The US government seems determined to crack down on its citizens living abroad who have not filed their tax returns or foreign bank account reports. Recently, the IRS announced that they are launching a third “voluntary disclosure program” with a different penalty framework for offshore tax evaders who come forward willingly.
The IRS said in a statement: “The IRS is currently developing procedures by which these taxpayers may come into compliance with U.S. tax law.” It also said that more information will be posted on the IRS website within the next month.
We may remember that last year, efforts from the IRS to ensure that all American citizens living abroad are aware of their tax obligations by filing an American income tax return and an FBAR listing their foreign accounts that total more than $10,000.
Last December, theirs posted an updated for American citizens living abroad, suggesting that those who come forward after just learning of their tax obligations to file in the US may avoid harsh penalties. According to the fact sheet, there is no penalty for individuals who file their returns and owe no US tax. For those who do owe tax, the penalty can range from 5% to 25%.
Here are some important points you should know if want to take if you are planning to come clean and file your US tax return:
- 1.The IRS requires all U.S. citizens to file returns declaring their worldwide income. Anyone born in the U.S. is considered an AmericanHowever, individuals born outside the U.S. to one or more U.S. parents may also be considered a citizen.
- 2.Your returns must be filed with the IRS.
- 3.The annual deadline to file U.S. tax returns if April 15th but Americans living outside the U.S. are given a two-month extension to June 15th.
- 4.U.S. citizens must file an FBAR listing foreign accounts that together total more than $10,000 during a calendar your FBARs must be filed with the U.S. Treasury Department by June 30th.