Taxes

Ameraves_sl said:

Question for any tax experts. My wife and I both have student loans that we were paying off last year. However, I managed to forget to list the $600 I paid towards interest on my loan. Is it just a loss at this point? We have already got our refunds sent to us.

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I am no expert but I have done this before. You can file an amended return and they will send another check if they owe you more money. It is fairly easy to do if you have turbo tax but if you don't then google would be more help then me for detailed steps. Turbo tax can also show you what the amended refund amount will be and help you decide If the amount is worth filing for.

I filed for the first time and used H&R Block free filing. This is the screen:

It clearly says "file your Federal taxes", but at the end it asks questions about State stuff. So did I really only file my federal still? Or did that questionnaire cover both?
In the left corner of this picture, it says State Tax Filing. The only link dealing with that was the "Learn More" you see. Clicking that sends you to a list of States and then after that a list of providers. H&R Block is one of those providers so I clicked on that one. It lead me back to this screen. I double checked to make sure pop-ups weren't blocked.

Nobody does state for free. Hence, your state return still needs to be done. Print out your Fed return, go to your state website, and input the info.

So I'm Petarded and never filed tax returns for 2009, 2010, or 2011. I was in Korea and just put it off. For 2010 and 2011, I am pretty sure I qualify fully for foreign earned income exclusion. That would make my tax liability 0, correct? As for 2009, I moved to Korea Mar 1, 2009, and was unsure if I qualified for foreign earned income exclusion due to the time abroad requirement. Anyone know about this? If I do qualify, that makes my tax liability 0, correct?

Also, if my tax liability is 0 for the income I earned overseas, do I still need to file? Moreover, how much info does the IRS have about my foreign income? All my wages were deposited into Korean banks and spent largely in Korea. I would send money home on occasion to pay for student loans, credit card bills (e.g. flight purchases), etc. The send-home amount was always only a few thousand dollars, however the last one was $7000-8000.

I generally prefer to give as minimal information to the IRS as possible, because I don't want to miss some exception that somehow makes 3 years of income suddenly tax liable and get some notice that I owe $10,000 to the government theft department. Another problem is my w-2 equivalents were among other financial documents stolen a few months back during a burglary of my house. I don't have any official documents for my 2009 or 2010 income, but I do have a deposit statement from 2011 with my total income for that year recorded. How do I handle this? Any other general advice would be appreciated.

Also, do you need a new copy of turbo tax for each year? ie if I file 2009, do I need turbotax 2009? That's just silly

Edit: looking at the IRS website, it seems like there is no real downside to simply not filing for those years abroad. It says they file a substitute return for you automatically, and since the only deduction I could have gotten was minor student loan interest, and it seems like they would have already come after me if they thought I owed something, what's the harm to just filing 2012 and ignoring those missing years?

So what will happen to me if I don't file a return or contact the IRS?

The IRS will file a substitute return for you. But this return is based only on information the IRS has from other sources. Thus, if the IRS prepares this substitute return, it will not include any additional exemptions or expenses you may be entitled to and may overstate your real tax liability.
Once the tax is assessed the IRS will start the collection process, which can include placing a levy on wages or bank accounts or filing a federal tax lien against your property.
Even if the IRS has already filed a substitute return, it still makes sense for you to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed. The IRS will generally adjust your account to reflect the correct figures.

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Ignore the years you were overseas. I spent two years abroad as well and never filed for them.

McCheese_sl said:

Ignore the years you were overseas. I spent two years abroad as well and never filed for them.

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This is terrible advice. You should look into filing taxes for previous years just in the case of an audit. They can and will find out where your income came from in certain years.

Vinen_sl said:

This is terrible advice. You should look into filing taxes for previous years just in the case of an audit. They can and will find out where your income came from in certain years.

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To clarify, I did look into it while I was overseas and, as Dabamf mentioned at the beginning of his post, I qualified for foreign earned income exclusion. As long as you earn under a certain number (which I don't remember off the top of my head) you don't have to file if all of your income was overseas and under a certain amount. Considering Dabamf had the same job as me (English Teacher) I guarantee he didn't earn enough to have to report and file.

Then again Korea may pay quite a bit more. I made less than $8,000/year when I was overseas. If you made much more than that you might have to file a form for the foreign income exclusion.

The amount is up to $80-90k a year, and yes you still technically have to file, no matter if you owe taxes or not.

I'm asking if there is any practical consequence to not filing, ie how would the IRS know about my overseas income?

Was a graduating student in 2010 and didn't file. At the advice of an acquaintance, I finally did file back in February. Had about $500 owed to me. Any one have an idea how long it takes the IRS to process 2-3 year old returns?

taebin_sl said:

Was a graduating student in 2010 and didn't file. At the advice of an acquaintance, I finally did file back in February. Had about $500 owed to me. Any one have an idea how long it takes the IRS to process 2-3 year old returns?

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6 to 8 weeks for a paper return. This includes mail time.

Dabamf_sl said:

The amount is up to $80-90k a year, and yes you still technically have to file, no matter if you owe taxes or not.

I'm asking if there is any practical consequence to not filing, ie how would the IRS know about my overseas income?

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Since you don't have the details you personally need to file I recommend you call the IRS and request the income documents that were reported for your tax identification number(SSN). They can either be faxed to you or mailed to your address of record. You should file the returns with that information once you can. Fair chance you may even qualify for refunds. This is a general recommendation and that's the best you'll get from anyone without knowing how your employer documents paid income and to whom they provide the information.

Also, the only practical consequence is you get a penalty to file / pay on time is if you owe. Conversely if you're due a refund it expires after 2 years so that is a penalty in of itself.

haus_sl said:

I'm staring at owing a few large this year which blows, but it was because the wife and I had a good year financially so I guess it's a FWP.
Also... living in Texas, so no state return. (another reason to love this state).

I've used H&R Block for years, but this year i'm trying TurboTax as so many seem to rant about how great it is.

Since we have a couple tax pros in here it looks like I do have one question. About twice a year my wife and I donate clothing (usually stuff we just don't wear anymore) to charity. How do you properly track that for deduction purposes?

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If you itemize it's a great idea to keep receipts for charitable donations. The institution you used to get rid of the stuff should've given you a record of it. If you're still using the standard deduction and weren't prepared for the huge increase of income then you'll bite the bullet this year. I don't know the min/max of charitable contributions without looking it up in relation to your other numbers.

If you owe more than $1,000 then you may also get hit for failure to pay estimated tax penalty, and that you can potentially get reduced if you call in to set up an arrangement. I haven't seen any of the self filing programs limit penalties for the taxpayer.

Dabamf_sl said:

The amount is up to $80-90k a year, and yes you still technically have to file, no matter if you owe taxes or not.

I'm asking if there is any practical consequence to not filing, ie how would the IRS know about my overseas income?

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What I was getting at is that if you make under a certain threshold, which I believe is about $9,000 for 2012, you don't have to file anything. This applies to everyone, at home or abroad. I got paid $8,000 each year for the 2 years I was abroad so I didn't file anything. Of course I got paid cash out of a big plastic bag each month (literally), so even if I had been making 10 times that I could tell the IRS whatever the hell I wanted to regarding my income because it was pretty much untraceable.

In Korea I'm guessing you made more than $8,000 a year, but depending on how you got paid and what you did with the money you could probably claim you made much less than that and therefore didn't bother filing. If you had your money deposited directly into a U.S. bank then you would probably have a harder time lying about it and should probably put in the paperwork for the foreign income exclusion.

haus_sl said:

About twice a year my wife and I donate clothing (usually stuff we just don't wear anymore) to charity. How do you properly track that for deduction purposes?

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You are allowed to donate up to $500 in non-cash items without any sort of prof so if it is around that amount, just plug in the number and go. If the software needs a place then just plug in Goodwill and your local address.

If you are over $500(not each item but combined), then you need dates, costs, etc.

Vlett_sl said:

Since you don't have the details you personally need to file I recommend you call the IRS and request the income documents that were reported for your tax identification number(SSN). They can either be faxed to you or mailed to your address of record. You should file the returns with that information once you can. Fair chance you may even qualify for refunds. This is a general recommendation and that's the best you'll get from anyone without knowing how your employer documents paid income and to whom they provide the information.

Also, the only practical consequence is you get a penalty to file / pay on time is if you owe. Conversely if you're due a refund it expires after 2 years so that is a penalty in of itself.

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This sounds like good advice. Thanks

McCheese: my bad - I misunderstood what you were saying. But yeah I made low 20k a year in Korea via direct deposit to my Korean bank account.

I taught in Korea 2009-2010 and didn't file mainly due to laziness. Since then I've joined the military, gotten a security clearance, and filed taxes every year, and it hasn't come back to bite me yet. I don't even have any paperwork at all from my time in Korea so I don't know how I would go about filing anyways.