From our friends at Invest Offshore

The American dream. That picture will look slightly different to everyone, but the end result is often the same. Grow up, land a dream job straight out of high school, marry the man or woman of your dreams, use the money from your dream job to buy a cottage or a beach house and spend your days relishing in your happiness and success. And then get taxed for it.

Something happened to that picture, didn’t it?

Americans have placed a high value on a strong work ethic. The country was founded on the backs of men and women who worked tirelessly to build a nation of prosperity, and that same drive lives on hundreds of years later. It’s that work ethic that also values reaping rewards of work efforts. Paychecks, summer bonuses, stock investments, etc., are all consolation prizes for a job well done. So, naturally, people want to protect what they’ve earned.

In years past, those chasing the American dream have ventured outside of United States to secure their assets; offshore bank accounts have stepped outside the fantasies of James Bond movies and into the common household financial plans of America. Securing funds overseas created a tax-free way to accrue interest on hard-earned money.

In 2010, however, the Foreign Account Tax Compliance Act was enacted, causing U.S. taxpayers with offshore bank and investment accounts to be taxed on their overseas assets. In an effort to cut back on the ever-present tax evasion problem, U.S. investors and taxpayers were stripped of a large percentage (often over 36%) of their earnings.