Another reason why you should file:
As mentioned, you can claim the 'Foreign Earned Income Exclusion' or the 'Foreign Tax Credit' in your taxes. Let's say you're above the exclusion limit (apx. 92k) and you don't file. So 10 years later the IRS finds out (trough SSA agreement with other country for example). Now they force you to file for the missing year, well, 10 years later you CAN NO LONGER claim the 'Foreign Earned Income Exclusion' in this situation. So again, you pay the (higher) taxes AND accrued interest (see previous post) and a Penalty. Ouch.
But, if you file, from my understanding, as soon as you file the statute of limitation (7 years for filing, NOT money owed) starts. So you don't need to worry and keep documents for longer than 7 years. The IRS can not go back and dig in your stuff in this scenario. So, it is always better to file and if there are problems let them tell you right away and not 20 years later !
NOTE:
FOREIGN TAX ISSUES CAN BE VERY COMPLEX, ESPECIALLY IF YOUR SELF EMPLOYED ABROAD AND/OR HAVE FOREIGN INVESTMENT INCOME.
IT IS ADVISABLE TO CONSULT A COMPETENT PROFESSIONAL FOR HELP. ALSO, CHECK DOUBLE TAXATION AGREEMENTS THAT THE US HAS !
... or just play hide and seek like Bin Laden
As mentioned, you can claim the 'Foreign Earned Income Exclusion' or the 'Foreign Tax Credit' in your taxes. Let's say you're above the exclusion limit (apx. 92k) and you don't file. So 10 years later the IRS finds out (trough SSA agreement with other country for example). Now they force you to file for the missing year, well, 10 years later you CAN NO LONGER claim the 'Foreign Earned Income Exclusion' in this situation. So again, you pay the (higher) taxes AND accrued interest (see previous post) and a Penalty. Ouch.
But, if you file, from my understanding, as soon as you file the statute of limitation (7 years for filing, NOT money owed) starts. So you don't need to worry and keep documents for longer than 7 years. The IRS can not go back and dig in your stuff in this scenario. So, it is always better to file and if there are problems let them tell you right away and not 20 years later !
NOTE:
FOREIGN TAX ISSUES CAN BE VERY COMPLEX, ESPECIALLY IF YOUR SELF EMPLOYED ABROAD AND/OR HAVE FOREIGN INVESTMENT INCOME.
IT IS ADVISABLE TO CONSULT A COMPETENT PROFESSIONAL FOR HELP. ALSO, CHECK DOUBLE TAXATION AGREEMENTS THAT THE US HAS !
... or just play hide and seek like Bin Laden
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