Under the Foreign Account Tax Compliance Act (FATCA), US taxpayers with certain foreign financial assets exceeding the reporting threshold must report their assets to the IRS. They will use Form 8938, Statement of Specified Foreign Assets. This is in addition to filing Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Disclosure and worldwide tax reporting has grown complex, and penalties for failing to comply and report are significant. Some holding dual citizenship are taking the drastic measure of renouncing their US citizenship to avoid IRS filing requirements.
Consequences of Renouncing Your Citizenship
This means giving up US protection and assistance when traveling overseas, access to federal jobs, unrestricted travel into and out of the country, citizenship for children born overseas, and the right to vote in US elections.
Renunciation is a time-consuming and costly process, as well. You will need to pay a fee of $2350, while high-income citizens have to pay a capital gains tax called an expatriation tax. Once you renounce your citizenship, there is no turning back.
A Better Solution
US International Tax Advisors can offer several alternatives to properly dealing with FATCA requirements, including IRS voluntary disclosure options for tax payers in Tysons, VA, the greater Metro DC area, nation-wide and across the globe. Voluntary reporting of non-compliance can help you avoid the most severe penalties. Another possibility is, if you did not willfully fail to report foreign income or bank accounts, we can represent you in the Offshore Voluntary Disclosure Program (OVDP). This will also significantly reduce penalties.
Depending on your circumstances, you can settle with the IRS and avoid possible prosecution by applying for IRS tax amnesty in Annapolis, MD. It presents you with several options, such as amended tax returns, offer in compromise, partial payment installment agreement, uncollectible/hardship claim, and penalty abatement.
Any one of these can help alleviate your situation. We provide effective, full service consulting and our tax experts will determine your best option. Our experienced tax professionals will investigate, document, and file everything necessary to assist you.
US International Tax Advisors can help you if you are facing an issue with the FATCA. Our counsel has made sure our clients comply with the FBAR and FATCA reporting requirements. Give us a call if you would like to learn more.
