Since we Bermuda residents all originally came from somewhere else, today there are thousands of us with multinational ties, multi-jurisdictional assets, multiple citizenships and multiple passports.

We are not unique in our restless quest to travel. Today, millions of people are advantaged with the ability to live, work, and retire in a globally mobile society. This quest for mobility continues to accelerate, almost beyond comprehension, given the ease of moving money, people, and businesses across borders.

As a consequence globally mobile people, and their businesses, have to sort out and possibly remit / report to more than one government’s tax regime.

Of course, if you never leave your country of birth, Bermuda, even to shop abroad, and you never invest outside Bermuda, then this information does not apply to you. But, I seriously bet that you have relatives and friends who have multiple country connections that can complicate their financial lives, please share.

Bermuda residents that are, or may be considered US persons, are currently grappling with the US FATCA compliance directives required of all foreign financial institutions (FFIs)¹ in Bermuda by the IGA Model 2 agreement signed by the US and Bermuda.

Recently, Bermuda FFIs sent letters to possibly thousands of residents requesting individual verification of being a US person, or refuting that classification by proving they are not a US person.

Everyone is a copy cat. The United States FATCA initiative is generally viewed positively as a tax collection vehicle by governments around the world. Other countries are considering, or have implemented, FATCA-type agreements.

The UK and Bermuda have signed a FATCA-type agreement for reporting applicable to offshore financial accounts in existence on or after 30 June 2014 that are held by a specified UK person, being a person or entity who is resident in the UK for tax purposes.²

Meanwhile, Bermuda residents (in the US persons tax compliant category) are once again facing complex US tax, reporting and filing requirements for the 2014 tax year. This not an easy task for anyone, even those familiar with United States tax regulations. Forward tax planning, if done prior to year end, helps to avoid tax traps and mistakes.

Here are some US tax filing errors, omissions and situations to be aware of. Warning, this list is not all inclusive:

US Income Tax returns

• Not filing an IRS Sec 663(b) election.

• Not reporting transfers into, or dividends from a foreign corporation.

• Not reporting transfers into, or distributions from a foreign trust.

• Using paper IRS tax forms to prepare your return.

• Copying same income / expense results as last year’s paper return that copied the year before and the year before.

• Omitting vForm 1040 Schedule B Part III in your tax filing.

• Using old IRS instructions (or not using instructions at all) to self-prepare your return.

• Incorrectly calculating your US tax liability.

• Treating self-employed income as wages.

• Reporting results of foreign mutual funds incorrectly.

• Not notifying the US state revenue department where you formerly lived that you have moved abroad permanently.

• Using (and paying) a friend or relative who, while well-intended, is not current in US tax law and is not a qualified US tax practitioner. Yes, tax practitioners are expensive, but can you hold your friend responsible for mistakes and omissions?

FBAR reports

• Not even aware that foreign accounts and financial interests of many types need to be reported.

• Not reporting guardian for (AGA) or power of attorney (POA) accounts, i.e. children, parents, etc

• Not reporting (if your beneficial interest qualifies) having a financial interest but not a signatory on accounts.

• Not reporting as signatory on foreign accounts but no financial interest.

The complexity involved in US tax preparation is enough to give most people a king size headache, perpetually! Emphasis is on correct filings. The US Internal Revenue Service is understaffed, and under-resourced — you don’t want to have to deal with them over correcting mistakes.

Resources: A list of the most common tax filing forms needed³ written by Jonathan Lachowitz for the Wall Street Journal EXPAT section. Jonathan is a fellow member with me, along with my friend Virginia LaTorre Jeker4 of the American Citizens Abroad Professional Tax Advisory Council.

Virginia’s AngloInfo blog is chock full of US tax help.

If you plan to self-prepare your US income tax return and FBAR — Report of Foreign Banks and Financial Accounts, please use an electronic tax preparation program.

For those wanting a list of US tax preparers who specialise in the international tax area, see the American Citizens Abroad, the non-profit group that represents you and supports your interests abroad. Please read their website thoroughly and I urge you to join up.

Bermuda residents. Know who you are. Know where you are considered resident. Know which citizenship will demand (and assess) tax accountability. Get your affairs in order. Get professional help if you need it.

Disclaimer: this article is for general information purposes only. It does not contain specific US tax advice, and it cannot be used for, or relied up as US tax law authoritative sources for your personal situation. See a US qualified tax professional.

In a follow up article, we will discuss other country’s planned or already implemented tax regulations that will affect globally mobile citizens with multiple country connections.

More information detail on the article above will up uploaded to the Pondstraddler Life website in a few weeks.

¹ FFIs defined: banks, investment firms, trust companies, insurance companies, etc

² Appleby: UK FATCA: Reporting requirements for Bermuda Trusts by Stacy-Ann Maharaj http://tinyurl.com/qb7hpfh

³ Wall Street Journal. http://tinyurl.com/ptmexq2

4 Let’s Talk About US Tax. http://blogs.angloinfo.com/us-tax/about/

Martha Harris Myron CPA CFP JSM; Masters of Law: International Tax and Financial Services. Appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. The Pondstraddler Life Consultancy providing planning for international tax, immigration, investment, retirement, legacy, and related financial challenges to the lifestyles of internationally mobile individuals and their businesses residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda. Contact: martha@pondstraddler.com