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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I am an Americain citizen and I have been living and ...

Customer Question

I am an Americain citizen and I have been living and working overseas for the past 18.5 years. For the past 10 of those 18 years, I was employed full-time but did not pay USA taxes because I was told that if an American lives overseas and makes less than 70,000 USD per year, he or she does not have to file income tax papers. I am now moving back to the USA for at least 6 months per year and I would like to know what needs to be done about my tax situation.
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.

Hello reine,

Do you have records of what you earned in the years you did not file or do you have access to obtaining that information?

Customer: replied 8 years ago.
Yes, I do. I have every statement with my earnings for each and every year.
Expert:  Merlo replied 8 years ago.

Hello reine,

Unfortunately the information you were given was not correct. As a US citizen, if you live and work abroad for a period of at least 330 days in a 12 month consecutive period, you qualify for the "foreign income exclusion". That exclusion amount is currently set at $85,700. In prior years, the amount was probably somewhat lower than the current amount.

If your foreign income did not exceed this amount and if you had no income from other sources such as investments, then in all likelihood you would not have owed any US taxes, however, you were still required to file a return to report your earnings and claim the exclusion.

Since you have all of your earnings records, then the best thing for you to do at this point is to try and file the returns for the years you missed. You may need the help of a tax preparer in doing this, or you may also obtain help free of charge by calling the IRS. They will be able to help you get the forms you need for the years that you need to file. I am also giving you below a link to a section of the IRS website that explains the foreign income exclusion and gives you links to the forms you need for the current tax year.

If it ends up that there are any years where you do owe tax, then in addition to the tax owed you will no doubt have penalties and interest for the late filing and payment. However, penalties will not apply in any year where there was no tax liability. So if your foreign earned income did not exceed the exclusion amount in any given year, then hopefully you will not have to worry about having any taxes or penalties to pay. It will, however, take you a little time and effort to get these returns filed, but then you will be up to date and can start filing your returns each year as they are due.

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