[quote=“scomargo”]Note that I haven’t actually tried this, but according to this site, you can contribute to a Roth IRA from overseas, but you cannot contribute to a traditional IRA.
taxmama.com/AskTaxMama/186/roth.html[/quote]
If it is correct, why the $&*@ would you be able to deposit into a Roth but not a Traditional! What BS is this!?!?!!!
Are you SURE?
I was done for income that I made on a short trip to the US some years ago and they said I had underpaid. If you are right, I should not have had to pay anything. It was a hell of a lot more that US$200, I can tell you.
Lifelong slavery no matter where you go (and the right to tax your income for 10 years if you renounce). If that is not a crime against humanity I don’t know what is.
I’ve been told by an IRS guy (after 2 hours on the phone, nice guy, we talked about driving in taiwan)that it would be O’K to not file federal taxes if you make below a certain amount.(something like 7000 US but i forgot). If you owe taxes then you will have to pay a penalty. He also stated that it is a good idea to write a letter to the IRS stating that you live overseas and plan to eventually return to the states. They’ll put the letter on file and that might prevent a furture audit.
However, I got a letter last year stating that i owed 50,000 Dollars in back state taxes. For the first 2 tax months in 1999 I worked on a fishing boat in alaska and make like 17,000. since i left the states soon after I didnt bother to file state taxes(the money was earned in alaska so i thought incorrectly that it wasnt taxable by california) they assumed that I had been making 85,000 a year and taxed me accordingly.
first thing I did was freak and emptyl out my bank account and cd accounts in California. i had to pay a big fee and it cost 300 dollars in notary fees and fed ex. after 3 tries they sent me a check that no one here would cash.
well, ,eventually i got the cash but it turns out the tax letter was a bluff. they have no legal weight and it was just a scare tactic(it worked) I talked to a nice lady on the phone and sent the a letter and it was all cleared up.
moral of the lesson… dont shoot up a red star clusters
[quote=“dix2111”]I’ve been told by an IRS guy (after 2 hours on the phone, nice guy, we talked about driving in Taiwan)that it would be O’K to not file federal taxes if you make below a certain amount.(something like 7000 US but i forgot). If you owe taxes then you will have to pay a penalty. He also stated that it is a good idea to write a letter to the IRS stating that you live overseas and plan to eventually return to the states. They’ll put the letter on file and that might prevent a furture audit.
However, I got a letter last year stating that i owed 50,000 Dollars in back state taxes. For the first 2 tax months in 1999 I worked on a fishing boat in alaska and make like 17,000. since i left the states soon after I didn’t bother to file state taxes(the money was earned in alaska so I thought incorrectly that it wasn’t taxable by California) they assumed that I had been making 85,000 a year and taxed me accordingly.
first thing I did was freak and emptyl out my bank account and cd accounts in California. I had to pay a big fee and it cost 300 dollars in notary fees and fed ex. after 3 tries they sent me a check that no one here would cash.
well, ,eventually I got the cash but it turns out the tax letter was a bluff. they have no legal weight and it was just a scare tactic(it worked) I talked to a nice lady on the phone and sent the a letter and it was all cleared up.
moral of the lesson… dont shoot up a red star clusters[/quote]
According to the IRS website it’s $7,800 if you are under 65, $8,950 if over.
I am curious about the letter though. You didn’t mention who it came from. If not from the IRS why would you freak?
I should have been more specific. it didnt come from the IRS but the “California Tax Franchise Board”. In 1997 they attached my wages for $20 in back taxes and over $200 in fines. When I proved I didnt owe the $20 they credited my account but still charged the penalties.
and p.s
I believe they assumed I had been making this amount from 1999 to 2003 plus penalties=around 50,000
I dont remember the exact numbers but they were around this amount
I was advised by a lawyer experienced in tax preperation–my dad as a matter of fact 
–to just file for the current year, and let them ask any questions if they want, which was very unlikely. as you wouldn’t have owed any taxes anyway they are unlikely to get hyper about it.[/quote]
Agreed. Just file as normally. You either will get audited or you won’t. If you do, deal with it then.
People I’ve known who didn’t file for years then started filing didn’t have any problem. The worst thing they had to do was file past filings for the years they missed. As long as you don’t owe anything for those years, my understanding is you won’t be fined.
When did we US citizens become so caged? We’re not even free of the IRS if we don’t live in the US the rest of our lives! Shame on us.
[quote=“JeffG”][quote=“scomargo”]Note that I haven’t actually tried this, but according to this site, you can contribute to a Roth IRA from overseas, but you cannot contribute to a traditional IRA.
taxmama.com/AskTaxMama/186/roth.html[/quote]
If it is correct, why the $&*@ would you be able to deposit into a Roth but not a Traditional! What BS is this!?!?!!![/quote]
Interesting. P61-62 of Publication 590 refers to your compensation (with regards to the ROTH IRA), which this website seems to correctly state that the excluded foreign income is added back in to give you the Modified AGI. P7-8 is in regards to Traditional IRAs, which specifically says “What is Not Compensation? … Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.”
It looks like the author of that website is taking advantage of some ambiguity. However, page 61 says specifically, “Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:…” So compensation and Modified AGI are different criteria that have to be met. Because P62’s discussion about Compensation refers back to p7-8, I have to assume their intent is to have the same definition for both.
It seems like if you don’t take the foreign earned income exclusion, it would still be considered Compensation for IRA purposes, and all is good. (As far as I can see, no where does it say foreign earned income is not Compensation, only any amounts you exclude.)
I would like to see a different tax pro give their thoughts on this. Here’s one site: taxes.about.com/od/retirementtax … Abroad.htm
I was advised by a lawyer experienced in tax preperation–my dad as a matter of fact –to just file for the current year, and let them ask any questions if they want, which was very unlikely. as you wouldn’t have owed any taxes anyway they are unlikely to get hyper about it.[/quote]
Agreed. Just file as normally. You either will get audited or you won’t. If you do, deal with it then.
People I’ve known who didn’t file for years then started filing didn’t have any problem. The worst thing they had to do was file past filings for the years they missed. As long as you don’t owe anything for those years, my understanding is you won’t be fined.
When did we US citizens become so caged? We’re not even free of the IRS if we don’t live in the US the rest of our lives! Shame on us.[/quote]
My experience in having to file prior years’ tax returns for an elderly relative confirms this. My Aunt had not prepared/submitted tax returns for about 5 years. After we submitted her then current year tax return we received a letter from the IRS advising that tax returns for years’ X, Y, and Z had not been filed. Since she actually had taxes due in all of the prior years, a fine and interest charges on all amounts due were also applied.
RE: ALTERNATIVE MINIMUM TAX - I will not attempt to defend the tax. However, the AMT has been around for quite a long time. There is a fair degree of controversy (for lack of a better descripton) as the level at which the AMT applies has not kept pace with inflation and therefore people are now exposed who were not initially intended to be covered.