The Internal Revenue Service (IRS) is becoming stricter on residents, expats, foreign nationals, and financial institutions (foreign and local) that have been failing to properly file their taxes. To prevent, catch, or penalize any instances of non-compliance, the International Tax Compliance Regulations were set in place.
Under these regulations, all foreign accounts and offshore assets must be reported to the International Revenue Service (IRS) through Foreign Bank and Financial Account Reports (FBARs). Under the Foreign Account Tax Compliance Act (FATCA), taxpayers who have these kinds of accounts are required to submit a form along with their income tax return.
The unfortunate thing is, we all make mistakes. This is understandable. However, if you have an overseas bank account and failed to properly report it along with your taxes,you could end up facing steep fines or criminal penalties.
It’s good to be aware of the common mistakes other taxpayers are making when filing their foreign taxes. This way you’ll also know how you can avoid them the next time you’re dealing with international tax compliance in Tysons, VA, the Metro DC area or nation-wide. We have listed four of them here:
- Wrong tax return was filed. Tax deductions and returns depend on your residency. To avoid costly mishaps, determine the appropriate income tax return by checking your residency status with the IRS.
- Other sources of income were not stated. You should be reporting all local and foreign income in your tax returns. Slow down and go over your taxes before you submit your forms. Make sure you check all of your accounts and submit the proper forms so you don’t leave anything out.
- Personal exemptions were not declared. Certain conditions for foreign account tax compliance is different for taxpayers who are married and/or have dependents. Don’t forget to include the social security number (SSN) of each dependent that you list. If the dependent is not eligible for an SSN, you can list the individual taxpayer identification number instead.
- Forms were not signed. Filing tax returns is tedious, but is an important task that you have to do anyway. Because of so many things involved in filing taxes, you forget the most important thing in your form: your signature. Always double-check your forms before you submit them to the IRS.
With proper planning, careful reading and double-checking, you‘ll be able to file correct taxes on time.
If you want to learn more about international tax compliance in Annapolis, MD, Baltimore or DC, contact US International Tax Advisors today. We provide expert advice for US taxpayers in the Metro DC and nation-wide. We will help you understand these very complex tax laws and regulations.
Call (844) 796-8565 if you have any financial concerns.