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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3535
Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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My wife is part owner of a company (small) outside of the

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My wife is part owner of a company (small) outside of the U.S. I was unaware when filing taxes about the situation because all of the money she earns as part owner/consultant etc is given to her mother for living costs. The income from the business is about 25K to 30K per year. I have not claimed this in the past because I was unaware of the issue. What should I do? How does this affect our tax refunds? Thank you in advance
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
I would also like to know if I have to file an amendment, how far back would I have to go (3 years)? What paperwork would I need from the other country as they do not file annual returns? thanks
Expert:  Tax.appeal.168 replied 2 years ago.
Welcome. Thank you for choosing us to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
As a U.S. citizen, worldwide income is supposed to be reported. Even though the company is outside of the U.S., the income was still supposed to be reported. For the years in question that the income was not reported, amended returns will need to be done, reporting that income. As for any refunds that you received, you may have to repay those amounts. As the company is outside of the U.S., the IRS may not know about the income, but technically the income is supposed to be reported. The form 1040X is used to file an amended return. You can file an amended return as far back as you like. The 3 years refers to the statute of limitations to receive a refund.
You don't need any paperwork from the other country to include the income on the U.S. tax return.
You can request Wage and Income transcripts from the IRS to see what information has been reported to them. You can call 1-***-***-****. Be prepared to be on hold for a long time.
Let me know if you require further assistance with this matter.
Customer: replied 2 years ago.
Thank you. Is there a limit to how much you can make from overseas before it is taxed or is all of it taxable if we live in the U.S. and she earns from another country
Thanks again
Expert:  Tax.appeal.168 replied 2 years ago.
Hello again,
Unless your wife meets the requirements for the foreign earned income exclusion, the entire amount is taxed in the U.S. SEE BELOW:
To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:
A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
REFERENCE SOURCE:
http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Requirements
You indicated that in the other country, no tax returns are required to be filed, therefore I take it that your wife paid no taxes in that country, which means that she is not able to claim the foreign tax credit either.