All U.S. citizens and permanent residents are required to annually file a U.S. income tax return reporting their worldwide income from all sources. Additionally, U.S. citizens and permanent who have an interest in or signatory authority over foreign bank and financial accounts holding $10,000 or more at any time during the year must independently identify and report these interests to the U.S. Department of Treasury's Financial Crimes Enforcement Network ("FinCEN"). This annual disclosure must be filed electronically using Form 114, Report of Foreign Bank and Financial ...
The IRS has long been aware of U.S. taxpayers living overseas who have not filed federal income tax returns or Reports of Foreign Bank and Financial Accounts ("FBARs"). Earlier this year, the IRS announced the reopening of its successful Offshore Voluntary Disclosure Program ("OVDP") allowing individuals with unreported foreign bank account income to come forward and report this income, and to pay the related tax, interest and certain reduced civil penalties, but without criminal prosecution. The IRS has now announced a new alternative compliance procedure designed to provide ...
U.S. citizens that work or receive income from abroad are subject to U.S. income taxes on foreign income. The tax is applicable regardless of where U.S. citizens reside. U.S. taxpayers receiving foreign income must file an income tax return with the IRS reporting all foreign income and must pay the reported U.S. tax liability. U.S. taxpayers may be eligible for a partial foreign income exclusion as well as a housing cost exclusion. Foreign earned income is defined to include wages, salaries, or professional fees, and other amounts received as compensation for personal services ...