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Old 07.08.2011, 16:32
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Re: US Taxes: Come Clean or Jump Ship?

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That decision, in turn, has a lot to do with how much grief would/will be involved in getting into the taxman's good books. Can I hope for some kind of amnesty?
Most likely, you won't need any amnesty. Provided you didn't owe any US tax (and given your brief background presented above, I suspect you don't owe anything), there is no penalty for late filing.

You don't need to file a US tax return at all if you fall under the minimum income for filing (~$8'000 for tax year 2010). Assuming you earned more than this, but less than ~$90'000 (and all of it outside the US), you can likely exempt all your income with the Foreign Earned Income Exclusion, meaning that you would have a zero US tax liability.

With an income of CHF130'000, you may or may not have an additional US tax liability.

If you want to get on the right side of the IRS with no consequences, this is the right time. My advice would be this:

File your back taxes. If you are wondering how many years back to file, the rule of thumb is to begin by filing the current year’s return and the preceding three years. If a tax liability is incurred for one of those years, then you should file for an additional two prior years (or a total of six years).

File your taxes for this year as normal.

You should also file your FBAR forms this year, but I wouldn't worry about filing them for previous years. Provided you're not laundering huge amounts of money or funding a terrorist organisation, starting FBAR forms now and continuing into the future is unlikely to get you unwanted attention. Note that any account you hold jointly with your wife also needs to be declared on your FBAR form.

You'll find lots of good advice in the Expat's Guide to US Tax. Especially look at sections 1.3 & 1.4, which discuss your situation specifically.

If you're comfortable with US tax forms, the easiest way to handle your back taxes is to buy a copy of previous years' tax filing software. I like TurboTax, as it handles the expat tax better than the other packages.

If you've never filled out a US tax form before, you might be better off getting a professional to handle your returns. I haven't used them personally, but the prices advertised by Taxes for Expats, who advertise here on EF, seem very good.
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