Home / News / Local / Chamber hosts CPA to speak to Abaconian dual citizens on FACTA compliance
On Jan 17 the Abaco Chamber of Commerce hosted a US based Certified Public Accountant to discuss the new FACTA taxes and taxation regarding dual citizens (Bahamian/U.S.A) living in Abaco. The CPA, Scott Williams, is a long-time visitor to Abaco. Over 120 people came to the meeting, which was held at the Anglican Hall.

Chamber hosts CPA to speak to Abaconian dual citizens on FACTA compliance

Above: Scott Williams, left, receives the “Cruisers’ Guide to Abaco” as a gift from Abaco Chmaber of Commerce president Dennes Lightbourne. Mr. Williams explained some of the facets of the new FACTA and FBAR requirements.
Above: Scott Williams, left, receives the “Cruisers’ Guide to Abaco” as a gift from Abaco Chmaber of Commerce president Dennes Lightbourne. Mr. Williams explained some of the facets of the new FACTA and FBAR requirements.

On Jan 17 the Abaco Chamber of Commerce hosted a US based Certified Public Accountant to discuss the new FACTA taxes and taxation regarding dual citizens (Bahamian/U.S.A) living in Abaco. The CPA, Scott Williams, is a long-time visitor to Abaco. Over 120 people came to the meeting, which was held at the Anglican Hall.

Dual citizens living in The Bahamas are still considered by the US to be US citizens.

The USA tax code requires citizens to report their worldwide income from all sources. There are three forms Dual Citizens should be concerned about: Individual 1040, FACTA 8938 and the FBAR.

Mr. Williams explained the difference between filing your income with the US Internal Revenue Service (IRS), and having to pay United States taxes on that income.

Worldwide income exceeding $10,000 must be filed with declared to the IRS. Deadline for filing in every April 15 for citizens living in the US, but for US citizens living abroad the deadline is not until June 15. Even then an extension can be requested until October.

While income over $10K must be declared it may not be necessary to pay taxes to the US gov’t on that income.

The IRS recognizes “Foreign Earned Income.” Meaning if you are a dual citizen living and working in The Bahamas, your wage falls under this category. Foreign Earned Income up until $97,600 is exempt from taxes. However there are wrinkles in what is not considered Foreign Earned Income including certain rental income, investments and other income. An expert should be consulted if this applies.

There are penalties for late filing.

Mr. Williams told the crowd that there is no specific initiative by the IRS aimed at Bahamians. Instead this is a blanket that covers all US citizens and they are expected to comply.

The FACTA and FBAR represent separate filing requirements. These are fairly new laws and are the reason education is needed. These are mostly filing and reporting laws and generally no taxes are due.

The FBAR (Report of Foreign Bank & Financial Accounts) must be filed when a dual citizen has more than $10,000 in any non-US bank at any given time throughout the year. Being a signature on an account that holds over $10K requires filing as well. Again, taxes are not generally due, it is simply a filing requirement for the US government to keep an eye US citizens money to prevent laundering and terrorism.

With the FBAR there is a $10K penalty for not filing, even if no taxes are due. The FBAR filing is due by June 30. There are no extensions for filing the FBAR.

The FACTA (Foreign Account Tax Compliance Act) is related to certain foreign financial assets like stocks and bond. Real estate in not considered a foreign asset under FACTA.

The filing threshold is $200K or more at the end of the year OR $300K at any time throughout the year. FACTA is filed alongside the Individual 1040.

There is a $10K for not filing the FACTA.

FACTA & FBAR are usually just disclosure documents with no taxes necessarily involved. Regardless, willful failure to file these documents once you reach the filing threshold carries the steep penalties.

There is “Reasonable Cause” associated with not filing. This includes questions such as: “When did you become aware of these requirement?” Professional help should be consulted in this situation.

Regarding expatriation, relinquishing one’s US citizenship, Mr. Williams explained it was not that simple. For expatriation a dual citizen must certify past compliance with all US tax laws. Heavy penalties and interest on penalties may be involved with the process if compliance cannot be proven.

On the question of how far back must dual citizens file who had “Reasonable Cause” and who were not aware of these tax laws: around three years.

There is no specific age when teenagers should begin filing. Filing is only necessary once a citizen surpasses $10K in income. Taxes are only necessary once a citizen passes $97,600 Foreign Earned Income.

Bahamian entity businesses with Dual Citizen partners are not required to pay US taxes. The only taxable income from a Bahamian business would be in relation to the dual citizens income and dividends from said business. Again, taxes may not be required on said income and dividends. Professional help should be consulted.

After the meeting Chamber President Dennis Lightbourne presented Mr. Williams with a gift of the new “Cruisers Guide to Abaco.” Mr. Williams, after seeing the large turnout and productive question and answer session, agreed to return to Abaco for another town hall later in the year.

What Do You Think?

comments

About Bradley Albury

Bradley Albury
Editor-in-Chief of The Abaconian.

Check Also

Local Eyes Division I Offers

Young D’Andre Vilmar, now graduated from Roman Catholic High, is poised and ready to begin …

Leave a Reply