If you’re thinking about how to receive payments from abroad, it’s best to use an international money transfer service. Once you receive the transfer, there’s a range of options for distributing the money, for example, you can transfer the payment to your bank. Such transactions will not interest tax commissions, but only if they are not larger than a hundred thousand dollars.
In today’s globalized world, the everyday mobility of people and their money is rapidly increasing. Many people move abroad for education or work, and while it’s not as permanent, for a short holiday. When they do so, often the need to receive money from abroad becomes an issue they must sort out, one which can have multiple hurdles to overcome.
First, there are several ways to transfer money to a foreign bank account. Depending on the specific situation, some of them are more profitable, while others can really eat into the amount of funds being transferred through fees and poor exchange rates. It’s worth evaluating these options in advance, so you can forgo the risk of losses in both time and money.
Foreign money transfers are often associated with high fees, blocked funds, and questions from tax authorities. This article will look at how to avoid these problems and legally receive money from abroad.
Receiving through a bank
Modern banking institutions have significantly expanded the range of their services in recent years. Nowadays, almost all banks have foreign transfers available through the SWIFT network.
The SWIFT network includes more than ten thousand banks from over two hundred countries, and processes more than a million transfers a day. In order to carry out a single transaction, you need to specify the recipient’s full name, the receiving bank’s SWIFT number, and receivers personal account numbers. The transfer procedure is not the fastest — but also not very complicated.
Keep in mind that such transactions are closely monitored by tax commissions and banks. If a financial institution suspects illegal money laundering, the sender’s bank account will be blocked or partly frozen. To solve problems, the bank will run a check, looking at information about all account receipts and transfers.
In addition, the financial institution has the right to make a request to the IRS for more details. If fraud is detected, the account will be completely blocked. Only if the client can provide proof that there was nothing illegal taking place, will the restrictions on the account be removed.
The tax commission has the power to delay and even cancel legal transfers. Moreover, in the USA, the government taxes foreign income — which is one of the reasons why using bank transfers are typically not one of the best ways to receive payments from abroad.
Foreign bank account or Multi-Currency Account
If you don’t want to spend a fortune on conversion rates, it’s better to open a foreign currency account, or a Multi-Currency Account, especially in Euros or US dollars. You can do this with Cashero and this way you won’t have to worry about losing money due to an unfavorable exchange rate. If you want more financial freedom and security, opening a forgein or multi-currency account can be a great option.
Keep in mind that with many financial institutions, you do not need to travel abroad to open an account with them. Some will open an account after a video interview, while others do not even need you to do that.
If you decide to open a foreign bank account, you must let the IRS know within one month. Also remember that if your turnover exceeds a certain amount, you will need to give an annual report to the IRS of money moving in and out of your account. It’s a simple process that takes only a few minutes. This reporting is submitted electronically based on an annual statement from your foreign account, and such account monitoring requirements may vary from country to country.
Failure to comply with tax requirements will result in penalties. There is no point in hiding foreign accounts, since countries now exchange this information automatically. Any American citizen who has foreign bank accounts totaling more than $10,000 must report such accounts to the Treasury Department. Still, a foreign bank is a safe way to receive foreign money. If the customer entered the wrong data, the money from this account is not deducted and will not be lost.
International transfer services
Modern services help many Americans get foreign money legally, and a customer can actually open several accounts under one system to receive money from abroad. This means that you can easily convert the money into any currency, and money is available to you without having to deal with the red tape of currency controls.
With Cashero you can carry a balance in USD, GBP, and EUR. Your money is easily accessible at any time to be transferred into a local institution’s account, while protecting you from currency fluctuations.
Key benefit to using transfer services
One of the great benefits when you use an international transfer service, is that your bank will not see the transfer as foreign transaction, but rather as a domestic one.
However most transfer services don’t issue cards, so you must have your own bank account or e-account to use the money locally.
If you have a domestic bank account, card, or e-wallet, it’s better to receive money through transfer service providers, as they can often provide the best exchange rates, along with low fees.
Accounts with companies like Cashero have its own advantages, such as the ease with which you can make transfers to others. In contrast to traditional bank accounts, the annual service fee for an account with Cashero is zero. That’s right, it’s absolutely free. You worked hard for your money, so you deserve every penny.
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