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