OUR THOUGHTS ON:

Calling all U.S. Citizens

Internal Revenue Service|Tax

By Mary Richter

Did you properly report your foreign income and assets? U.S. citizens are required to report income on their tax returns, irrespective of where the income is earned or where they live. This means that a U.S. citizen abroad could be required to file tax returns in more than one country. Generally, the tax rules provide an offset to U.S. tax for foreign tax paid.

For several years, the IRS has focused on increasing compliance in reporting both foreign-based assets and income for U.S. citizens. Penalties for noncompliance have been raised and enforced (to the extent that the IRS contacts the taxpayer). In order to encourage compliance the IRS created the Offshore Voluntary Disclosure Program and several other disclosure options with low or no penalties.

Although the IRS closed the Offshore Voluntary Disclosure Program in late September, the Streamlined Compliance and Delinquent Information Returns options remain in place. For U.S. citizens living abroad, it is possible to become compliant through these processes, pay any tax an interest due, without incurring any penalties. U.S. residents would be subject to a small 5% penalty on undisclosed assets, but this is much lower than the normal penalties which can actually exceed the value of the unreported assets.

There are specific eligibility requirements for these programs and it is unclear how long the IRS will maintain these programs. In today’s digital age, it is likely that the IRS will begin searching for taxpayers who haven’t properly reported.  

Don’t wait to be contacted by the IRS; Schneider Downs can assist you with your compliance efforts.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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