U.S. citizenship comes with significant obligations, the most important being the requirement to file tax returns in the United States, even if the individual resides outside the country. U.S. citizens and green card holders who have income are required to file annual tax returns, even if the income is generated from activities outside the U.S. Although there are exceptions for those with lower income, taxation can apply to earnings from employment, interest, or capital gains from the sale of stocks and real estate. However, the Foreign Earned Income Exclusion allows for up to $126,500 (for 2024) of foreign-earned income to be excluded from U.S. taxation.

Additionally, U.S. citizens who hold bank accounts outside the United States with a balance exceeding $10,000 are required to report these accounts to the U.S. government by filing the FBAR form. Failure to comply with this obligation can result in severe penalties, including fines or even imprisonment.

The deadline for filing tax returns in the U.S. is April 15 for people residing in the U.S. and June 15 for U.S. persons living abroad. Delays in filing returns can lead to serious consequences, as U.S. authorities closely monitor compliance with these obligations. Despite the strict regulations, in many cases, U.S. citizens living abroad may not have a tax liability, as the system provides for relief measures and tax treaties to avoid double taxation.

In recent days, our office has been receiving daily calls from individuals who were born in the U.S. and have been asked by foreign banks to complete Form W-9 or W-8BEN. This is happening because banks have agreements with the U.S. tax authorities (IRS) to identify individuals with indications of U.S. citizenship, collect their information, and forward it to the United States. U.S. citizens are therefore required to complete the W-9 form and ensure they are fully compliant with their tax obligations to the U.S. government. Our office will be happy to answer any questions you may have regarding this matter.

FATCA (Foreign Account Tax Compliance Act) requires financial institutions worldwide to report information about accounts held by U.S. citizens or U.S. tax residents to the American authorities. These banks are obligated to identify accounts belonging to U.S. citizens or individuals with U.S. tax residency by reviewing indicators such as a U.S. passport or a U.S. address.

For example, if an E.U. citizen who was born in the U.S. holds a bank account in their country of citizenship, they are required to complete a form to declare their tax status and inform the U.S. authorities. If they refuse, their account may be frozen. U.S. citizens living abroad must comply with their tax obligations to the United States.

U.S. law requires all American citizens to report their bank deposits held outside the United States (FBAR) if the total balance exceeds 10,000 on any day of the year. Failure to report such accounts can result in severe penalties, including fines of up to 50% of the account’s highest balance. The issue gained widespread attention primarily due to the UBS case, in which the bank was accused of assisting clients in hiding assets from U.S. tax authorities.

Americans in concealing deposits. FATCA (Foreign Account Tax Compliance Act) requires banks worldwide to report information about U.S. citizens to American tax authorities, while banks in Greece request that their clients declare their tax residency status.

The U.S. government offered amnesty programs allowing individuals who had failed to report foreign bank accounts to avoid criminal penalties by paying a 27.5% fine on the highest balance of the unreported accounts. However, for many Americans living abroad, this penalty was considered excessive. Following widespread complaints, the U.S. government announced a more lenient approach for those who were non-compliant due to negligence (“non-willful” cases), allowing for late filings without the imposition of harsh penalties.