More than a third of Americans overseas are likely to make a mistake on their tax return or file late, reveals the CEO of one of the world’s largest independent financial advisory organizations.
The observation from deVere Group’s Nigel Green comes as the current U.S. tax season draws to a close – the deadline for filing is April 18 at midnight.
Mr Green comments: “Since the worldwide rollout of the highly controversial Foreign Account Tax Compliance Act, or FATCA, in 2014, tax returns have become more complex, onerous and burdensome for American expats due to additional reporting requirements.
“In our experience of working with U.S. citizens who live abroad, 35 per cent are now likely to make a mistake on their tax return and/or file late due to the new complexities.”
He continues: “Overall, a small percentage of taxpayers end up with the dreaded IRS audit. However, the number of international returns that are audited is disproportionately higher.
“Failing to report accurately can lead to severe penalties. In addition, there is new legislation that allows the State Department to revoke, deny or limit passports for anyone the IRS identifies as having seriously delinquent tax issues. For U.S. citizens who are resident overseas and may use their passports more than most Americans, this combined with FACTA and the aforementioned penalties, means it is more important than ever to stay on top of your taxes and file on time.
“As such, we recommend that before U.S. expats submit their tax returns they have them checked over by a professional with the relevant cross-border experience.”
Mr Green concludes: “FATCA is fatally flawed on many levels and has unjustifiably turned many hard-working, law-abiding Americans who happen to live overseas into financial pariahs.
“However, whilst there are established, legitimate ways to mitigate this legislation’s toxic effects, the law is the law and, of course, people must fulfil their obligations or face the consequences.”