illegal to hide it. As long as you comply with tax reporting requirements in your home country, offshore banking is legal. 

Why Should I Have An Offshore Bank Account?

Asset diversification is one of the most significant reasons to open a bank account overseas. Many people diversify their assets through growth stocks, blue-chip stocks, bonds, and real estate. However, not many people think to expand their assets geographically. An overseas bank account can reduce your risk and offers the potential benefit of high returns. Additionally, you get access to new opportunities with foreign investments if you have an overseas bank account. Here are a few reasons why opening an offshore bank account may be a great idea.

Political Risk Diversification

The federal or local government does not control offshore bank accounts, meaning more protection for your money. Additionally, money in overseas bank accounts is harder for the IRS to freeze or seize. A foreign bank account can also provide you with increased privacy.

Protect Your Assets

As the U.S. continues to fall into even more national debt, protecting your assets should be a priority. When domestic debt situations turn dire, countries are not afraid to take money from citizens to pay the bills. Some countries, like Ireland, Hungary, Poland, and Cyprus, have even taken their citizens’ assets to pay bills. When you have a bank account in your home country, any officeholder can freeze your account. However, if you have an offshore bank account, it’s harder for the government to get to it. An offshore bank account can protect your money from government agents. Having a bank account overseas can also protect your money from:

–    Aggressive lawyers

–    Creditors

–    Ex-spouses

Bank With More Stability

You can count on offshore bank accounts to provide you with more stability in your banking. Western banks keep one or two cents per dollar of your money with them. Alternatively, offshore bank accounts can hold 20, 25, sometimes even 30 cents per dollar. If you want to start thinking long-term about the safety and growth of your wealth, consider offshore banking.

Insure Your Money

Since the financial crisis in 2008, the FDIC has shuttered more than 400 U.S. banks. Other countries have never even seen a bank failure. Some foreign bank accounts offer some level of deposit insurance on their accounts. The FDIC in the U.S. has less than one percent of deposits in its reserves. What does that mean? If every bank failed at once, you would only get $1 for approximately every $300 you have in the bank. However, the most important thing to look for with an offshore bank account is stability.

Diversify Your Currency

Diversifying your currency is a great way to protect the value of your assets from central bankers. An ideal way to expand your money is through an offshore bank account. Banks in financial capitals such as Hong Kong, Singapore, and Andorra offer as many as 12 to 15 currencies in on account. By opening up a bank account offshore, you can get access to emerging currencies, and profit from global financial trends.

Get Higher Interest Rates

By diversifying your currency in safe overseas bank accounts, you can get higher interest rates on your money. Some foreign banks offer interest rates that are up to ten times higher than what the U.S. provides. Earning high-interest rates on your accounts can be a game-changer for your wealth. Some emerging market currencies offer interest rates as high as 28 percent. Additionally, several foreign banks pay five to six percent annual yields on U.S. dollar accounts. Even if you aren’t ready to invest in foreign currencies, you can gain wealth by opening a bank account overseas.

Do I Have To Pay Taxes On Bank Accounts Offshore?

U.S. taxpayers are not off the hook for paying taxes when they open bank accounts overseas. The IRS requires U.S. taxpayers file the form knows as FBAR to report any money exceeding $10,000 in foreign accounts. There is a foreign-earned income tax exclusion for money earned abroad; however, the rest is taxable. The Foreign Account Tax Compliance Act requires banks around the world to report balances and any activity of U.S. citizens. If you don’t claim the money in offshore bank accounts on your taxes, it can be considered tax evasion. Holding cash in a bank account offshore isn’t illegal, but it isn’t tax-exempt. 

Get Help With Taxes On Offshore Bank Accounts From Platinum Tax Defenders

Comprising CPAs, enrolled agents, tax attorneys, and x-IRS Agents, Platinum Tax Defenders can ensure your overseas account is tax-compliant. Call Platinum Tax Defenders today for a free consultation.