More than anything the law underlines the importance of having comprehensive financial advice and cross-border tax planning services in place. The reporting of US tax is notoriously complicated and is made even more difficult to negotiate by the fact that US taxpayers are taxed on worldwide income.
Quite simply, if taxpayers in the US, including non-residents, are not clear on the structure of their income and assets and do not report to the IRS in the correct way, they could fall foul of the law, even if they have the best intentions. This is true even in cases when the taxpayer is only acting in accordance with professional advice; the services of a reliable and trusted adviser are, therefore, truly of paramount importance.
One potential difficulty is that the IRS may deem a taxpayer to have debt exceeding the $50,000 threshold without considering the full range of deductions or foreign tax credits that might apply – it is important in such cases that taxpayers are able to go to their wealth manager, accountant or tax adviser in order to recover documentation proving their situation.
The FAST Act also underlines the importance of being contactable. Expats frequently change addresses and it is important that they have a reliable postal address that enables them to maintain correspondence with the IRS; any other course of action risks the closing of communication channels. Furthermore, the IRS will not repay fees and costs in the event of an invalid confiscation under the FAST Act. Clarity and advice are everything.
Your to do list
If you in any doubt regarding your tax liability, you should seek the advice of your wealth manager and trusted tax professional in order to address any foreseeable problems without the expense of potential civil and criminal penalties.
Also, make sure that the IRS has your current address on file – if it doesn’t, you will need to complete an update form.
You must also continually review your liability. You can order transcripts to help achieve this, as they will show you how much tax the IRS thinks you owe.
Lastly, you should also consider the benefits of a U.S.-based cross-border tax and finance professional as they will be able to help you stay organised to manage your tax reporting and liability fulfilment.
Contact Blacktower (US) LLC for more information about how we could help you make sure your cross-border tax planning is up-to-date and in line with the law.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.