I have created a sort of perfect storm situation for myself and want to be sure I have not done anything that could get me in trouble later.
I got divorced in spring of this year and got remarried this summer.
My ex-wife got virtually our entire net worth (roughly 4 million) plus I have to pay $7000 per month alimony
for the next 9 years. I was left with my 401K of $240,000.
Last year, I liquidated the $240,000 and paid the 10% penalty. I then proceeded to give all the money to my girlfriend at that point (now my wife.)
My new wife is not a U.S. citizen and does not plan to be.
Once I gave my girlfriend the money, she purchased a house in her name here in a foreign
country where we are living.
Last year, I also stopped my internet based affiliate marketing business. I reopened the business in my girlfriend's name (a foreign national). Now, all the sales
originate in the U.S. But since she is a foreign national, she is not required to pay U.S. tax
. And the tax laws
here are such that she is not required to pay income
tax on the money in this country because the sales originate in the U.S. The yearly income is about $350,000.
This year, at a point when I had no assets
left (because all of the income beginning this year is in my new wife's name, the house is in her name, the car is in her name) I took out about $150,000 in cash advances on my U.S. credit
cards. Soon after taking out the money, I informed the credit card companies that I had moved to London. I only stayed in London for one month, and then moved to the other country where I am now and will be getting residency shortly.
Based on what I have done, my income is currently 0 and my assets are currently 0. But I have $150,000 in debt. Now when I file my taxes this year, I will show 0 income and that I have paid $84,000 in alimony to my ex-wife.
I have not made any payments on the credit cards and don't intend to. I have gotten notification from a couple that they are getting ready to charge-off the debt. But if they send me a 1099-C, I will likely never get it.
So my only current concern is a potential IRS audit
over the $150,000 that MAY appear on 1099-Cs that I won't receive. But as I understand the law
, I would not be required to pay income tax on the 1099C because I am insolvent. I don't know if I should just contact the credit card companies periodically to see if they have sent me a 1099-C.
I am figuring that if I just keep filing
my taxes with 0 income and $84,000 in alimony paid, I will be okay if ever audited over the 1099-C on the basis of the insolvency.
Is there anything else I need to worry about in the scenario I have detailed?