U.S. Citizens Living and/or Investing in a Foreign Country
Living and or working in a foreign country does not release you from your responsibility to the United States Internal Revenue Service.
The fact is you may have increased responsibilities, which if not fulfilled, could lead you into a Pandora’s Box of trouble.
Do not think that just by living, working, or investing in a country outside of the United States you are protected from the strong arm of the U.S. Internal revenue Service.
It is very easy to convince yourself by listening to friendly advice from some long time expats that you do not have to concern yourself with the IRS. They might tell you there is no way the IRS can do anything to you while you are living here. They might tell you that they have been living here for a long time and have had no problems. They might ask how the IRS can audit you from outside of the U.S.
Are they going to send an auditor here just for you?
Some of this may be true, but only to a point. For starters the IRS can do what is called a mail-in audit. Second, no matter how insignificant you may feel your income is, beware.
The IRS carefully chooses its audits to set examples for others, not just for the amount of money they think they can get. While you are out of the U.S. It is a bit difficult for the IRS to do much of anything to you if all of your assets and family members are also outside of the U.S.
The problem arises when you return to the U.S. on a permanent or a temporary basis. You could be faced with answering many difficult questions, paying numerous penalties, and not being permitted to return to your foreign country of residence.
Living and working outside of the U.S. can be a great experience for everyone involved. However, you need to be aware of, and follow the rules of the U.S. government. To make the best of your time living overseas it is a good idea to be well informed, and avoid being surprised by the long arm of the Internal Revenue Service. Use the rules to your advantage.
For clients located in Costa Rica, U.S. Tax International is conveniently located in Rohrmoser, just a few blocks north of the United States Embassy. We can be reached at the phone numbers below or by e-mail at email@example.com.