It is a common misconception, that if you are a U.S. citizen or resident, and permanently reside in another county, you don’t have to file or pay any U.S. taxes. In fact, U.S. citizens living abroad and making more than $9,350, have the same, and sometimes enhanced, tax and reporting obligations. There are a few tax breaks for U.S. citizens abroad, but there are also numerous foreign reporting requirements with which U.S. citizens must comply.
The IRS is also getting serious about U.S. citizens reporting signature authority over or financial interest in, foreign financial accounts, as well as relationships with many types of foreign entities, including foreign corporations and partnerships. Failure to comply with these reporting obligations can result in significant penalties.
Finally, on March 18, 2010, (FACTCA) Foreign Account Tax Compliance Act was made into law. FACTA creates an overlapping reporting requirement separate from the one mentioned above. It applies only to foreign financial assets, such as foreign bank accounts, foreign securities, and ownership interest in foreign entities. The penalties for failure to comply with these requirements START at $10,000 per failure and upwards.
Obviously, just because you live and work outside of the U.S., in no way absolves you of your U.S. tax and reporting obligations. The complexities of living abroad can be difficult to sort through. Make sure you have a competent tax professional help you sort out the details and make sure you are in compliance.
Beth Dardynski is an American accountant, who calls Cozumel home, although she does travel back to her home state of Colorado during tax season. She’s been helping island residents understand the intricacies of US tax responsibilities since she arrived here in 2009.
This story originally appeared in the weekly Cozumel 4 You NEWS – the island’s number one source of positive information about our island! Be sure and subscribe to the weekly NEWS to find out all the island events!…
Una ex yanqui de Connecticut quien llama hogar a Cozumel desde hace más de 15 años. Laura escapó al Caribe hace años, desplazándose de una isla a otra dando clases de BUCEO. Se dedicó a perder el tiempo en Jamaica y finalmente se detuvo en Cozumel para pasar unas vacaciones de 2 semanas que aún no terminan. Convenciendo a sus padres que pagaran una elegante universidad privada, obtuvo su título en Periodismo y Laura crea semanalmente Cozumel 4You, medios sociales y artículos promocionales sobre la Isla y también es moderadora en el grupo Cozumel 4 You en Facebook que actualmente cuenta con 25,000 miembros. Fabián, s umuy tolerante marido, desde hace mucho tiempo se resignó a no tener vida privada, pues se ha visto implicado en los diversos proyectos y planes que urde Laura. Son orgullosos padres de diversos perros y gatos rescatados. Mientras contempla su paso a través de la vida en el Caribe mexicano,Laura continúa siendo la pesadilla en la existencia de su muy tradicional suegra mexicana.