What is the taxation of foreign financial assets?

International Tax Law in Washington is a complex, ever-changing facet of the law that can be difficult to understand. When it comes to taxation of foreign financial assets, there are a few key points to consider. First and foremost, US citizens are held liable for paying taxes on both domestic and foreign financial assets regardless of where those assets are located. This means that all income from investments, like dividends and interest, must be reported to the IRS. Additionally, there are certain forms that must be filed for tax returns that involve foreign financial assets. For instance, taxpayers holding assets worth more than $200,000 outside of the US must file a Foreign Bank Account Report (FBAR) with the Department of Treasury. Failure to accurately report these assets may result in fines or imprisonment. In terms of foreign assets, Washington residents should also consider the Foreign Earned Income Exclusion. This exclusion allows taxpayers with earned income outside the US to exclude up to $105,900 of those earnings from their taxable income. In conclusion, while navigating the taxation of foreign financial assets can be complex, understanding the basics can help taxpayers avoid potential fines, imprisonment, or have a larger tax bill. As such, it is important to seek professional advice if you have any questions.

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What is the taxation of foreign financial assets?

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