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Tax Strategies For The American Abroad

“I heard the other day that our government is issuing a warning about overseas investors looking to avoid paying taxes. If caught, these investors would suffer severe penalties, fines, and possible jail time. I did not think anything such as this was to happen until 2013. Possibly I am somewhat confused in this area.

“I do not have any investments outside the United States but would like to do so before 2013. Or is it already too late? I think I should be able to do with my money as I see fit. Too bad they do not want to look for those who misuse food stamps, welfare, WIC, and all the other government-subsidy programs.

“Where I live, there is so much corruption it makes one ill. It’s so sad that I do not know even when our country took the wrong turn and headed down this road. I love my country. I just do not like what is happening.”

–Jo Ann F., United States

Lief Simon replies:

Many things are going on at the same time. The IRS is, indeed, cracking down on all aspects of tax evasion and avoidance. In addition, it is creating new forms and filing requirements, along with stiff fines for not completing the forms and meeting the filing deadlines. It’s a cut-and-dry way to generate revenue. Much easier to convict someone for not meeting a filing deadline than to prove any wrongdoing associated with his past tax payments (or non-payments).

Even after 2013 it won’t be too late to move assets out of the United States…at least based on today’s laws. It will just be more complicated. And it could continue to become more complicated over time. Some think that the rules that go into effect in 2013 and 2014 are the first steps to currency controls in the United States. I am including a good article on this from an expert in this field in the first issue of my Simon Letter.

The real point is that it’s not too late right now. The first step is to seek advice from a tax expert to make sure you know which forms to file when and then be sure that the right forms get filed at the right time so you don’t end up paying fines and penalties. This is a very real concern in the current climate. You don’t have to owe tax or to avoid paying tax to end up in trouble these days.

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