Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Hi Lev, By chance I discovered that it seems I should have

Hi Lev, By chance I discovered...
Hi Lev,
By chance I discovered that it seems I should have declared the interest gained in 2010 even though I do not need to file a 8938 form for that year.
And, I have the doubt I have to do it also for years 2006-2007 and 2008 even though in those years I gained very little bank interest and I did not have a green card (I was on F-1 and J-1 visas).
Now I sent my Fbar form a few days ago for 2012 and still I have to send the ones for the prior years(2006-7-8 and 2010, in 2009 I was not in the US and I did not have any visa, got the green card in 2010), I am kind of scared as in 2010 I had over 400000$ in my account, as my family wired a huge amount of money on it since I was planning to buy a house (it did not happen and I wired the money back after a year or so).
This is my situation, what would you advise? Am I at risk of some serious penalty?
Show More
Show Less
Ask Your Own Tax Question
Answered in 25 minutes by:
6/20/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,691
Experience: Taxes, Immigration, Labor Relations
Verified
Hi and welcome to Just Answer!
For years 2006-2007 and 2008 - when you were on F-1 and J-1 visas - if you were a nonresident alien - you should be taxed ONLY on income from US sources. Interest income generally is not considered from US sources - and should not be reported on your US tax return.
The situation is changed after you became a resident alien. Resident aliens are taxes on ALL their worldwide income. Thus if you were a resident alien in 2009-2012 - you are required to report your interest income.
Another issue - if you were required to file your tax return. If your total taxable income is below filing requirement threshold - there is no need to file and report anything.
For instance - in 2012 filing requirements for most taxpayers are $9750 - so if your taxable income is below that limit - no need to file and report any income - and there is no tax liability.

Foreign account reporting requirements is a separate issue. As you were required to file FBAR form - I suggest to do that. Possible penalty for not complying is up to $10,000. However - if there is no tax avoidance and the taxpayer is trying to comply as soon as he/she learn about filing requirements - the IRS usually doesn't apply the penalty.
Ask Your Own Tax Question
Customer reply replied 4 years ago


Hi Lev,


thanks, XXXXX XXXXX heard that people on H-1 should declare they worldwide income and thought that working under F-1 (OPT) and J-1 was the same.


In any case what concerns me is mostly 2010 (I was not in the US on 2009).


I did not know that I had to file a FBar and that I had to file my foreign bank interest(I don't even know how much I made then).


2011 is not of concern as I did not earn enough (made less than 9000) so I did not file taxes nor the 8938.


2012 I filed my taxes, the 8938 , reported (and paid taxes on) my foreign bank interest gained and sent Fbar ( I learned all of this just year).


The CPA that filed my taxes told me to send the Fbar just for this year as IRS would be happy enough that I reported all my foreign assets and interests.


The questions is, how shall I behave? Do I risk criminal prosecution?

I honestly do not think there is any criminal element or any risk for the criminal prosecution... That is very unlikely.
As we already discussed - tax fraud (which is a criminal offense) requires both:
•a tax due and owing; and
•fraudulent intent.
Non reporting without fraudulent intent is NOT a criminal action.

The IRS is a very large and very bureaucratic organization - it may not be happy or not happy - so do not even try to make it happy.
Your purpose - to stay in compliance with the reporting requirements.
So far your reporting requirements for 2012 are satisfied.
As you investigated - your reporting requirements are also satisfied for 2011 as you are not required to file your tax return and form 8938.
However - you did not comply with FBAR reporting requirements for 2010. Your choices are:
-- to file late reporting asking to abate any possible penalty as there is no tax liability and you are trying to comply as soon as you learned about these requirements, or
-- not to comply in hope that the IRS will never come back, but if they will - you would not be able to say that you had not know about filing requirements.
That is up to you what option to choose.
Ask Your Own Tax Question
Customer reply replied 4 years ago

that's exactly my point, I want to be as clean as possible, my fear is that if I comply, they will still charge me penalties, is it likely?


In any case I do not have much of a choice.


If, for example, I would go for the second option (unlikely), is there a possibility of criminal prosecution?


 


 

Non reporting without fraudulent intent is NOT a criminal action. Thus - I do not think there is any risk for the criminal prosecution...
If you want to comply - just file reporting form - attach a letter with explanation - and I do not see any issues.
If you do not comply and the IRS will know that - there will be penalty - and it would be hard to abate the penalty in this case.
Will or will not the IRS have any information about your account - that we may not know.
Ask Your Own Tax Question
Customer reply replied 4 years ago

Of course there was no fraudulent intent, the fact is and you know that, many CPAs are not really knowledgeable and give bad advices.


I will take care of it. Also Irs has the info from my account through this year FBAR and 8938 so if they want to investigate they can.


Last question, so the OVDI program is not for me right?


 

Customer reply replied 4 years ago

in addition who should help me a CPA or a Tax lawyer?

I do not think that you need a tax attorney - as long as there is no any litigation with the IRS. Tax attorneys rare do tax form preparations.
You are not required to have anyone helping you - and may prepare all your tax forms by yourself,
If you do not feel comfortable - you may hire a tax preparer - not necessary a CPA - any tax preparer may be helpful. But that is your choice.
Ask Your Own Tax Question
Customer reply replied 4 years ago


you confirm that I do not need go through the OVDI program right?

That is correct - if you do not have any tax liability for past years - there is no need to use OVDI program.
Ask Your Own Tax Question
Customer reply replied 4 years ago

sorry I am not sure I understand. By having to amend my 2010 tax returns (adding up the interest I gained on my foreign bank account) means that I have tax liability, so do I have to go through the expensive OVDI or I just need to amend that return and send the FBAR for the past years?


I appreciate your response on this.

If you received interest income in 2010 that was NOT reported on your 2010 tax return - and if you amend your 2010 tax return - there will be additional tax liability.
As a result of additional tax liability - there will be penalties and interest charges.
In additional - you might be subject of up to $10,000 penalty for not filing FBAR form.
If all above is correct - you MAY choose to apply for the offshore voluntary disclosure initiative (OVDI) program - that is not mandatory - this program is optional.
The law requires all taxpayers to comply with reporting requirements - so I may not advise you not to comply.
Ask Your Own Tax Question
Customer reply replied 4 years ago


In any case, and then we covered it all, my case is not a criminal one as I did not know truly that I had to report this interest for 2010, right?

I agree with your assessment - and honestly do not see any criminal elements in your situation.
Moreover - your wiliness to report and pay your tax liability may be used as a proof that you had no any fraudulent intention.
Non reporting without fraudulent intent is NOT a criminal action.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,691
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,691
30,691 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
A CPA prepared a filed a personal return last april. There
A CPA prepared a filed a personal return last april. There was a NYS and NYC refund due. The check never was received. The CPA is not helping procure a replacement check, whom should the person call o… read more
Lev
Lev
Tax Advisor
30,691 satisfied customers
I would like to open a business:to prepare tax returns for
Hello! I would like to open a business:to prepare tax returns for non resident,more exactly for students who come on a J1 -Visa ("Summer Work and travel" programme=where they work for aprox 3 months i… read more
Lev
Lev
Tax Advisor
30,691 satisfied customers
What are the Qualifications to be a Tax Preparer in New York
What are the Qualifications to be a Tax Preparer in New York Area Also any educational requirements for PTIN & EFIN renewal and opening your own Tax Preparer Business ?… read more
Carter McBride
Carter McBride
LLM
252 satisfied customers
Have a new client whose prior tax preparer did not file an
Have a new client whose prior tax preparer did not file an extension for his 2016 partnership return and he has received a Late File bill. How do we file a FTA request to waive? Is that possible for a… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Tax law. California. 2016. I am a tax preparer... I have a
I am a tax preparer... I have a client that is under audit... he unfortunately paid approximately $200,000 to subcontractors CASH... the IRS is not allowing the deduction... is there a way we can prove it?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
Lev, I am still working on preparing the final return for
Good morning Lev, I am still working on preparing the final return for this particular client. Per your instruction, I converted the loan to the shareholder to paid in capital and on the balance sheet… read more
Lev
Lev
Tax Advisor
30,691 satisfied customers
I am preparing 6 years of tax returns, I have an IRS Notice
I am preparing 6 years of tax returns, I have an IRS Notice 2014-7 that states that states "IHSS wages received by IHSS providers who live in the same home with the recipient of those services are als… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I used to work for Hewitt as a tax preparer and figured
I used to work for Jackson Hewitt as a tax preparer and figured while I carried a simple insurance for "error and omissions" they had a larger umbrella insurance to cover me for larger million dollar … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I am preparing a form 8802 for an LLC that will be filing as
Good morning. I am preparing a form 8802 for an LLC that will be filing as a Partnership on Form 1065. For 2016 this entity was a Single Member LLC and two Partners were admitted October 1, 2017. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
Lev, I am preparing federal unfiled tax returns for a client
Good morning Lev, I am preparing federal unfiled tax returns for a client of mine. I am also ready to finalize the 2014 tax return and there is an NOL created on his return. The client has already fil… read more
Lev
Lev
Tax Advisor
30,691 satisfied customers
Is a tax return less likely to be audited if it's prepared
Is a tax return less likely to be audited if it's prepared by a CPA or simply a tax person? Secondly, our Rotary Club is a 401 C for we have a 401 c 3 Foundation the question is can individual members… read more
socrateaser
socrateaser
1,031 satisfied customers
I need help with preparing a tax return and I may need to
Hi I need help with preparing a tax return and I may need to file form 3520 as well. Please let me know if you can assist.… read more
taxmanrog
taxmanrog
Master\u0027s Degree
776 satisfied customers
I filed my Form 1040, prepared on TurboTax and filed
I filed my Form 1040, prepared on TurboTax and filed electronically via TurboTax. I got nothing back and was told by the IRS that the refund was sent to a different bank transit number than the one sh… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,798 satisfied customers
My tax preparer is with Liberty Tax, and filed incorrect
Hi. My tax preparer is with Liberty Tax, and filed incorrect returns without my knowledge or significantly … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
I have a NJ estate tax return to prepare for a decedent in
I have a NJ estate tax return to prepare for a decedent in NJ. The brokerage statement has an account with the decedent and a trustee set up for her grandson under a U/W/O . Are these assets included … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
I am preparing a corporate tax return. The company is a
I am preparing a corporate tax return. The company is a payroll company based in NJ but almost all of the clients are in NYC. Is the income generated from NY clients require a NY S corporate tax retur… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
A Form 1065 partnership return is being prepared for a
A Form 1065 partnership return is being prepared for a partnership whose General Partner is a single member LLC. In the Analysis of Net Income (Loss) section at the top of page 5, is the LLC's portion… read more
taxmanrog
taxmanrog
Master\u0027s Degree
776 satisfied customers
I am preparing a partnership tax return for 2016. The
I am preparing a partnership tax return for 2016. The partnership holds commercial rental property. one of the partners, 50%owner, passed away in April 2016 and left his interest to his spouse. i woul… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x