Big Tax issue

[Davis 0]

Well I have been in the US for nearly 2 years on a CR-1, before that for the last 7 years I had been working overseas in Australia (Originally I am from the UK), When I moved to the US the company I worked for offered to keep me employed and allow me to work remotely. What they asked is that I contract with them as they did not want me to keep being an employee and having to foot the US medical bill.

Well then started my problems they could not pay me in to a US bank account and they would also pay me in AUD. They then also ran in to money troubles and have been only paying 50% of each invoice on the promise of paying the other half back once they where out of troubles. Some times not paying any thing for 3 or 4 months at a time.

Now for most of this time I did not have to touch any of this money maybe every 6 months I would move over 5k/10k. MY wife did not work and then she went back to school

But for the last 2 years I have not filed a tax return for either my self or for my business and I am pretty sure the wage I have been getting has not been taxed in Australia. As the exchange rate has been good I have transferred my last 7 years of savings plus the last 2 years worth of money I made to the US.

We are starting to look for a home and I want to make sure I am legit just not sure what I should start claiming or showing on my taxes.

Money was made out of the country but because of the exchange rate what do I show as how much I made ? Because I did not move the money I made say 2 years ago what exchange rate should I use ? The date it was made or when I moved it over here ?

As I am self employed what should I claim ? phone, internet ? room that I work out of desktop laptop ?

[trillium13 84]

Sounds like you need a good accountant. They would know all of these answers and their expertise is well worth the cost!

[Brother Hesekiel 2,236]

Long story short: you file a 1099 for each of the past 3 years. The late fee is insigficant and unless you declare a truckload of income figure 15.7% that you have to pay into your own SS account in form of self-employment (subcontractor) "tax."Use the amount and exchange rate you "feel comfortable" with. Nobody is going to have a closer look at your tax returns but as a resident, and you are and were a resident for tax purposes, you need to file. Another advantage is that you then can use YOUR income to satisfy the income requirements.

Edited October 4, 2010 by Just Bob

[Nich-Nick 3,354]

The IRS.gov website has some fairly good help features. There are specific publications for earning money abroad, self-employment returns, home office deductions, etc. You can also call them up and keep getting bumped up to a person specializing in your questions.

Your salary is converted to USD based on when earned and the exchange at that time. There are websites that do historical exchange rates so pick something in the ballpark of the truth and write down your notes in case you would be audited. Like Bob said, most likely nobody will ask because it is self reported without sending in documentation.

[Davis 0]

Thanks all :-) I am off to the local H&R block, when i first came over here they where very helpful and about the only accounts company I trust in this little town. When we where moving over to the US my wife had to file her tax returns to catch up a little I spoke with a few of the "family recommended" tax agents and most of them said she did not have to file as she did not make any money in the US and was not living here and I knew that was BS as it was needed for the visa and also was listed on the gov website.

[Davis 0]

Bob,Nick

I have used the historical rates from oanda and then used interbank rates

http://www.oanda.com...istorical-rates

is that the best site to use and should I be using interbankrates ? I of caused picked the lowest monthly rate... each month

Date Rate

1/31/2009 0.6431

2/3/2009 0.6318

3/3/2009 0.6339

4/2/2009 0.6918

5/2/2009 0.7289

6/24/2009 0.7875

7/12/2009 0.7793

8/18/2009 0.8226

9/3/2009 0.8312

10/4/2009 0.8652

11/1/2009 0.9001

12/24/2009 0.8773

Edited October 4, 2010 by Davis

[milimelo 4,568]

Not sure that I would just go to the H&R Block - remember, the people that work there go through a whopping 6 weeks of training on how to use the H&R Tax software.

For what you need, a CPA is your best bet - look up your state's board of public accountancy - their fees are not outrageous.

[Nich-Nick 3,354]

I used Oanda. Pick what gives you the lowest USD, ie less income to report.

I too would not trust H&R Block for complicated foreign tax matters. Having gone through two filing seasons now on VJ and trying to help new immigrants understand the tax laws, I have come across many who went to HR Block and were given completely wrong information. They ended up filing amended returns to (legally) get more money in their pockets. The publications from IRS are lengthy, but if you print them out and highlight what seems to fit your situation, then go back through a second or third time they will be clearer than on first read. I've been able to do estate returns as executrix for two deceased persons and a joint return with my K1 husband prior to his green card by reading the IRS stuff. At least give it a try to muddle through it, so you have some idea before trusting a bloke at HR Block. Your knowledge might help him. With that said, at this time of year, you are more likely to get a supervisory type person rather than an inexperienced seasonal worker.

I've never been self-employed so don't have a detailed enough knowledge with that to quote you specific answers to your questions. I know there is a self-employment tax you are to pay. And I know the rules for claiming home office have gotten much stricter than they were, say a decade ago, but it will be spelled out in detail by the IRS. (The problem is, it's too much detail and overwhelms you.) I also use TurboTax to do the forms and calculations, but only after understanding the tax laws from the IRS Publications. Otherwise I wouldn't know what TurboTax was asking me or how to answer the question.