Here in the US, we speak endlessly about the tax issues that we have in our own country, but what about international issues that also affect us? Today, there are a lot of business that have expanded globally, where additional tax rules must be complied with. Here are a few international issues we wanted to bring to light.
- Lack of awareness of foreign tax policies
- Lack of comprehensiveness of tax forms and procedures
- Transfer pricing penalties and adjustments
- High penalties
- High Liabilities
- Loss of Income/Assets
- Determining taxpayer’s responsibilities on tax returns
- Foreign tax credits
- Lack of knowledge of foreign reporting requirements for US and Non-resident aliens
For individuals and businesses collecting income from other countries, there are different tax filing necessities that need to be handled properly. Whether it is an employee of a US resident in another country or a remote office location, the foreign country is able to also tax the income. Failing to oblige by international tax laws can land you in some trouble by leading to certain penalties and liabilities. Receiving income internationally also increases the amount of information needed to complete returns and often effect beneficial taxes. The IRS pursues those who have failed to report income and especially come forth when attempting to make future investments in hedge funds. From years of experience in tax law, we know that missed tax filings can result in burdensome financial penalties. Filing too late can also lead to lost income.
Unidentified Foreign Bank Accounts
Unfortunately, some people don’t know that if you are an individual from the United States with bank accounts overseas are required to disclose of this information and report the assets on specific tax forms such as the 8938 form. The harsh penalty can result in a high percentage of the overall bank balance. Usually, individuals with a foreign offices hold bank accounts, but are subject to disclosure if the balance is over $10,000. The IRS has been highly preemptive with discovering foreign accounts that aren’t reported.
Keeping up with IRS requirements, deadlines and identifying the proper filing forms is incredibly difficult for almost any person that is solely responsible for assets in the United States. The process becomes even more difficult when there are various international tax laws that are constantly changing, and require a lot of accurate information. Having a professional financial advisor on your side helps to translate the language of tax laws so that you, your business and your assets are kept safe. If you are interested in speaking with a tax advisor, give us a call here.