On behalf of Silver Tax Group posted in Offshore Accounts on Friday, October 20, 2017.
If you as a Michigan resident have foreign assets in excess of $10,000, please make certain you are in compliance with federal tax laws. The rules are complex, and noncompliance comes with penalties including seizure of assets and criminal charges.
Under the Foreign Account Tax Compliance Act (FATCA), you likely need to report these assets to the IRS. You may also need to file a Report of Foreign Bank and Financial Accounts (FBAR) form.
Compliance with FATCA requirements depends upon whether you meet the following three factors:
- Whether you are specified individual. This includes U.S. citizens, resident aliens within our country, a nonresident alien who elects to treatment as resident alien for purposes of filing joint income tax returns, or nonresident alien who resides in Puerto Rico or American Samoa.
- As a taxpayer, you have ownership interest in foreign financial assets covered by this legislation. This could include any sort of foreign investment or financial account.
- The value of such assets exceeds reporting thresholds that apply to your particular circumstances. Such thresholds differ depending on whether you are married, unmarried, married and filing jointly, married and filing separately, or are a taxpayer living in a foreign country.
Abiding by FATCA reporting requirements
While abiding by FATCA reporting requirements is absolutely essential, there may be a number of exceptions concerning reporting of foreign income and offshore assets. Determining whether exceptions exist is complex, however. Mistakes can raise red flags with the IRS that leads to audits.
A seasoned tax attorney who understands international tax law can be of great assistance. Such a professional can prevent reporting mistakes from occurring to begin with that could lead to harsh consequences.