Do you have an offshore bank account that is currently not taxed by the IRS? Well, treasure it while you can because come January 1, 2013, the IRS will implement the U.S. Foreign Account Tax Compliance Act (FATCA), which will tax any account with assets of $50,000 or more. Many people have recently been caught hiding assets overseas to avoid taxes, or even moving to different countries to avoid tax debt. This new law will ensure that all U.S. citizens, no matter where their assets lie, will be forced to pay taxes on their assets. According to Senate Budget Committee Chairman, Kent Conrad, tax havens will cost the Treasure approximately $1.4 trillion over the next decade.
The overarching goal of this act is to raise more money for Congress so that ordinary taxpayers will receive more tax breaks. The allure of having an offshore bank account is still prevalent and highly utilized, yet the IRS claims that if the money starts in the U.S., it is still owed back to the U.S. This act may benefit the government, yet for people of dual citizenship, the act could be a little tricky. This would be mean that a person could pay taxes to the U.S. government in addition to their home government. Until the act is actually implemented, there may be changes or alterations to protect those dual citizens from double taxation.
So if you find yourself living the good life in a different country, know that all good things come to an end and be prepared to pay! J.D.Katz, P.C. is more than willing to assist you in any concerns and problems that may arise from your taxable accounts.