Published On: Mon, Apr 9th, 2018

How to enjoy being an expatriate and still comply with U.S. taxes in Curaçao

WillemstadExpat living is exciting, but we don't want to make it too exciting.  The good news is that compliance is relatively simple.  Curaçao is a party to FATCA (Foreign Account Tax Compliance Act).

It's possible that if you are an American living in Curaçao you may receive what is commonly known as a FATCA letter.  This is a letter from a financial institution or bank requesting information about your U.S. Tax filing status.

Normally the bank will want a response within a relatively short period of time.  What is happening, you ask?  Well, the bank is in process of complying with an agreement with the U.S. Treasury.  But don't panic.  Just respond with the correct information.

Your next question is – where is this information going?  Well, the answer is the same if you respond to the letter, or you don't choose to respond.  The bank is exchanging information with the U.S. Treasury.

In fact, the U.S. Has a Streamlined Offshore Filing Compliance Procedure.  It allows Americans who have not filed tax returns for the last 3 years, or FBAR (financial reporting) returns for the lat 6 years, to catch up.  They can complete their returns and send a certification statement with them.  It has to be carefully worded.  The only fee to the government is a relatively small one-time 5% miscellaneous offshore fee based on the value of the holdings.  This is an extraordinary opportunity.

Please don't ignore a FATCA letter.  Just simply reply and provide the information.  Banks annually review their client records.  If the records contain indications of a U.S. Taxpayer connection, the bank will now send this letter.  It's a whole new world.  If the bank doesn't disclose account data on U.S. Persons, it is penalized under FATCA.

Remember, Americans are taxed on their worldwide income – no matter where they live.  What is peace of mind worth?  A clear conscience is a very valuable commodity, and the benefits of filing far exceed any drawbacks. Expats no longer live “off the grid.”

But wait – it gets better.  One of the advantages of filing is that you can often utilize the Foreign Earned Income Exclusion.  The only way to claim this is to file.  If you have not filed, the statute of limitations continues to run.  By filing, on the other hand, the statute of limitations runs and you only have 3 open years at any time.  Most of the countries we used to consider “tax havens” are still wonderful places to live, and they provide a certain level of privacy to expatriates.  By simply taking common sense measures, you can still have those benefits and enjoy your time in paradise.

By Jerry Taylor

My background:

I'm a Tax Accountant and maintain my professional certifications in the midwest U.S.  I've either lived on or visited most of the countries of the Caribbean, and am an international tax researcher, consultant and writer.  I've been the Business Manager for a wealthy family.  My Bachelor of Science degree is in Accounting & Mathematics.  I can be reached at: Jerry@capecoraltaxaccountants.com

My website is: http://expatriatetaxstrategy.com

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