Offshore Account Information
Offshore bank accounts are entirely legal and may save account holders significant sums of money on taxes. U.S. citizens, however, face stiff penalties if they fail to report to the Internal Revenue Service interest earned on foreign bank accounts.
Other People Are Reading
-
Identification
-
An offshore bank account is one held in a foreign jurisdiction or country other than the one where the account holder lives.
Benefits
-
Offshore banks pay tax-free interest on your account balance. They also provide a high level of confidentiality and security and offer estate planning and asset protection benefits. You may conveniently access your account online, by telephone or by using an ATM card without ever having to visit the bank in person.
-
Reporting
-
Offshore bank account income must be reported on your U.S. income tax return and you must check the box on Schedule B that says you have a foreign bank account. Income amounting to $10,000 or more must be reported on Treasury Department form TD F 90-22.1---Report of Foreign Bank and Financial Accounts---by June 30 of every year.
Penalties
-
You may be charged with tax evasion or fraud by the IRS if you don't report your offshore account income. The IRS may penalize you up to 20 percent of your earnings for not reporting accurate information, or up to 75 percent for committing fraud.
-
References
Resources
- Photo Credit Foreign Currency image by Stephanie Mueller from Fotolia.com
