If I didn't work in the US, was I required to fill out a tax return last year?

Question

I make somewhere between $10-12K a year working abroad, which is not taxed by the US government. I also have student loans back home.

Should I have filed a tax return last year? My mother's lawyer told her it wasn't necessary but now, for other reasons, I need to supply one, and I didn't file.

Answer 1

I have been a tax accountant for 27 years and I have many clients who make use of the Foreign Earned Income exclusion. I do agree with what "Boston" told you but differ with him in one respect. I am of the opinion that the lawyer knew that his advice, albeit idiotic, would be relied upon by you and that is ample grounds upon which to base a "reasonable cause" argument. I think you should consult a tax professional about whether you would otherwise qualify for the exclusion and, if so, file the return and claim the exclusion anyway but also attach a sworn declaration citing your reason for believing that you weren't required to file a return, i.e. erroneous legal advice, naming the attorney and providing the date the advice was given. I think the IRS may be inclined to allow you to claim the exclusion. You have nothing to lose by trying.

Answer 2

It sounds as if your mother's lawyer isn't qualified to advise on tax matters. Even so, the "advice" was given to your mother and is therefore meaningless to you. A good attorney would never offer such advice regarding a 3rd party so I'd question their general qualifications or competence if they did in fact say that to your mother.

Yes, you should have filed a return! Assuming that you are single and have no dependents, your income was above the filing requirement amount ($8,450 for 2006) and a return is required. Merely living overseas does NOT exempt you from US taxation or the filing requirements.

If you are a US citizen or resident, your world-wide income is subject to US taxation regardless of where you live. Although you might qualify for the Foreign Earned Income Exclusion if you meet certain foreign residency or physical presence tests, you MUST file a timely return to claim that. Unfortunately since you didn't file a 2006 return by June 15th, 2007 (there's an automatic 60 day extension if you live outside the US) you have lost that exclusion forever.

You can still claim a credit for any foreign income taxes paid on that income, if any. The credit is not limited by the timely filing requirement of the FEI Exclusion.

So, yes, you must file. And since you are late (but only by 2 days right now) there will be some penalty and interest for late filing and late payment although it will be minimal right now.

Get a copy of IRS Pub 54 from the IRS website. It will explain all of the tax implications of living overseas.

(If you think that this income is exempt from US taxes, please post full details and I'll evaluate that claim. But earned income is ALWAYS taxable so it's highly unlikely that your income is exempt from US tax.)

Answer 3

it particularly is talked approximately as tax evasion and it may advise reformatory. Al Capone went to reformatory for tax evasion. you're able to consult somebody who makes a speciality of distant places earnings. it is not complicated yet maximum preparers in no way could fill one out. you're watching achieveable fines and outcomes for not submitting.

Answer 4

I have 'relations' (don't want to give more info) that work for the gov... The US is the only country or one of the only ones that expects you to pay taxes on all money you make outside the country. I have other 'relations' that live abroad and they all have to pay taxes.

The US loves it's $$$$$$$$

EDIT: I've added links...