What is my duty of care as a financial professional?

Linda Mabelis

2 min
Published on: 27-07-2024 Last modified on: 29-07-2024

Summary

Tax specialists, accountants, bookkeepers beware: Your clients may be taxable in the US. Inform them in time to avoid problems.

Your duty of care as a tax professional

As a tax professional, you have a moral responsibility to educate your clients about their potential tax liability in the U.S. You have a duty of care. This includes:

  • Identifying US persons in your client base.
  • Informing your clients of their tax liability and the potential consequences of non-compliance.

Tax lawyer support

Although ultimately a US tax advisor will prepare and file the return, you can support your client by providing general education, handholding, and ultimately providing the financial documents for the purpose of the return.

Tax treaty & advice

Yes but, there is a tax treaty, right? There is! Unfortunately, this treaty is not broad enough so it ensures that taxes never have to be paid in America. America has a difference between active income (income from work simply put) and passive income (income from dividends, interest, and rentals for example), with different tax rules for both. America also taxes capital gains on the sale of a house and profits from a business in a private limited company.

It is a challenge but therefore very important that your client gets the right advice, not only on how to comply with laws and regulations in both countries. Also on a strategic level, how can your client organize his financial situation so that he does not pay too much tax unjustly in both countries.

Risks

The risks your client faces by not having a Social Security Number (SSN) and/or not filing a U.S. tax return and/or not filing an FBAR depend very much on their financial situation. Below is a general overview:

  • Having an SSN is mandatory if you want to close a product with a financial institution outside the US, the already existing product or product to be closed may be blocked or refused if your client cannot provide an SSN.
  • Failure to file a tax return can result in unwanted penalties.
  • Failure to file an FBAR report can result in a penalty of $10,000 per tax return year or 50% of the highest account balance.

More information can be found here:

How can I contact you and get more information?

Do you have questions or would like more information for free? Americans Overseas is ready to help you. Please feel free to contact us.

Please email your questions and requests to support@americansoverseas.org. Our team strives to respond as quickly as possible.

Knowledge Center

Visit our knowledge center for comprehensive information on tax liability, regulations, and frequently asked questions.

We are ready to assist you and your clients with all aspects of U.S. tax obligations.

 

Written by Linda Mabelis

General Manager & Partner

Linda Mabelis is the General Manager and Owner at Americans Overseas, dedicated to helping individuals find the right tax attorney for their unique situations. With extensive work experience and a deep understanding of the complexities facing Americans Overseas, Linda is committed to providing personalized and effective solutions.

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