Living Overseas Comes with a Taxing Price
July 31st, 2014
So how should Americans working abroad or with a financial life in two countries manage their finances?
Traveling abroad can be exhilarating enough, but living abroad comes with a whole other level of excitement … and even some hitches if you aren’t careful. If you are one of those hopping back and forth across a U.S. border, beware of the financial hurdles and heightened attention of the IRS.
If you are no stranger to frequent border traffic, then likely you are aware of the recent adjustments in IRS practice, not to mention several large developments involving overseas accounts and income. Essentially, the IRS is on a mission – it wants to capture more and more overseas accounts and assets taxable under U.S. law. How? By working in sync with international banking institutions.
Ostensibly, the targets are tax-evasion type accounts in Swiss banks. In reality, the dragnet is catching a broader group of individuals and families of all means and intentions. And many of these individuals and families are unaware that they are targets and even fewer are aware the rules of the (tax) road.
The problem has been growing with the surge in IRS attention to the matter and The New York Times tackled the issue not too long ago in an article titled “Overseas Finances Can Trip Up Americans Abroad.”
Bottom line: if you’re going to be crossing borders regularly, whether for work, for family, or even as part of your retirement, then this is an important reminder about the hurdles those little lines on the map can pose if you aren’t careful. Whether you work, live, or retire abroad, it’s important to be aware of the new international complications.
Reference: The New York Times (April 5, 2013) “Overseas Finances Can Trip Up Americans Abroad”