Three Most Common Consequences For Failing To Report Income Made Overseas
When filing your annual income tax return, it is a requirement that you include all of the income made for the year, wherever it was made. For people with jobs that take them out of the country, this includes any income made outside of the United States. This is true even if you work part of the year in the States. If you neglect to note all of your income when filing your tax return, you can face significant fines and penalties and in some instances you may even face criminal charges.
None of these possibilities are attractive, so it is important to know what to expect if you do not report all of the income you made for the year. The three most common consequences for failing to report income made overseas are:
- If a finding is made that you willfully failed to report income made abroad, the likelihood you will face criminal charges is high. Any time criminal charges are filed; there is a possibility of incarceration.
- Failure to report all of your income will cause the IRS to impose stiff financial penalties once the income is discovered. Penalties can be compounded for each period that assets and income are not reported, which can result in a penalty that exceeds the value of the asset.
- Along with the penalties that are associated with not reporting all of your income, you will also be hit with interest on the amount of tax and penalties owed. The interest charged by the IRS is not at a favorable rate, and will quickly cause your total amount due to rise.
The requirement to report all income made overseas extends to reporting the existence of any offshore banking accounts or trusts in which you have an interest. Failure to report these accounts can also result in fines, penalties, and legal action being taken against you by the IRS. In order to avoid these harsh punishments, contact a knowledgeable legal tax professional to be sure your return is in compliance with IRS rules and regulations. Making sure your return is accurate when filed will save you the need to explain your actions later, or to defend yourself in court or before the IRS. If you have already received notice that the agency is questioning your income, we can help you resolve that issue as well. Call us today for more information.
If you have questions about taxes and what to do about income earned abroad, let the professionals at Nielsen Law Group help you negotiate with the IRS. Call (480) 888-7111 or submit a web request here.