Foreign Income & International Tax Reporting Services
Atlantic Tax Advisory assists U.S. taxpayers with foreign income, foreign assets, and worldwide income reporting to maintain compliance with IRS foreign reporting rules. I help process global financial interest disclosures with efficiency.
In plain language: U.S. taxpayers must typically report worldwide income, foreign bank accounts, and foreign financial assets to the IRS. This guide focuses on the critical aspects of foreign income reporting and international tax compliance for U.S. residents and expats.
Key Foreign Income & Asset Reporting Rules
Understanding the core IRS and FinCEN reporting regimes is essential for U.S. taxpayers with financial interests outside the United States.
Worldwide Income Reporting
U.S. citizens and residents are required to report worldwide income on their U.S. tax return, regardless of where the income was earned or the source of funds.
FBAR (FinCEN Form 114)
Mandatory for individuals with an aggregate value in foreign bank and financial accounts exceeding $10,000 at any time during the calendar year.
FATCA & Form 8938
Reporting requirement for specified foreign financial assets under the Foreign Account Tax Compliance Act, subject to specific filing thresholds.
Foreign Tax Credit
Avoid double taxation by claiming a credit on your U.S. return for income taxes paid to a foreign country on foreign-source income (Form 1116).
Tax Treaties
Leveraging Bilateral Tax Treaties to reduce withholding taxes and resolve cross-border tax conflicts for expatriates and foreign investors.
How We Help With Foreign Income Reporting
We assist clients with identifying and addressing applicable U.S. reporting requirements for foreign financial accounts, assets, income, and investments.
Our experience working with expatriates and cross-border families allows us to assist clients with the U.S. reporting requirements applicable to worldwide income and foreign financial interests.
Foreign Income Reporting FAQs
Do I have to report foreign income on my U.S. tax return?
Yes, as a U.S. citizen or resident alien, you must report your worldwide income on your U.S. tax return, regardless of where you live or where the income was earned.
What happens if I don’t report foreign income?
Failure to report can lead to severe penalties, including substantial fines and interest. In some cases, the IRS may also initiate audits or criminal investigations for non-compliance.
What is the difference between FBAR and FATCA?
The FBAR (FinCEN Form 114) focuses on reporting foreign bank accounts, while FATCA (Form 8938) requires reporting specified foreign financial assets. The reporting thresholds and filing dates for each can differ.
Who must file Form 8938?
Form 8938 is required for U.S. taxpayers who have an interest in specified foreign financial assets with an aggregate value exceeding certain thresholds (e.g., $50,000 on the last day of the year).
Can I claim a Foreign Tax Credit for taxes paid abroad?
Yes, you may be eligible for the Foreign Tax Credit (Form 1116) to assist in reducing double taxation on income that is taxed by both the U.S. and a foreign country.
What if I forgot to report foreign assets in prior years?
The IRS offers several voluntary disclosure programs for taxpayers to catch up on prior-year reporting and potentially reduce penalties if the failure to report was non-willful.