Paying your tax on foreign income is not an option or charity
A lot of US citizens and even resident aliens are now enjoying the benefits of globalization. Nowadays, they are no longer limited to working standard jobs. They can now enjoy international career opportunities without any fuss. That being said, they earn foreign money at some point of their lives. In recent reports of the IRS, there are taxpayers who have accounts in countries like Liechtenstein. The IRS interests go beyond the accounts found in the said nation and address accounts located across the map. Thus, Tax on foreign income is a very vital thing. It is your responsibility to pay taxes be it overseas tax for citizens who work in another country or maybe someone who receives compensation from another country.
If you are a resident alien or a US citizen, you are required to report your income from all channels, be it local or international. The Tax on foreign income is part of your responsibility as a citizen of the United States and just because you already work outside the country does not mean you are already free from the responsibilities of paying taxes. This is a fact. This is actionable even if you have not received the Form W-2, Form 1099, a tax statement or any other foreign variants. You have to pay overseas tax just like any other citizen or resident in that country.
The same rule applies for all citizens and residents outside or inside the US when it comes to income taxes. The rules are similar for income, and gift/estate tax returns, and you also pay your taxes in the same manner even if you are in the US or not. The great thing nowadays is that there are services that you can take advantage of if you wish to manage your Tax on foreign income with more ease. The good news for those who would like to pay their taxes is that they can file for deductions and exclusions. Also, with the help of international treaties between US and other countries, you can also avoid risks of paying taxes twice.
What if you decided to not pay?
If you decided not to pay your Tax on foreign income, you will be in a lot of disadvantage. When you decide to go back to the US, you will be scrutinized by the IRS for the lack of tax payments that you made. Now, IRS and its international partners are pursuing people who are hiding their assets or working sneakily in another country. They aim to avoid the tax payments. This is considered a crime. The IRS has trained examiners who specialize in international tracking of tax evaders and those who abuse structures and entities for their personal advantage.
If you decide not to pay your Tax on foreign income, you can be subject to a fine, massive interest and if proven to be a tax evader, you could be subject to imprisonment. You might have heard of some expats who say that you do not need to pay, that it is just a waste of time. Do not believe them. You cannot relinquish your citizenship by simply working outside. The same concept follows that you cannot avoid overseas tax payments for working in a different country. You are liable for your taxes so it would be best to pay on time.
It’s that time of year again when you pay your overseas tax. Are you confused? Our services can help you in managing our tax on foreign income so that you can manage your responsibilities as a citizen or resident alien of the US.
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