I haven't filed taxes while living abroad - misunderstanding of gross income - filling out affidavit of support

[Beth&JP 2]

Hey everyone, sorry if this is the wrong forum, but while filling out paperwork for my husband's AOS/affidavit of support, I think I (US citizen) have uncovered a horrible mistake that I've been making for the last few years.

 

Every once and a while I'd go on the IRS website, do their little "Do I Need to File a Tax Return?" and it would ask me for my gross income, and it would generally be like $300-600 (after taking into account the foreign income exclusion from Form 2555) due to odd jobs on the internet. Well, now I was googling around to see how not filing would affect the affidavit of support... and... I think I took too many assumptions with the IRS tool. It seems like the exempted foreign income needs to be included in the gross income (which is confusing, because as you fill out your tax return, the "total income" and "adjusted gross income" doesn't include that foreign income.

 

Anyhoo, has anyone been in the same situation? I'm not really sure where to move forward here and could use some input from someone who knows about taxes or has been in the same situation.

 

Thanks so much!

[acidrain 325]

From what I understand legislation was passed around 2011 to mandate all US citizens living abroad to be tax compliant with the IRS. In Canada this has created so many headaches as banks are now forced to report anyone they suspect are not being tax compliant.

 

As my spouse had never filed taxes in his life we were advised the Offshore Procedures method was best. We had to submit 6 years of FBAR statements that reported all of our foreign bank accounts. Then file 3 years of tax returns for the past 3 years. Most income from abroad is exempt (depending on tax treaties between countries so I'm not sure about Chile) so in our case the total for the income tax part only came to something like $6.

 

Where it is expensive is to find an accountant who is able to put together the package and submit it. It cost us $2,500 plus courier fees and taxes. We did this in order to be tax compliant for when we moved to the US as well as be able to submit tax information for our IR1 petition. Generally you are supposed to have 3 years of US tax returns to show but have heard of people only being asked for 1 year.

 

Recently we were asked for our tax returns for a mortgage application. So there are many areas in which showing US tax returns are useful.

Edited September 15, 2017 by acidrain