How Can I Resolve Unpaid US Taxes for Overseas Work?

Question from The Yuman, How Can I Resolve Unpaid US Taxes for Overseas Work?

Answer from AI:

If you are a U.S. citizen who has worked overseas for 25 years without paying U.S. taxes, it’s important to address this situation with the Internal Revenue Service (IRS) to avoid potential penalties and legal issues. Here’s a general guide on how to proceed:

Understanding Your Tax Obligations

As a U.S. citizen, you are required to report your worldwide income to the IRS, regardless of where you live or work. This means that even if you earn income abroad, you must file a U.S. tax return and pay any taxes owed. However, there are provisions like the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC) that can help reduce your tax liability.

Steps to Address Unpaid Taxes

To resolve your unpaid taxes, consider the following steps:

1. Gather Financial Records: Collect all relevant financial documents, including income statements, foreign tax returns, and any other records of earnings and taxes paid abroad.
2. File Past Tax Returns: You may need to file tax returns for each year you did not file. The IRS typically requires you to file returns for the past six years, but it may vary based on your situation.
3. Consider the Streamlined Filing Compliance Procedures: If your failure to file was non-willful, you might qualify for the Streamlined Foreign Offshore Procedures, which can help you become compliant without facing significant penalties.
4. Calculate Potential Penalties and Interest: Be aware that the IRS may impose penalties and interest on unpaid taxes. Understanding these can help you prepare for any financial obligations.
5. Consult a Tax Professional: Given the complexity of international tax issues, it is advisable to consult with a tax professional or attorney who specializes in U.S. expatriate tax law to ensure compliance and explore options for minimizing penalties.

Legal Considerations and Resources

– Foreign Earned Income Exclusion (FEIE): Allows you to exclude a certain amount of foreign income from U.S. taxation. For more details, visit the [IRS FEIE page](https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion).
– Foreign Tax Credit (FTC): Provides a credit for taxes paid to a foreign government, which can help reduce your U.S. tax liability. More information is available on the [IRS FTC page](https://www.irs.gov/credits-deductions/individuals/foreign-tax-credit).
– Streamlined Filing Compliance Procedures: Designed for taxpayers who have not been willfully non-compliant. Learn more on the [IRS Streamlined Procedures page](https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures).

When to Seek Legal Advice

If you are unsure about your tax obligations or how to proceed, it is crucial to seek legal advice. A tax attorney or a certified public accountant (CPA) with experience in international tax law can provide personalized guidance and help you navigate the complexities of U.S. tax law.

Remember, addressing unpaid taxes promptly can help mitigate potential penalties and legal issues. Always consult with a legal professional for advice tailored to your specific circumstances.