Moving Your Money

There are a lot of reasons to invest overseas for US citizens, all of which are dollar bills. Nonetheless, Uncle Sam will hunt you down. There are tax consequences when jumping ship. You need to be aware of them.

First, if you’re a US citizen, you need to declare all foreign accounts if they total more than $10,000.00. You must report all foreign assets valued above 50,000.00.

There are more forms to be filed of course, lots of them and they need to be filed annually. The bureaucracy is a thick fog that conceals many rocks for you to dash your ship against. The government will beat you down with forms, so file carefully and stay on top of your paperwork.

You are also required to pay federal income tax on foreign income you receive. The US taxes the income that you earn abroad. If you pay taxes in the country where you are earning income and there is a tax treaty with the US, you’ll receive a credit in the US for foreign taxes paid.

All US citizens are subject to federal income tax regardless of where they live or do business. Uncle Sam wants his money. Even if you no longer earn income in the US, Uncle Sam wants his money. Even if you renounce your citizenship, which is expensive and has a whole host of tax repercussions, Uncle Sam will get his money.

These are just the basics. Every country has its own tax dilemmas. There are special rules and numerous exceptions to the examples provided here. The bottom line is that if you are holding money outside of the US, you need to find out what you are obligated to report because Uncle Sam gets testier than Don Corleone when he isn’t paid, and he’s harder to escape than the Terminator. Make sure that a move made to save you money is worth it.

This has been a matter for Money Matters.

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