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Old 05-07-2008, 19:18   #31

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Originally Posted by Hud3 View Post
Lot's of tax rant thread drift here! Has anyone got any more advice for DefJef?

All the advice that he SHOULD use is right at the top of the thread, "see a tax attorney".

All the rest of it is worth LESS than he paid for it.
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Old 05-07-2008, 20:35   #32
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Originally Posted by hellosailor View Post
As I understand it, if someone owes no taxes they are not required to file a return. However, as any enrolled agent (EA) or tax attorney will probabaly tell you, it is a good idea to file a return regardless of whether you owe anything.
If you have taxable income you need to file regardless of tax owed. In order to avail of the FEIE you have to file the return.

However, it is all but impossible for the IRS to identify foreign source income.

I have never heard of this hapenning but in theory the IRS could say, "OK you lived in Canada for 12 years and didn't file. Prove to me how you supported yourself with no income..."

PS - Don't thnk I am the "friend" that didn't file. I work for a US company so they diligently report all my income to Uncle Sam ;-(
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Old 05-07-2008, 20:46   #33
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Originally Posted by Ex-Calif View Post
Isn't the US tax statute of limits 7 years?
There is no statute of limitations on tax fraud, but they'd have to prove that in tax court. There are countries that ignore the IRS - Switzerland, I believe, does not cooperate with other countries investigating tax crimes.
Originally Posted by hellosailor View Post
As I understand it, if someone owes no taxes they are not required to file a return.
Ten years...the folks who wrote and signed that bill, need to be run out of town on a rail. And then, charged for the wood and the mileage!
In point of fact, the requirement to file a return is not based on whether or not you owe tax. An information return is still required.

As to your last point, hellosailor, Hear! Hear!


PS: defjef, hire a good tax attorney. (Thread drift course correction.)
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Old 05-07-2008, 20:50   #34

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From the IRS's own web site:
Do You Need to File a Federal Income Tax Return?
"For tax year 2007 only, many taxpayers who would not normally need to file a federal income tax return will need to file one in order to ensure that they receive an Economic Stimulus Payment (commonly referred to as "rebate")."

"To determine if you need to file a Federal Income Tax return for 2007 answer the following questions:"

You see, even the IRS says up front that some folks do not need to file!

And if you show a large drop in income--the IRS can and does ask people to come in for an audit or examination to show what their income was. They'll ask you to bring your bank records (checking and saving) and other papers with you. If you can substantiate your claims, no problem. But if your paperwork doesn't back up your story--problem. If your tax return shows a major change in any single year, and that trips an audit flag? Yup, "Please call this office to make an appointment".

Someone who is self-employed can expect some type of audit/review/examination once about every 22-25 years, in other words, once in your career simply because that's the percent of Schedule-C filers they pull at random to look at more closely. Quite your job and take off to go sailing--and take the radical income hit--and your odds probably will go up because of the change in gross income. Once they see the bank statements (which they'll get with or without permission) and the other paperwork, no problem--if you've cooperated. If you say "no", they tend to keep digging. Much faster and simpler to just say "yes" and hand over everything in order, which tends to support your story. They know there are oddballs amongst us, they just need the paperwork to confirm that.<G>
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