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Quebecman 09.03.2012 13:22

To file or not to file a US tax return...
 
Suppose I am a 34 year old US citizen. Suppose I graduated from college when I was 24 and I worked in the USA for the following 10 years. Now I move to country A, I get a job in country A, I become a citizen of country A, I plan to retire in country A, I do not own any asset in the USA and I never want to live in the USA again.

Question 1: Why should I file a US tax return every year?

Question 2: What will happen if I never file a US tax return again?

Thank you.

KeinFranzösisch 09.03.2012 13:24

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508583)
Suppose I am a 34 year old US citizen. Suppose I graduated from college when I was 24 and I worked in the USA for the following 10 years. Now I move to country A, I get a job in country A, I become a citizen of country A, I plan to retire in country A, I do not own any asset in the USA and I never want to live in the USA again.

Question 1: Why should I file a US tax return every year?

Question 2: What will happen if I never file a US tax return again?

Thank you.

Answer 1: Because it's the law.
Answer 2: You'll be hunted down by the IRS like Leona Helmsley and locked away in Camp Cupcake like Martha Stewart, or assassinated like al-Awlaki.

The_Love_Doctor 09.03.2012 13:26

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508583)

Question 1: Why should I file a US tax return every year?

Because you are required to do so by law.

Quote:

Originally Posted by Quebecman (Post 1508583)
Question 2: What will happen if I never file a US tax return again?

Nothing will happen as long as you don't set foot on US soil again. Otherwise you might be detained at border control if you are identified as a tax evader.

poptart 09.03.2012 13:26

Re: To file or not to file a US tax return...
 
You are legally obliged to file taxes each and every year, no matter where you live, if you wish to retain your citizenship. Given the FACTA dragnet, I wouldn't recommend just not filing and hoping you don't get caught. If you haven't been filing over the last ten years, you're liable for the last 7 and, should you be brave enough to google 'FACTA expat IRS penalties', that should explain why. You're only option is to renounce if you don't want to file taxes yearly.

poptart 09.03.2012 13:30

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by The_Love_Doctor (Post 1508591)
Nothing will happen as long as you don't set foot on US soil again. Otherwise you might be detained at border control if you are identified as a tax evader.

That's not entirely true if I am to understand what the ramifications of FACTA are. If the IRS wants to pursue you, they will and it won't be much fun. Two kinds of people you don't mess with...immigration and tax folks as both can make your life a living hell with very little effort.

Quebecman 09.03.2012 13:37

Re: To file or not to file a US tax return...
 
I am not 34 years old and I am not a US citizen. But let's continue the game anyway. Let's say we are talking about Joe.

Everything is true except for a few major details.

So Joe left the USA in the summer of 1993.
He filed a US tax return for the year 1993 because he had worked in the USA during the first half of 1993 and he has a good conscience.

Now Joe has not filed a US tax return since 1993.
That's like 18 or 19 years!
He has gone back to the USA on numerous occasions (on average once a year) and he has never run into any problem.
Actually, since he's become a citizen of country A, he has travelled to the USA with his Country A passport... which might be against US law...

Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)

standardgirl 09.03.2012 13:39

Re: To file or not to file a US tax return...
 
If what you said is true that you "never want to live in the USA again," why don't you just make an appointment with the US Embassy in Bern and give up your citizenship?

The_Love_Doctor 09.03.2012 13:39

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by poptart (Post 1508599)
That's not entirely true if I am to understand what the ramifications of FACTA are. If the IRS wants to pursue you, they will and it won't be much fun. Two kinds of people you don't mess with...immigration and tax folks as both can make your life a living hell with very little effort.

FACTA: Wiki :confused:

If he's a citizen of another country, (depending on which country of course), as far as I am aware they can't do shizzle :msntongue: It just means that he will live his life as a fugitive :cool:

st2lemans 09.03.2012 13:40

Re: To file or not to file a US tax return...
 
If you never plan to go to the US again, dump your US citizenship, problem solved (unless your tax laibility in previous years is above $150k or so, or have assets above a certain amount, in which case you need to continue filing for a few years).

Tom

standardgirl 09.03.2012 13:41

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508612)
Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)

There is no filing deadline for income tax return under US laws if you do NOT owe any tax. So, do a few returns for all the years Joe was supposed to file income tax and see what comes up. If he had no liability in all years, then just file all the return and he'll be clean :)

st2lemans 09.03.2012 13:42

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by The_Love_Doctor (Post 1508616)
FACTA: Wiki :confused:

Ummm, it's FATCA!

Tom

phdoofus 09.03.2012 13:44

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508612)
Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)

Yes, you might (or might not) be fined. You can easily ask the IRS these kinds of questions. You would have to refile for the 'forgotten' years. It doesn't matter if you earn no income, you still have to file.

poptart 09.03.2012 13:46

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508612)
Ok. Joe wants to come clean.
Can he?
(His income in country A has always been below 100K)

I don't know the entire story about Joe but, yes, he's in some serious shiite particularly for entering the US under a passport other than the US passport (seriously, as a dual holder myself, it can get complicated but the penalties are very serious if you get busted so I stay within the lines). As for non-filing...still, I recommend Joe speak with a good tax lawyer as there was an amnesty program me offered before FACTA got rolled out but that has passed and the hunting has begun. I don't know what kind of paper trail he's left in CH but...chances are, they will catch up eventually. Good luck to Joe.

Geez, and here I am panicking over forgetting to file a visa form for the green card before leaving the US thinking of all the worst-case issues....

moongoddess 09.03.2012 13:47

Re: To file or not to file a US tax return...
 
They won't let you give up your american citizenship until your tax liability has been taken care of....

poptart 09.03.2012 13:47

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1508624)
Ummm, it's FATCA!

LOL...I always wondered if was dyslexic. ;) I think I like FACTA better as FATCA just makes me think of fat californians....

KeinFranzösisch 09.03.2012 13:49

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by poptart (Post 1508631)
I don't know the entire story about Joe but, yes, he's in some serious shiite particularly for entering the US under a passport other than the US passport

It's the 21st Century. Neary every valid passport has an eChip. Those that don't are expiring. Immigration systems are linked globally. If you're a USC and you try to enter under another nationality... you WILL get caught. I guarantee it.

Quebecman 09.03.2012 13:53

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by standardgirl (Post 1508615)
If what you said is true that you "never want to live in the USA again," why don't you just make an appointment with the US Embassy in Bern and give up your citizenship?

As I said, I am not Joe and I am not a US citizen.
Joe is a US citizen (as well as a citizen of Country A).

It is true that I never want to live in the USA again, but Joe might want to go back some day. Thus Joe should file for the last 18 years!!!! Joe paid lots of income tax in Country A and Joe never made more than 100K per year. We strongly believe that Joe has no US tax liability.

So Joe should download 18 years of tax forms, fill them all and send them to the IRS. I'd like to see the face of the IRS agent who will open the envelope...

KeinFranzösisch 09.03.2012 13:58

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508648)
As I said, I am not Joe and I am not a US citizen.
Joe is a US citizen (as well as a citizen of Country A).

Does "Joe" remember his SSN?
Quote:

Originally Posted by Quebecman (Post 1508648)
I'd like to see the face of the IRS agent who will open the envelope...

Job security.

Quebecman 09.03.2012 14:00

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by KeinFranzösisch (Post 1508639)
It's the 21st Century. Neary every valid passport has an eChip. Those that don't are expiring. Immigration systems are linked globally. If you're a USC and you try to enter under another nationality... you WILL get caught. I guarantee it.

Nonsense.
Absolute nonsense.
My kids have Canadian passports and USA passports. They always travel with their Canadian passports, whether they are going to Europe or to the USA. They never had any problem. Same when they drive from Canada to the USA.

But to be on the safe side, I will advice them to use their US passports when they go to the USA...

The_Love_Doctor 09.03.2012 14:00

Re: To file or not to file a US tax return...
 
I think this all depends on Joe's appetite for risk taking :rolleyes:

I mean if you wanna be straight with the IRS, Joe needs to file his taxes, if he wants to take the risk for whatever little amount he might owe than that's Joe's choice.

standardgirl 09.03.2012 14:01

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508648)
Joe paid lots of income tax in Country A and Joe never made more than 100K per year. We strongly believe that Joe has no US tax liability.

So Joe should download 18 years of tax forms, fill them all and send them to the IRS. I'd like to see the face of the IRS agent who will open the envelope...

Correct, like I said in my previous form, if your US tax liabilities = 0, then there's no filing deadline for your tax. So, just file for all the missed years and see if for sure Joe doesn't owe any tax in all the years. If so, he's clean after he files.

poptart 09.03.2012 14:06

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508648)
As I said, I am not Joe and I am not a US citizen.
Joe is a US citizen (as well as a citizen of Country A).

It is true that I never want to live in the USA again, but Joe might want to go back some day. Thus Joe should file for the last 18 years!!!! Joe paid lots of income tax in Country A and Joe never made more than 100K per year. We strongly believe that Joe has no US tax liability.

So Joe should download 18 years of tax forms, fill them all and send them to the IRS. I'd like to see the face of the IRS agent who will open the envelope...

If Joe wants to go back someday, he's going to have to come clean and he's going to have to hire a tax pro to do it because US tax law changes all the time and the forms will be different. Seriously, Joe's in deep....even if he never wants to look in the direction of the US, he's still on the hook. You can't just 'believe' that he has no liability, you have to file the forms to prove it.

And given the recent hysteria in the expat community over FATCA (natch!), the IRS won't be surprised to receive such returns. Joe also has to report all overseas bank accounts.... Get a good lawyer and accountant. Again, good luck to Joe.

diamondscan 09.03.2012 14:09

Re: To file or not to file a US tax return...
 
If "Joe" has entered the US with another country's passport and not his US passport, I'm pretty sure he has already revoked his citizenship.

If he has not been filing (and paying) his US taxes for any number of years he can be held liable for tax evasion as well.

At this point, "Joe" has f-ed up. "Coming clean" is going to be difficult. Joe should have NEVER stopped filing his taxes or entered the country without his American passport.

Over 100k USD per year would probably be liable for tax… and if Joe believed he wouldn't be liable for anything, he should have filed his darn taxes out.

Honestly… it's annoying, but it's the law. I would never do either of these things to screw up my citizenship or get in trouble with the IRS if I planned at all in the back of my mind to return some day.

poptart 09.03.2012 14:10

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by standardgirl (Post 1508660)
Correct, like I said in my previous form, if your US tax liabilities = 0, then there's no filing deadline for your tax. So, just file for all the missed years and see if for sure Joe doesn't owe any tax in all the years. If so, he's clean after he files.

Absolutely not true. There is no deadline to amend, but you have to file by 15 April and as an expat you can extend that into...October maybe? I'm fuzzy on that particular bit but he will be penalized for not filing for so many years.

runningdeer 09.03.2012 14:13

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508583)
Suppose I am a 34 year old US citizen. Suppose I graduated from college when I was 24 and I worked in the USA for the following 10 years. Now I move to country A, I get a job in country A, I become a citizen of country A, I plan to retire in country A, I do not own any asset in the USA and I never want to live in the USA again.

Question 1: Why should I file a US tax return every year?

Question 2: What will happen if I never file a US tax return again?

Thank you.

Have you visited the Isaac Brock Society yet? A lot of this is being debated over there, especially for Canadians. http://isaacbrocksociety.com/

I believe you relinquished your US citizenship by committing an expatriating act by becoming a citizen in country A. A lot depends on when you became a citizen and the laws of the country you became a citizen of, including the oath, etc...

Issac Brock Society, a very good blog site for 'relinquishing' citizenship vs. renouncing citizenship, as that seems as what you did if obtained Canadian citizenship before a certain date.

miniMia 09.03.2012 14:21

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by Quebecman (Post 1508648)
.

So Joe should download 18 years of tax forms, fill them all and send them to the IRS. I'd like to see the face of the IRS agent who will open the envelope...

No. He doesn't have to go back that far. It's 7 or 10 years. I'm not sure which.

Quote:

Originally Posted by diamondscan (Post 1508668)
If "Joe" has entered the US with another country's passport and not his US passport, I'm pretty sure he has already revoked his citizenship.

No. This is not true. They can not revoke your citizenship like that. Only you can renounce your citizenship. And frankly although you are supposed to enter on your US passport, I'm not sure what the penalty if for not doing so. I've never heard anyone getting more than a "enter on your US passport next time". Has anyone heard of anyone getting an type of sanction for this?

Quote:

Originally Posted by diamondscan (Post 1508668)
If he has not been filing (and paying) his US taxes for any number of years he can be held liable for tax evasion as well.

This is only if he owes any significant amount.

st2lemans 09.03.2012 14:24

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by diamondscan (Post 1508668)
If "Joe" has entered the US with another country's passport and not his US passport, I'm pretty sure he has already revoked his citizenship.

If it were so easy, I'm sure that many people who want to lose their US citizenship would do that, but it's only a risk of a fine, or maybe just a warning.

Tom

st2lemans 09.03.2012 14:26

Re: To file or not to file a US tax return...
 
Actually, you don't have to file a US tax return if your income is below the threshold (can't recall what it is).

For example, a housewife with no income would not need to fill one out.

Tom

poptart 09.03.2012 14:31

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1508699)
If it were so easy, I'm sure that many people who want to lose their US citizenship would do that, but it's only a risk of a fine, or maybe just a warning.

Tom

It's a pretty steep fine and...iirc, a felony (as you're entering the country under false pretenses). Not to mention, your birthplace is no doubt noted on your Swiss passport.

poptart 09.03.2012 14:34

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1508703)
Actually, you don't have to file a US tax return if your income is below the threshold (can't recall what it is).

For example, a housewife with no income would not need to fill one out.

Not true....as an expat, I have filed each and every year, even when my liability was nil. I'm not an accountant or an international tax lawyer so I don't know all the rules one year to the next, but he's not going to get off lightly as he's not an unemployed housewife....

st2lemans 09.03.2012 14:39

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by poptart (Post 1508712)
your birthplace is no doubt noted on your Swiss passport.

No, I don't think it is, just your attinenza, but I'll check when I go home.

Tom

standardgirl 09.03.2012 14:40

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 66825)
Actually, you don't have to file a US tax return if your income is below the threshold (can't recall what it is).

For example, a housewife with no income would not need to fill one out.



Not true....as an expat, I have filed each and every year, even when my liability was nil. I'm not an accountant or an international tax lawyer so I don't know all the rules one year to the next, but he's not going to get off lightly as he's not an unemployed housewife....


Quote:

Originally Posted by poptart (Post 1508714)
Not true....as an expat, I have filed each and every year, even when my liability was nil. I'm not an accountant or an international tax lawyer so I don't know all the rules one year to the next, but he's not going to get off lightly as he's not an unemployed housewife....

Well, if you do not have any US tax liability then there is NO DEADLINE as to when you file. So in a way, a housewife with zero income and zero tax liability could just "never file." But as an expat, you need to at least complete the forms to ensure that you have zero liability, and by which point you might as well file!

The statute of limitation of 7 years only begin after you file the tax return, so it is in your best interest to file even when tax liability = 0.

st2lemans 09.03.2012 14:41

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by poptart (Post 1508714)
Not true....as an expat, I have filed each and every year, even when my liability was nil. I'm not an accountant or an international tax lawyer so I don't know all the rules one year to the next, but he's not going to get off lightly as he's not an unemployed housewife....

From this:

"You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive."

Tom

m509272 09.03.2012 14:42

Re: To file or not to file a US tax return...
 
Just to clear one misstatement up. There are scenarios where you do not have to file. It's probably pretty rare you don't but there are cases.

IRS Tax Tip 2011-02, January 04, 2011

You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive.

Edit: What Tom said!

poptart 09.03.2012 14:48

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1508725)
From this:

"You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive."

I think that only applies to US citizens in US residence. For expats...not so much. This is why so many folks who haven't filed for years are in utter panic as they were wrong and are getting hefty fines, etc. Again, I'd seek legal advice for the most accurate rules for this as I'm crap at this sort of stuff, QED, my current green card issue. :)

m509272 09.03.2012 14:50

Re: To file or not to file a US tax return...
 
More misinformation regarding amendments. There are indeed restrictions on amendments but only on refunds/credits. So this is a warning to anyone procrastinating on amending to get money back. They're more than happy to take your money and penalize you though at any point in time.

Include copies of any schedules that have been changed or any Form W-2 (PDF) you did not include. File 1040X only after you have filed your original return. Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you timely filed your original return or within 2 years after the date you paid the tax, whichever is later.

st2lemans 09.03.2012 14:56

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by m509272 (Post 1508738)

I never filed a W2 with my tax forms filed here, just in the US.

Do they exist here?

In 23 years they (IRS) never mentioned anything, I just wrote in the amount.

Tom

miniMia 09.03.2012 14:58

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by st2lemans (Post 1508743)
I never filed a W2 with my tax forms filed here, just in the US.

Do they exist here?

In 23 years they (IRS) never mentioned anything, I just wrote in the amount.

Tom

No. Only US employers will provide W2s.

Hansi 09.03.2012 17:20

Re: To file or not to file a US tax return...
 
Quote:

Originally Posted by moongoddess (Post 1508634)
They won't let you give up your american citizenship until your tax liability has been taken care of....


Not true. At the renunciation ceremony they tell you that you are still liable for any taxes you may owe, etc., and they tell you to file form 8854 with your final 1040. That's it. You can renounce and then get caught up after you renounce. The IRS is only going to "come after you" if you actually owe the US any taxes.

If I were Joe and I had enough foreign tax credits to not owe anything to the US, then I would file the last seven years just to show them this and renounce my citizenship and be done with it. Easy. However, if I were Joe and I actually owe taxes after using FTCs and the income exclusion, etc., then I would consult a professional.

Quebecman 09.03.2012 17:24

Re: To file or not to file a US tax return...
 
Joe would like to thank everyone for their comments. :)


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