US Citizens who have or are planning on international removals to Saudi Arabia may be familiar with the new Foreign Accounts Tax Compliance Act, or FATCA, that will soon been introduced. It looks set to affect more than 200,000 US expats who now reside in the Saudi Kingdom.
At a seminar in Riyadh in Saudi last month, it was announced that the new act is set to come into place soon, once an agreement is signed between the US and Saudi governments. At the seminar, a KPMG spokesperson also covered the ins and outs of how to file a US tax return abroad, and detailed the tax deductions and exemptions US citizens living abroad are privy to.
Current US Tax Law
At the moment, all US citizens and those who have Green Cards, whether they reside in the USA or now live abroad, are required by US law to report their income worldwide and file US tax returns each year. On top of this, these people are also required to give the Inland Revenue Service information on their foreign assets and bank accounts.
So, the requirement for US citizens living outside the US to file tax returns is no new thing; FATCA has been introduced not to change the laws, but is a new act brought about by the US government to try and ensure that US expats actually comply with these laws and meet US tax requirements.
The deadline for filing a US tax return is April 15th, but those US citizens living outside the country currently get an extension automatically, making June 15th the deadline - they can even ask for additional time until October 15th for their tax return completion.
US citizens who have shares in foreign corporations or partnerships, or association with a foreign corporation may also be required by the IRS to share information about these foreign business ties. It is recommended that US citizens and Green Card holders who think that these disclosure requirements may apply to them should meet with their tax advisers to find out whether they must disclose information, in order to avoid potential penalties for not meeting these requirements.
The current voluntary disclosure program that is offered by the IRS can be very important for US citizens who have moved abroad. By complying with US tax file requirements by choice, expats can waive certain interest fees and penalties. This program was put into place in 2009, and in its first year collected over $6 billion in taxes.