Offshore bank accounts can cause a lot of trouble, especially for those that do so purposely to hide assets. If you are working and living abroad, the trouble can lead to revoked passports, fines and penalties. Here is some useful information regarding offshore bank accounts and how they can potentially lead to trouble during tax season.
The United States government requires that all assets and income be reported for tax purposes. Hiding assets or money in offshore accounts can lead to hefty tax penalties, some being $10,000 per year rather than a percentage of the hidden funds.
Hiding money in offshore accounts is not a good idea. If the US Government finds out, you can actually lose your passport! This would prevent you from traveling outside of the United States, and if you are residing in a foreign country, you may end up stuck there until your tax issues are settled.
Fines and Penalties
Fines and penalties for hiding assets or money in offshore accounts can be up to $10,000 per year. This is a rather hefty fine and is really not worth the cost of trying to be sneaky. Eventually, the IRS and federal government are going to catch up to you, and you can be penalized for previous years as well.
It makes no sense to try and hide your assets in offshore bank accounts. The penalties and consequences when the government does find out are far worse than having to pay a little extra in tax in the short term. If you really need the help of lowering your tax liability, purposely sell an asset for a loss.
Image credit: Keith Williamson