Quality Problems? What To Do With Your Offshore Accounts

There was a time in which offshore banking was only supposed to be for those trying to avoid paying taxes. Now, however, it’s a different story, as financial markets are opening up all over the world, thanks to a globalized economy. There are many people who seek to take advantage of the tax breaks that come with offshore banking, however, if you do it wrong, you could end up paying a lot more in fees and fines than you ever would have if you had banked at home. If you’re considering taking your money overseas, there are a lot of things you should know, and it all starts with hiring a strong and knowledgeable tax attorney.
What Is Off Shore Banking?
An offshore bank account is any type of bank account that is outside the country of which you live. The concept behind offshore banking is to allow foreign residents to invest in regional markets and banking operations without having to live in that country. Many countries have laws and policies in effect that allow for your banking interest to be tax-free (either for those that live in the country, foreigners or both.) Every country is different, so it can vary depending on where you’re doing your banking. In fact, even the United States allows non U.S. Citizens zero taxation on any capital gains from stock market investments.
Why Go Offshore?
There are a lot of reasons to go offshore and, contrary to popular belief, you don’t have to be rich to take advantage of offshore banking options. There are many banks all over the world that will allow you to set up a savings account in U.S. dollars. While you’re at it, you’ll get the ability to enjoy those savings tax-free as well as lots of personal assistance thanks to bankers who specialize in such options. Plus, since virtually the entire world works off the same Visa or MasterCard policies, your money is easily accessible with a simple debit card transaction.
Tax Advantages
As mentioned, there may be tax benefits to opening up an offshore account, and you’ll want to seek the advice of a tax attorney to make sure you’re doing everything right. It can be pretty confusing and overwhelming to do it on your own though. One of the best reasons to seek the advice of a tax attorney is to ensure your money is safe, especially since FDIC insurance is something available only within the United States. A professional can assist you with finding the right banking institution for you and your specific needs, while addressing any local or Federal tax concerns that may pop up. While it’s totally legal to have an offshore account, the IRS does require you to pay taxes on the interest and earnings, so it’s very important to do things by the book.
The Foreign Account Tax Compliance Act went into effect in 2010, and it requires foreign banks to report accounts of U.S. taxpayers to the IRS. Hundreds of foreign banks have been handing over information to the IRS to ensure that Federal regulations are met. This is another reason why it’s so crucial to have the assistance of a licensed tax accountant. As explained on the IRS website, “FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts,” so with this policy in effect your tax attorney will be a very valuable asset in protecting your income and savings.
Deborah Flomberg is a theater professional, freelance writer and Denver native. Her work can be found at Examiner.com.


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