US Taxes...again

[need to know]

I know this topic has been beaten to death in the expat teacher community, but I will ask for your advice. I have taught overseas for several years and have not filed taxes since 2002. I have gone to two CPAs during this time and asked what to do and they have both told me to not worry. I have never received a W2 form during that time, and I am not earning more than 80K/year. One CPA this summer tried convincing me to fill out a 1066 for self-employment. Well, I am not self-employed and I did not want to fill out the form and pay the amount (5k plus or minus) that he advised me to pay into social security. I don't really care about those 0's on my annual social security form, and I personally feel I will come out better in the long run with the investments I am making in the IRAs and mutual funds I have.

I have heard both sides of the debate of having the file for taxes. I also did not file for a stretch of four years in the late 90s and nothing came of that. I did file when I lived in the US between that time and my current stretch. I feel the IRS has bigger fish to fry than me, but I know some of you will say it is the law.

I feel at a loss of what to do, esp. after going to two CPAs who have told me that they have done their research with this issue and have given me their best advice. According the IRS website, one has to fill out the 1044 and the EZ 2555. I noted on the 1044 that you have to attach a W2 form. Well, there is nothing to attach. I see that TIEONLINE advertises a CPA. Should I check this outfit out?

[gringo1]

I would need a clarification here, is it not true that if you are working overseas, and not in the USA, that you cannot put money into an IRA. Legally?

[Need to know]

I cannot put money into a Roth IRA (a very popular IRA), I have learned. However, I do invest money in mutual funds, etc.

[guest-o]

If you have any income at all in the US, that money can go into a Roth IRA. For example, if you own a house or condo and rent it out, that is income. You can put it into your IRA, even though you also offset all or most of that income with your rental expenses (mortgage).

I cannot put money into a Roth IRA (a very popular IRA), I have learned. However, I do invest money in mutual funds, etc.

[Hit by the IRS]

The situtation is tricky. If you earn less than $70K (in total including US ncoe such as rent on your house) and live overseas, you do not have to pay US tax but you DO have to file a return. If you live in certain countries, you may not have to pay local tax if there is a treaty, eg Germany = up to two years. However, technically you are in fact paying tax on your first $70K at a rate of zero (!!) so therefore you can still pay into Soc Sec and IRAs etc which may be worth your while. As a rule of thumb, CPAs etc do not know about this - you need to find one who deals with expats, but they also charge accordingly for this knowledge. We were hit with a $4K fine per year for ten years for not filing, plus interest on the unpaid fines. After a lot of time, grief, tears etc etc we ended up with a zero fine, but don't let idiot CPAs fool you (as they did us) - you may not have to pay tax, but you DO have to file. Hope this helps.

[Need to know]

4K!! Yikes. I don't know where or who to turn to as it seems I have dealt with reputable CPAs who have told me not to do anything (in so many words). I paid a guy $50 recently to tell me what another one had told me a year or two earlier. I know I will not have to pay any taxes. As stated, I didn't file for 4 years in the late 90s and nothing came of it. My situation is pretty clear-cut and simple. I do not own any property and work in the Middle East where I do not pay taxes. I send money home each month and invest on a monthly basis. BTW, thanks #3 for the info.

I see that Tieonline advertises a firm in Wisconsin that has CPAS who work with expats. Can anyone recommend these guys. I don't want to raise red flags and cause problems with the IRS if I don't have to. I have been honest with the CPAs I have dealt with and they have further researched this before giving me a snap answer. It seems like it is their job to know or consult with someone who knows. As they have said, I have no W2 and no paper trail of what I have earned overseas. Please advise.

['fess up]

If you don't owe the IRS money, they usually (key word) do not care if you file late - we've done a few years at once and didn't get fined. Although you don't get W2's, you should get statements of earnings from your school. If not, ask for them. We go to good old H&R Block in the US and have always been more than satisfied with their service. You get automatic extensions if you live overseas and owe nothing, so if you go stateside first thing during summer break you have time to file and not be considered late. Rather than worry about them, just get them done.

[Informed]

My husband and I just filed returns for the past 4 years. We owed nothing and still ended up getting almost $2000 in refunds. Don't ask me how... OK, so this doesn't seem like much info, huh? ...sorry

[Need to know]

I appreciate the comments. I am in the process of trying to sort this out. It's amazing the diverse opinions and attitudes I have heard over the years on this topic.

[Guest]

This is my first year overseas and I'm using http://www.overseastaxservices.com/. I have an extension so we'll see how it goes.

[jumpingbean]

hello...did anyone ever find anything out about Overseas Tax Services? They advertise here on this site and I am wondering if they do a good job.

Thanks.