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I need someone familiar with filing US ex-pat tax returns for a number of past years. I do not make much money but I may have some liabilities/penalties to take care of and I would like to minimise these and reduce any US tax risk to my non-US spouse and child (I really don't feel they owe the US anything!). I have been paying taxes in my country of residence and been operating correctly under their system (as far as I know). I and my partner (with the bank) own a house, I own a limited liability company that pays me a shareholder salary (< US$20,000 pa) and I have had some very small self-employed earnings (< US$30,000 per year). There are a few CPA/lawyers on the internet, are they any good and trustworthy? (know of any scams) Any recommendations?
Already Tried: Nothing. Every time I looked at this it seemed way to hard. I did get advice from a US tax person once that I was far too small a fish for them to be worried about.
HelloCustomer As I am sure you know, as a US citizen, you are subject to US tax on your worldwide income, regardless of where you reside. However, once you have permanently moved to another country, and all of your earned income is from a foreign source, then even though you are still required to file a tax return with the United States, you are allowed to claim a credit for the Foreign Earned Income Exclusion. That amount increases a little each year, and the current allowed exclusion amount for 2009 is $91,400. What that means is that any foreign income you have which is below the allowed exclusion amount of $91,400 will not be subject to any US tax. In prior years that amount would have been slightly lower. However, you have indicated that your average income is apparently somewhere in the range of $50,000 per year. If that has been the case for the last several years, then your foreign income is well below the allowed exclusion amount, and you would have no tax liability here in the United States. This does not relieve you of your responsibility to file a return and report your income, but no taxes would be due. If you have not filed any returns in a number of years, the IRS generally requires that you file for the previous 6 years. In most cases that will be the extent of how far back you must go to bring your account up to date. If your income for the past 6 years has been below the amount of the foreign earned income exclusion, then you will owe no taxes. And if you owe no taxes, then you will also not owe any penalties. This will just be a matter of getting the paper work done and filing your returns to bring yourself up to date with the filing requirements, but based on the information you provided in regards XXXXX XXXXX income level, you will not be liable for any taxes in the US. If this was helpful please press the Accept button. Positive feedback is also appreciated. Thank youCustomer Merlo40081.1966696759
So there are no penalties for just not filing? Here in New Zealand there are penalties for not filing the paperwork and for not paying the money on time. Can you recommend anyone to do this for me or a website (Turbotax?) that allows me to do this on line? I'm just concerned that I'll screw something up and the IRS will decide to get ugly.
Hello againCustomer In the US, there are no penalties for filing late, as long as those late returns do not show that any tax is due. You could not use any of the on line tax services such as Turbo Tax or similar programs, because they are only set up to handle current year returns. Every year the tax forms change, so in order to file taxes for prior years you would first have to obtain the proper tax forms for each year involved. You would then have to fill those out manually and mail them to the IRS. There are services that will do this for you, but because of the fact these are prior year returns and because foreign transactions are involved, there would likely be a fee of at least $300 for each year's return. If this was helpful please press the Accept button. Thank youCustomerand let me know if you have more questions.
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad