Immigrant workers in the United States are subject to international taxes. They often need to pay income taxes in the United States and their country of origin. The situation can become even more complex if they have a bank account in another country.
Working in the United States as a foreign national and banking abroad are both perfectly legal with the right paperwork. However, careful compliance with domestic and international law is necessary. You will need to disclose your international accounts and income to the United States and the other country when you file tax returns.
Undisclosed accounts can trigger penalties
The majority of countries participate in an international agreement to share tax and financial records with one another. If a citizen of Canada opens an account in the United States, the banking institution will provide the relevant tax information to the Canadian government each year. This system helps eliminate tax evasion.
For decades, people abused international commerce rules by creating foreign bank accounts and not reporting them. If the Internal Revenue Service (IRS) discovers undisclosed foreign bank accounts, they may initiate a tax audit or even tax evasion charges.
For the average taxpayer, an audit is a problem. For an immigrant worker, an audit could impact their career or ability to stay in the country. Tax charges could affect someone’s visa or employment. They could also make them ineligible for a green card or naturalized citizenship, in some cases. Only by properly disclosing income and assets to pay taxes on them can workers avoid these risks.
Understanding how tax law differs for immigrant workers can help you avoid dangerous mistakes on your tax return.