Although the Internal Revenue Service has been cracking down on offshore bank accounts, there are still a handful of positives that come with foreign accounts – as long as you follow the rules.
According to Kelly Phillips Erb of Forbes.com, account holders must pay a one-time setup fee and annual administration fees, along with potential U.S. compliance costs.
It is important to know that U.S. citizens and residents with foreign bank accounts must disclose then on their tax returns, pay taxes on earnings, and report them in their report of foreign bank and financial accounts. Failure to file may result in a penalty of up to 50% of the account’s value for each missed year. Thus, foreign bank account reporting is extremely crucial if you plan on opening an offshore account.
However, using offshore bank accounts to hide assets may face perjury. Just ask millions of the wealthy Americans who had their documents leaked by Mossack Fonseca, a Panamanian law firm.