Meet Rania, a young woman from Virginia. She decided to leave the USA and seek a more balanced life overseas. She suffers from lupus, made worse by our American diet and stress.
But I'm betting she's overlooking a huge aspect of living abroad which could cost her big $$$...
As an American, she is subject to worldwide taxation by the IRS. She still needs to file and pay US income taxes overseas every year, even if she has a foreign employer and is paid wholly in local currency.
Failure to comply means large failure to file penalties by the IRS.
Also if she opens a local bank account abroad and her cumulative balance of all her foreign accounts ever exceeds $10k, then she also needs to file the FINCEN Form 114, aka the Report of Foreign Bank and Financial Accounts (FBAR) .
Failure to do so is a $10k penalty.
If you think leaving overseas means you will never get caught, think again!
Almost all foreign banks maintain a list of their American customers, and share this list with the US Treasury Dept. This is to comply with something called FATCA...
The Foreign Account Tax Compliance Act (FATCA)
Basically means foreign banks willing violate your privacy in exchange for access to US Capital markets.
That trade-off is worth millions or even billions of 💵 to them
So average Joe or Jane cannot hide from Uncle Sam!
Short of renouncing your US citizenship (rare), you have no choice but to continue to file and pay US income tax and disclose your large foreign bank accounts
Rania believes she is cutting ✂️ all ties to USA, but she's in for a very rude awakening soon!
Are you an Expat that didn't know about IRS rules abroad?
How did you fix it?
