Do I need to pay tax if I keep money in overseas bank.

23 replies
Seems like a lot of headache, btw, not trying to evade tax, I would definitely alredy paid the income tax, i'm talking about the tax on the interest earned.

And btw, I'm not rich yet.Just planning.
#bank #money #overseas #pay #tax
  • Profile picture of the author rosetrees
    You need to ask an accountant.
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  • Profile picture of the author kindsvater
    If someone from Thailand knows you may get an answer.

    If you are a US citizen the answer is easy: yes. Your income is taxable whether it is kept in a Miami bank, London bank, or Moscow mattress.

    A reasonable guess would be every country expects its citizens to pay taxes on income earned in their country, even if you move the money elsewhere.

    .
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  • Profile picture of the author Alexa Smith
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    Originally Posted by Jim Rain View Post

    Do I have to pay tax in that country or in my country, or in both the countries.
    Almost never in both, I think.

    It's normally going to be in one or the other, and which one is going to depend on the taxation agreements/treaties between the two countries (i.e. it's variable).

    "Europe" isn't a country. Even "the European Union" isn't a country, and for the specific purposes you're asking about, some different answers will certainly apply to different (EU and non-EU) European countries.

    The answers will also sometimes depend on how long (and/or for what proportion of the tax year) you've lived somewhere.
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  • Profile picture of the author salegurus
    Originally Posted by Jim Rain View Post

    Hello,

    Let's say I have lots of money and I want to diversify it by keeping money in various banks in and out of the country.
    That's not diversifying, it's trying to dodge the tax man...
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  • Profile picture of the author colinph970
    Most countries will tax on worldwide income, irrespective of where it is earned.
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    • Profile picture of the author Alexa Smith
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      Originally Posted by colinph970 View Post

      Most countries will tax on worldwide income, irrespective of where it is earned.
      I don't think so, at all, Colin. The US is the only country I'm aware of that even claims to do that (and very often it doesn't, really, if local income taxes have already been paid on money/interest earned, under its various "non-double-taxation" treaties).
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  • Profile picture of the author wingmanpi
    where you keep the money i.e. bank, mattress etc. is largely irrelevant. If you are from the US then you owe taxes on the income that you have earned. one thing you may
    want to look into is the "foreign earned income tax credit" If you live overseas you may be able to earn up to $93,000 per year tax free. There are important details so you will have to research it for yourself.
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  • Profile picture of the author NewParadigm
    U.S. not only requires you to report income, but account balances no matter what foreign bank they are in.
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  • Profile picture of the author thedanbrown
    Depends what country you live in. I know in New Zealand you don't pay taxes on any income you make outside of the country...
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  • Profile picture of the author sal64
    If you had all this money... why would you ask this on a public forum???
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  • Profile picture of the author smodha
    Most countries operate a "double tax treaty". That is you declare your income in the country where the profit is generated which can be used to offset tax in your home country.

    The laws are country specific so speak to a tax lawyer before moving money around.
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  • Profile picture of the author MartinPlatt
    Originally Posted by Jim Rain View Post

    Hello,

    Let's say I have lots of money and I want to diversify it by keeping money in various banks in and out of the country.

    For in the country, the tax would alredy be deducted by the bank, but for keeping it out of country -

    Do I have to pay tax in that country or in my country, or in both the countries.

    Let's say my country is thailand, and other countries are singapore, india, japan, australia, europe, switzerland etc.

    Thanks
    You definitely need to get advice on this.

    My understanding is that you are taxed based on your residency status. So for example if you are resident in thailand for tax purposes, or you have a business that has its office based there, that is where you pay the tax.

    I'm not an accountant, so you'd have to check on what I'm saying, but that was correct for my experience of having lived in England and moved to Australia, and how the accounts work, and where you pay the tax.
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  • Profile picture of the author JamesColin
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    Yes, seek pro advice, that is paid advice, from an accountant where you live. But don't worry if you want to comply with the laws, then most probably yes, someone out there wants a part of your money, for sure.
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  • Profile picture of the author laurencewins
    Ask advice in here and you will get 10 different answers as you have seen. Speak to a decent accountant about the RIGHT way to do things. Once you know, then you can decide what you actually want to do.
    ***Suggestion*** It's never wise to ask how to dodge the tax man in any open forum. You never know who may be watching.
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  • Profile picture of the author CDarklock
    Originally Posted by Jim Rain View Post

    Do I have to pay tax in that country or in my country, or in both the countries.
    It depends on a great many factors. You need to talk to a tax attorney (not an accountant). Different countries tax differently. There are four places you are likely to be taxed on your money.

    - Wherever you are a citizen
    - Wherever you earn the money
    - Wherever you keep the money
    - Wherever you physically reside

    All of these can get very, very complicated. Normal people can't even begin to fathom all the possible combinations, so don't walk in and ask "if I do this, can the government do that?" because you are unqualified to design the process. You will get the best results by telling your attorney what you want to accomplish and asking him what the best way to do that is.
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  • Profile picture of the author sal64
    Actually if you have all this money... I am in Australia, so you can feel free to use my bank account any time.

    deal?
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  • Profile picture of the author keyon
    Speaking of taxes...if anyone wants a refresher course on how a billion dollar US company can somehow owe zero taxes at the end of the year -- watch the documentary "We are not broke." So pathetically sad that small, honest businesses get stuck paying the bulk of taxes in this country.
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  • Profile picture of the author OrangeBull
    If you are a US citizen and you don't already have an overseas bank account, getting one ISN'T going to be easy.

    The US Tax code was changed in 2009 to help encourage foreign banks to report US tax cheats hiding money overseas. One of the reasons I'm certain Mitt Romney wouldn't release his tax returns prior to 2010 is that you would have likely found he took advantage of a Tax Amnesty program that the US government put in place for people who had money in overseas accounts, but who failed to file the form disclosing such accounts to the IRS. I can't remember the Tax Form #, but you have to DISCLOSE all overseas accounts and overseas stock holdings as a US Citizen to the IRS, even if you live outside the US.

    You also are required as a US citizen to pay taxes on all income earned worldwide. If you have paid taxes on money held in an overseas bank account, well you are keeping your money in the wrong country because there are plenty of good tax haven nations, i.e. the Cayman Islands to do offshore banking with and pay no tax.

    If you own 49% of an offshore corporation, and a British friend owns 26% while a Canadian friend owns the remaining 25% you wouldn't meet the controlled foreign corporation test, and you as a US citizen may be able to avoid US taxes on that corporation's overseas income, until such time as you repatriate its dividends and it if that offshore corporation is located in a tax haven you may avoid taxes altogether, BUT you would still be required to disclose to the IRS your ownership of the foreign stock.

    If however, you owned 51% of the stock, you would have what is known as a controlled foreign corporation, and as a US citizen, you would be required to pay US taxes on the income to that corporation in the year it is collected as if it was your own income, even if there had been no distribution of dividends as I understand it, but I haven't read that section of the code in about a year, so that may be a bit fuzzy.

    Oh, and that change that made it hard for a US citizen to get an overseas bank account is as follows. If you are a foreign bank and you want to receive money from a US bank via wire transfer, you can receive funds in full from the US bank, so long as you make sure that you disclose your US clients to the IRS "voluntarily" if you don't, well you still get your funds, but the US bank sending them is required to withhold 30% for the tax man because that money may be moving to a US account holder.

    To address this problem, a good many banks in "Secrecy" jurisdictions, i.e. the Cayman Islands, and Switzerland or Panama have closed accounts of US account holders and stopped taking on US accounts. These banks have then signed the compliance docs for the IRS and will never disclose anything to them.

    It is a crime for a banker in the Cayman Islands to tell you that someone is a banking client, they go to jail for even acknowledging that an account MIGHT exist. The same I believe was true in Switzerland and Panama, and is actually the law in tons of countries, so bankers DON'T want US account holders anymore.

    Those who have taken on US account holders are in jurisdictions where secrecy laws aren't so severe and can be waived, and the US account holders acknowledge their info will be reported to the IRS. The banks that have a problem with complying with the US law have started routing wire transfers through other countries before hopping into the Cayman Islands type of banks. I mean they route through a country without the secrecy laws, through a bank that complies with the US law and then re-route to the Cayman's I suspect.

    All of this was to tell you don't worry about it, unless you already have an account, because offshore banks aren't taking on too many US customers these days.
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  • Profile picture of the author atag40
    Originally Posted by Jim Rain View Post

    Seems like a lot of headache, btw, not trying to evade tax, I would definitely alredy paid the income tax, i'm talking about the tax on the interest earned.

    And btw, I'm not rich yet.Just planning.
    Yes. (as per the advice of the last poster you need to ask your accountant, but the answer is inevitably YES)

    If your are a USA citizen (even one living outside of the US) the answer is Yes and you can be fined 10k for holding an unreported foreign bank account, even if thr income their is marginal. (although this will likely be waived if the account is reported voluntarily)

    Find a CPA that understands your financial situation, but first make some money before you bother paying professionals.... in the interim, just pay your tax...
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  • Profile picture of the author RyanGillam
    Why anybody would want to avoid paying tax is beyond me. It helps pay for a lot of the services they use *sigh*
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  • Profile picture of the author Rbtmarshall
    are you spending any of the money you have in overseas accounts in your country?


    you need more than a CPA, you need an international broker for that specific country to get the full extent of what their specific rules are reguarding the money going into and out of their countries account, or assets purchased under that countries financial protections.


    many large yachts owners keep that asset under safeharbor type countries.



    It's been a few years since I looked into this for a family member, but it's definitely not something you want to play around with. It's a game with taxes that the rich play to divert their income they feel they already paid enough taxes on when they earned it, and are trying to avoid more taxes that will most likely be misappropriated by our government.

    the rich do not do it themselves though, they have $500/hour lawyers and tax accountants who specialize in helping handle their assets.




    unless you're a multi millionaire, 8digit+, I personally wouldn't even mess around with overseas money funneling to deter taxes.



    some countries will take your money easily. but when you try to draw it and or spend it here in the US, that is when you will start running into problems.
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