RFE - NO tax return!!!

[manupinto 0]

Hi everyone!

I just got a RFE today. There are 2 things they are asking for. One is a missing signature - EASY! The problem is about my husband's tax return. He was living abroad and did not have any income.

They say:

"If you were not required to file a Federal Income Tax Return under US tax law, attach a written explanation and if applicable, evidence of the exemption and why you are subject to it."

According to a lawyer I consulted, we can just make an affidavit, notarized letter explaining all.

Does any one have any more info on this?! I'm worried! I don't want to be denied!!! IS this normal?! Should I be worried?!

Thank you!!!!!

[Dave&Roza 748]

Hi everyone!

I just got a RFE today. There are 2 things they are asking for. One is a missing signature - EASY! The problem is about my husband's tax return. He was living abroad and did not have any income.

They say:

"If you were not required to file a Federal Income Tax Return under US tax law, attach a written explanation and if applicable, evidence of the exemption and why you are subject to it."

According to a lawyer I consulted, we can just make an affidavit, notarized letter explaining all.

Does any one have any more info on this?! I'm worried! I don't want to be denied!!! IS this normal?! Should I be worried?!

Thank you!!!!!

It's normal that most people who live and work outside the US do not file a tax return. If it was me, I would still file to show that I do not owe any US income taxes. Now you have to dig up the IRS code that deals with foreign income credits and show that your husband was under that level and therefore owed no taxes and does not need to file a tax return based on this. It is so much easier to just file a return every year so when some other government agency asks for one you can get a tax transcript and be done with it. Do not worry unless your husband made more than the deduction and then owes taxes--then it is time to worry and correct this ASAP with the IRS.

Good luck,

Dave

[Que Saudade 284]

According to the IRS

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

You can read more here

Every US Citizen who wants to maintain certain benefits should file taxes, typically they don't have to pay much in taxes on income derived from working abroad, unless they make a lot of money. But, they have a return filed. You may want to talk to a tax expert that is knowledgeable about this particular area. It may be that you can file late.

[aaron2020 11,651]

It's normal that most people who live and work outside the US do not file a tax return. If it was me, I would still file to show that I do not owe any US income taxes. Now you have to dig up the IRS code that deals with foreign income credits and show that your husband was under that level and therefore owed no taxes and does not need to file a tax return based on this. It is so much easier to just file a return every year so when some other government agency asks for one you can get a tax transcript and be done with it. Do not worry unless your husband made more than the deduction and then owes taxes--then it is time to worry and correct this ASAP with the IRS.

Good luck,

Dave

Dave, you got a few problems here.

First, it is not normal that most people who live and work outside the US do not file a tax return. US citizens and LPRs are taxed on their worldwide income. If a person makes more than the standard deduction and personal exemption, then that person must file a tax return. The standard deduction and personal exemption is around $9,500 for a single person. So, US citizens and LPRs who live and work outside the US who make more than $9,500 must file a US tax return.

Second, your statement that "[n]ow you have to dig up the IRS code that deals with foreign income credits and show that your husband was under that level and therefore owed no taxes and does not need to file a tax return based on this" is wrong. Just because the tax liability is zero (no taxes due) does not mean that this person does not need to file a tax return. If a person earns $90,000 outside the US, there is a foreign income exemption that leaves the person with zero in tax liability. However, the person is still required to file because the person earned more than $9,500 (standard deduction and personal exemption).

You cannot just apply the foreign income exemption against the foreign income and conclude that no tax return is required. Like elementary school, you have to show your work. You have to file a return and show your income, which credits and exemptions you applied, and how you got to a zero tax liability. It makes it easier for the IRS to audit.

Essentially: Income below reporting threshold --> no tax return required. Income above reporting threshold --> tax return required even if there is no tax liability because of credits and exemptions.

Your advice on filing even if it is not required is right on. It's good to have a record. People are also unaware of some great benefits. There are refundable tax credits. There is the child tax credit. There is the Earned Income Credit.

For example; A married couple earning less than $19,000 is not required to file a tax return. They have two minor children. There tax liability is zero. Assume no income taxes were withheld because the money was earned outside the US. The couple still qualify for the refundable child tax credit which is $2,000 ($1,000 per minor child) and the Earned Income Credit (approximately $1,000 to $2,000). So this family that owes no taxes can qualify for $4,000 in refundable tax credits. That's $4,000 in free money if they file a tax return even though they were not required to file a tax return.

Edited September 14, 2012 by aaron2020

[X Factor 1,112]

So he has to contact a tax company like H & R Block and do his back taxes since world wide income is taxable. However if he paid taxes in the foreign country he lived in, he would be given a credit and may not need to pay US income taxes. You won't know until you do the back taxes. Do this as quick as possible and then submit those tax returns as a response to the RFE.

[jasonofape 17]

Your lawyer does not know income tax laws for sure. Was there a domicile issue that ever came up?

Here is a link to look at http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad---Filing-Requirements

[Karee 4,191]

If you carry that blue passport, you have to file. Bottom line.

[Angela Murray 4]

File it and file it fast! I had to file 3 years worth of taxes at the US embassy in London when I lived there in order to proceed with the process. It wasn't until we hired the lawyer to file our petition that we found out that regardless of where you are in the world, if you're an American, you file your taxes with the IRS.

My 2010 had to be all 0's since that was the year I was awaiting my work visa and couldn't legally work. It seemed a pointless return but it had to be done. I got the shock of my life when I called the IRS in New York about 3 weeks after I got here to get transcripts in preparation for my husbands interview--Somewhere between London and the USA, the IRS managed to lose my 2010. 2009 and 2011 were fine though. It's OK, they blamed me of course lol.

When I called my lawyer she said to re-do it stat. Print 2 copies of your 1040 from the IRS website, sign them and send them next day/signed for to the IRS. Go to the USPS website and print out the proof of it being signed for. Then you can submit the signed for slip from the post office, the print out from the post office showing that it was signed for and a copy of the 1040. That should do it. Good luck!

[LauraDP 10]

My husband made the same error in not realising (since he had never lived as an adult in the US) that he was required to file his UK income with the IRS. He has since rectified this error by submitting three years' worth of tax returns. We were worried about the consequences of his failure, in terms of fines etc, but since he was not liable to pay any tax in the US on his UK income he cannot be fined for not having filed. Granted my husband is an Accountant but one who has never filed with the IRS before and he found the forms easy to fill out. Of course, he then forgot to sign all the required pages so we had them sent back to us costing us a bit of time but we are in limbo right now anyway so it is no big deal. So you need to file.

Best wishes

Laura