Taxes

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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If you earned below the foreign income exclusion amount you won't need to pay anything. I believe you need to spend 10 or 11 months out of country to qualify, so i doubt the 2009 year will be legit. For filing late, you do accrue some pretty nasty penalties, but this only applies if you earn above the exclusion.

The IRS can find out about the income in several ways. Firstly, you are required by law to declare your foreign bank accounts in the income exclusion form. So if you have filed previously, then they are at least aware of the bank and the account you were using at the time. I have heard of banks sharing information with the IRS, but i dont know exactly how or why the IRS would ask, or when/how the bank would supply that information.

honestly, if you are earning below the exclusion it is MUCH better to just file and forget in my opinion. If you are earning above the exclusion amount, you are taking a huge risk by not filing. If you ever work in the US again and file, you will need to fill in those missing years, and then either have to lie or pay a huge fine. SO I would recommend just filing it.

Last - if you have a bunch of years to file together, you should be able to negotiate a discount with your account to do them all at once.

As annoying as it may be, make some phone calls and try to get someone on the phone to explain the situation and justification for the payment. I don't have a considerable amount of personal advise or information, but with some info on your end, I could ask my Aunt. She's a retired Director for the IRS. About as high up as a person can get in there. She'd know and have some answers.

You could also ask on /r/personalfinance - there are a lot of professionals there and it's a really great sub for this sort of stuff. Just have to be really detailed with your post.

You could ask here and get a bunch of horseshit.

I'd amend my 2014 return and up my charitable contributions to exactly what they're asking for.

Hoss_sl said:

Are any of you rerolled bros tax lawyers or accountants or anything? I got a letter from the IRS while I was on vacation saying I owe them a bunch of money because discover forgave a debt in 2014. I didn't even know we owed discover money. My wife said she did from before we got married, but doesn't think it was anywhere near that much (she thinks the amount she owed is closer to what the IRS is asking for now) and hasn't heard from them in about 10 years. I mean, if they forgave us debt, don't they need to notify us somehow? Especially if it's shit you have to pay taxes on. I should at least not have to pay penalties and interest on that shit since no one bothered to tell me about it.

So I guess this was like one last shot at shoving a finger in her eye. "Fuck you, you may be able to duck paying us, but you won't duck out on paying the IRS". If it really was forgiven, it seems like we'd want some proof of that so her credit can improve.

The best part is my wife threw away the envelope we're supposed to send the response/payment back in. So even if I didn't think it might be a scam, I couldn't just pay up and be on my merry way.

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You can call and try to get them to resolve this, but YMMV. We had the IRS claim that we never issued W2's the first year we were in business. Even in the face of invoices and cleared checks from the CPA, they are still trying to clip us for it. Only the penalty is 10% of payroll! We spent several thousands defending it, and it's making its last round in Appeals. If they don't approve it to go away, we are suing them. We've already seen their transcripts that show they didn't have correct mailing addresses, and sent warnings to the wrong places. They even sent the first denial of our appeal to the wrong address. And, while they just showed up and said it was missing, it went back so far, that they don't have records of the W2 transcript data. If they take it that far, my Lawyer will have a field day with it, as even in Appeals, we've been arguing they weren't following process, and they sent our correspondence to the wrong damn address. I'm not going to roll over and pay the IRS 10% of one year's payroll, if they want it, then we can go to Court and they can show their evidence (they have none, we've seen the official transcripts).

That being said, I know some people have been able to convince the IRS and they fix the situation immediately. The Agent we have is notorious in this State as not working with people, even when it's clear they've done thing wrong.

I get those letters every other year for probably the last 20. Or at least every 3 years.

I give them to the CPA I use and she takes care of it and I have never wound up owing them anything. I think they lose a lot of shit.

When you have debt forgiven, that ends up on a 1099 and becomes income to you. Which you then owe taxes on. There was a brief time when forgiven debt from home foreclosures / short sales was not considered income however that provision wasn't renewed IIRC and wouldn't apply to credit card debt.

Tax Topics - Topic 431 Canceled Debt Is It Taxable or Not?

The reason it is higher, likely has to do with time and interest. It doesn't take long for stuff that is in collections, getting charged the maximum rate interest rate by law, plus fees and late charges to go up significantly over 10 years.

Yea I wouldn't be surprised to see fees, costs and interest running at 30%+ (depending on jurisdiction caps) to make a huge balloon out of a mild debt causing the tax consequences to be far larger than you might "envision". I mean the rule of thumb is 7% compounded yearly doubles in 10 years so imagine what 30% and collection costs would do.

That said, depending on the size it might be worth fighting but if everything was done by the book then you're just wasting money. That said call the IRS, not communicating with them still just mean an automated garnishment, lien or bank levy down the road so you're not going to help yourself out there.

I'm not sure if this is the best place for this question, but here it goes.

My dad wants to gift me a new car. He's in Texas and I'm in Kansas. He is thinking of paying cash, so no financing or leasing. Should I advice him to put the title in his name and then transfer the title to me, or could he pay for the car and put the title on my name. In either scenario, how would reporting taxes on this would work. I've definitely never been on this situation so as excited as I am of getting a new car, I don't want to put my dad or myself in a weird tax situation.

Depends on what you invest in and your rate of return.

Even assuming an amazing rate of return of like 15% you would have made 3000 x 0.15 = 450$. Now you would have made slightly more due to the way investments compound and gain interest more than once on the final year mark, but for this level of investment it's a fine guesstimate.

So in short, if your plan was ONLY to invest for 1 year so you could buy something bigger, you may have lost out but not much, again that 450$ assuming an amazing rate of return. Now if you were to do this annually as a long term goal, it would really start to add up and in 10 years you'd be making some big money, which is essentially what a 401k is

Okay, so I set aside 30% from the small business I ran for a few months at the beginning of the year. I just recently found out I'm supposed to pay my taxes quarterly, I tried to set them up online to pay and got a letter in the mail saying my tax id and other information did not match their records. I double checked all the information and it is correct, even with the form they sent me when I set up the business. Every time I try to call them to line this out it kicks me off hold and tells me to call back because too many people are in queue.

Is there a penalty for not paying your taxes during that quarter? Is there another way I can get this handled so I can pay these taxes before the year is up?

Just to be clear it is a DBA in the state of Texas.