Moving Money Internationally: Legal and Tax Traps for Immigrants and Expats

Moving money internationally can feel like second nature—especially if you’re living abroad, supporting family back home, or running a business across borders. But the truth is, international money transfers come with more strings attached than most people realize.

If you’re a U.S. citizen living overseas—or someone from another country making money in the U.S.—this post is for you. Let’s break down the biggest legal and tax traps, and how to avoid them without pulling your hair out.

“Wait, I Still Have to File U.S. Taxes Even If I Don’t Live There?”

Yep! One of the most surprising things for Americans abroad is that the IRS doesn’t care where you live—if you have a U.S. passport or green card, you’re taxed on your worldwide income.

Even if:

• You’ve lived abroad for 20 years.
• You earn every dollar in another country.
• You already pay taxes where you live.

But here’s the good news: you might not owe anything! The U.S. offers tools like:

• Foreign Earned Income Exclusion (FEIE) – lets you exclude over $120,000 of foreign income
• Foreign Tax Credit – helps you avoid getting taxed twice on the same income

The bad news? You have to file properly to get those benefits. If you miss forms or deadlines, you lose out—and could face penalties.

Got a Foreign Bank Account? The IRS Wants to Know

Let’s say you opened a bank account in Germany or Spain to pay rent or deposit local income. Sounds normal, right?

But if the total in your foreign accounts ever goes over $10,000, even for one day, you probably need to file:

• FBAR (Foreign Bank Account Report)
• And maybe Form 8938 under FATCA

Failing to file FBAR can mean penalties up to $10,000 per account, per year – even if you didn’t owe any tax.

So don’t assume your accounts are “too small” to matter. The threshold is surprising low.

Foreigners Making Money in the U.S.? You’re Not Off The Hook Either

Maybe you’re a non-U.S. citizen investing in U.S. real estate or running an LLC from overseas. That’s great! But it comes with U.S. tax and paperwork responsibilities.

Common traps involve:

• 30% tax on U.S. dividends or royalties (unless a tax treaty applies)
• Real estate sales that trigger FIRPTA, requiring 15% withholding from the sale
• Effectively Connected Income (ECI) – like rental income or business profits, which must be reported and taxed

And don’t forget: the U.S. is quick to apply withholding rules if it doesn’t get proper paperwork. That money can be tough to recover once it’s withheld.

Sending or Receiving Big Transfers? It’s Not “Just a Wire”

Let’s say you are:

• Sending savings to your home country
• Receiving a large inheritance from abroad
• Wiring money to fund your U.S. business

It might seem like no big deal–but large or frequent international transfers can raise red flags (and you don’t want that). U.S. banks must report transfers over $10,000, and if you try to avoid that by sending smaller amounts in chunks, it can look like Structuring–which is illegal.

It also counts if you’re a U.S. person and someone sends you:

• A foreign gift over $100,000
• A large inheritance

You’ll likely need to report it on Form 3520. Not doing so could cost you up to 25% of the gift’s value in penalties. And no one wants that.

“I Thought My Foreign Bank Wouldn’t Tell Anyone…”

Surprise!! They probably already have.

Thanks to laws like FATCA and global initiatives like the Common Reporting Standard (CRS), banks around the world now report account information to tax authorities—either directly to the U.S., or to your home country, who then shares it. Moving money internationally is something banks are always on the lookout for.

So that “secret” account abroad? It’s not really secret anymore.

How to Keep Your Money—and Your Sanity—Safe

Let’s be real: None of this is fun. But it’s also not impossible to manage if you stay ahead of it.

Here’s what smart global earners do:

• ✅ Work with an accountant who understands cross-border taxes (not just local rules)
• ✅ Keep clean records of every transfer and foreign account
• ✅ File all the necessary forms—even if you don’t owe tax
• ✅ Ask questions early—before the IRS or your local government comes knocking

Bottom Line

Whether you’re an American living abroad or a non-U.S. entrepreneur navigating the U.S. system, moving money internationally is more than a transaction — it’s a legal event.

Need help making sense of your cross-border tax or transfer situation?

Let’s connect–we’ll help you untangle the rules and keep your money moving safely.