Offshore Banking

"I have heard so many horror stories about the hell unleashed on U.S. citizens simply because they opened offshore bank accounts. They, apparently, are immediately marked as being tax evaders, drug people, or worse. I am an international banking virgin. I see the growing need for this, given the set of circumstances that currently exists in the United States, yet I am very hesitant to trigger more misery by doing something that raises a big red flag in front of the IRS bull.

"Can you help, please?"

-- Dan D., United States

Today's issue was written with you in mind, Dan.

It's not illegal or in any other way a problem for a U.S. citizen to have a bank account in another country. It is illegal to hide income in an overseas account to avoid paying taxes on it. That's where people get into trouble.

That is not what we're talking about and certainly not what we're recommending.

As long as you properly report the account on what is called an "FBAR," you shouldn't have any trouble, and the existence of your overseas account shouldn't be a red flag to the IRS. We know many, many people who have offshore bank accounts (including us) and who don't have any extra issues with the IRS.

You can learn more about offshore matters, including opening a bank account in a foreign country, at our Emergency Offshore Summit in Panama Dec. 2 and 3.

• Offshore Banking