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Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

Has anyone here had experience of dealing with the local US embassy on tax issues? Any comments? Specifically, filing late tax returns. Is the embassy helpful on such a matter? Etc. Tks.

kowlooner · Joined: 24 Jun 2004 Posts: 230 Location: HK, BCC (former)

Can't talk about experience with the consulate here (no embassy in HK) on IRS issues, but as for late filing, how late is late? You realize you do get an automatic extension when filing from abroad, right? So even though it's after April 15, you're not late. In any case, the consulate is pretty helpful generally, so give them a call and find out. You'll need an appointment if you have to actually go over there. The website is: http://hongkong.usconsulate.gov/ Look under "citizen services". Sorry I couldn't help more.

mcgillaa · Joined: 06 Apr 2009 Posts: 14

Marcoregano,

I've some friends in the State Dept. and I have forwarded your request to them, if they have any contacts at the HK consulate, I'll pass along information to you. Are there specific issues at hand? With more information I could give the embassy people I know likely scenarios and they could give me responses.

Let me know if you need information still.

Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

Hi Kowlooner and Mcgillaa, many thanks. The problem is that she hasn't filed since she came to Asia 12 years ago! She wants to get it cleared up but think the Feds will come and get her, plus filling out he right forms seems far from strightforward. Tks again.

Yes Sir I Can Bogey · Joined: 23 Mar 2009 Posts: 201

I dare say she may well experience a few difficulties then! I know of a US citizen who did not file his tax returns for just a few years and was fined and had to pay interest on tax owed, and he was lucky to narrowly escape prosecution. What is she going to say? That she forgot? For 12 consecutive years?

Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

Many overseas Americans are unaware they are supposed to file tax returns, and therein lies the excuse. Add to that the fact that her salary has always been under the threshold (currently US$87K p/a) and I don't think she will have too much trouble, but we shall see.

Yes Sir I Can Bogey · Joined: 23 Mar 2009 Posts: 201

As I understand it, in US law as in UK law, ignorance is no defense/defence. Also, are you absolutely sure about that threshold? It was my understanding that the US authorities determine who is exempt; people cannot take it upon themselves to decree that they need not pay tax. They must still ultimately file their return and await to be told whether they have any overseas US tax liability.

kowlooner · Joined: 24 Jun 2004 Posts: 230 Location: HK, BCC (former)

YSICB is right that ignorance is no defense, but Marco's also right as to the automatic foreign earned income exclusion. If she's been under the amount all these years, there should be no taxes to pay. It's not a matter of owing back-taxes (like, say, the guy now in charge of the IRS itself!). The IRS I don't believe is in a position to determine who is exempt. The rules on that are pretty clear. I am interested to see how this will play out, though! Your friend really does need to contact the consulate here and get the advice of their IRS guy. Let us know how this turns out and what she's required to do!

EDIT: Adding info ...

Found a site that says something about the issue:

http://www.overseastaxservices.com/

Look up their FAQ, and it gives some info for those who haven't filed in a few years.

Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

southerngirl · Joined: 30 Aug 2006 Posts: 53 Location: Sunny beaches

Marcoregano:

As long as your wife doesn't make above the 87K threshold (this is to include her SALARY AND INVESTMENTS OF ANY SORT, ie a rental home or
a non-retirement investment account w/ earned dividends) she should be just fine -save for the inconvenience.

I myself have had to file for three consecutive years last year and had no problem.

If, however, the two of you are planning to return to the USA "together", there might be problems for a spousal visa for you.

Someone I worked with here in Korea (another US citizen) had not filed for 7 years as he was below the income threshold. Yet when he was preparing to return home to enter graduate school AND BRING HIS KOREAN WIFE ALONG, he was 'CAUGHT WITH HIS PANTS DOWN". He had to scramble and hire an accountant when the US embassy declared he needed to "DEMONSTRATE PROOF OF SUPPORT"

She almost didn't get to leave on the same flight.

As it has been 12 years, your wife might be well served to hire and accountant who practices in the state where her residency is declared for two reasons:

1. It has been so long since she filed

2. Every state is different in terms of it's OWN TAX LAWS. If she's
a resident of a state that has STATE INCOME TAXES, she might
have to file state returns as well as federal.

I certainly feel my CPA is worth every check I write to her.

Best of luck!

Leigh

mcgillaa · Joined: 06 Apr 2009 Posts: 14

Marco,

After talking to a couple of friends in the State Department, and speaking with a couple of people who work in the HK Consulate, their suggestion is to contact a State-side accountant that specializes in overseas taxes, preferably one that lives in the state from which she was last considered a resident. Most of them also handle back taxes for foreign income, and will be more helpful than any non-trained consular officer would be. They may be a bit pricey, but it'd be worth it.

From what I understand, even though she has stayed below the threshold, it doesn't matter, as the government still likes to keep track of how much money people are making, as well as what they are doing, and where. It's a matter of record for them, so any form of tax or income statements she may have received are necessary for their records, and if she came back to the US, she would definitely have an issue with pursuing a visa for you, and possibly even for certain jobs, since most places require some forms of employment verification, and you can't put down "Traveled for 12 years".

Hope this helps.

Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

Just bumping this up. Anyone got any updates? Apparently the US govt intends getting tough on this issue after June 30, so we're going to get it sorted...

southerngirl · Joined: 30 Aug 2006 Posts: 53 Location: Sunny beaches

Hi Marco:

My accountant is excellent and always alerts me of changes. I've heard nothing from her other than the usual "I need this..... send me that...." Though returns must be filed by April 15th, US citizens residing abroad get an automatic extension - I just got an email from her reminding me that October 15th is when she needs to have my return en route to the IRS.

As for them getting tough, I should think that is for those who owe money and are avoiding paying.

My friend who had not filed for 7 years was required by his accountant to provide bank statements from the Philippines and Korea when he was getting all those returns ready.

It might be a good idea for your wife to have all that documentation together before contacting an accountant.

Has she mentioned whether or not she's from a state that has a "STATE" income tax??

As I stated in an earlier post, the biggest obstacle - if she's never made more than 87,000 USD annually is obtaining a spousal visa for you. The US government demands proof of support for foreign spouses ff the foreign spouses doesn't have $250,000 in assets.

Good luck with everything

Marcoregano · Joined: 19 May 2003 Posts: 872 Location: Hong Kong

Tks Southerngirl. At the mo she has no intention of using an accountant - wants to do it all on her lonesome - but she just spent all of today trying to do this year's return - 11 years still to go! If anyone knows of a HK-based accountant who charges reasonable prices for doing US tax stuff, pls pm me his/her contacts.

My partner made some enquiries a while back and was told that HK$3,000 (about US$400) per tax return is about average for local accountant rates - which seems a bit over the top to us and at that rate it'd cost over US4,000 to do the lot - which isn't chicken feed!

As regards a spousal visa - no worries on that core as I have no desire to live in the US. With horrible tax hassle like this who'd want to?

southerngirl · Joined: 30 Aug 2006 Posts: 53 Location: Sunny beaches

Hi Marco:

I can understand why your wife is inclined to want to do it herself. Yet, after being gone all these years and NO FILING, that may be a RED FLAG IN A BULL'S FACE to the US Internal Revenue Service in terms of sending your wife a letter saying YOU WILL BE AUDITED!! An accountant will make that less likely.

The fee you mentioned is about right (between $275 -$500) depending upon how organized someone is and how many deductions,etc. In other words, an accountant will charge someone LOTS OF MONEY to sort out a grocery bag full of receipts kept all year.

I pay my CPA about $350 every year. She has to do currency conversion and file a certain form relating to overseas work in addition to my property taxes and some stock investments.

As I only went to Hong Kong on vacation, I'm not familiar with what US/global businesses are there other than "FAST FOOD" restaurants. If there is an H&R BLOCK TAX SERVICE, I would get over there as fast as I could before October 15th. They have offices in Korea. The teachers and military personnel I know who have used them have been satisfied. I have no idea what there rates are.

Google them and see where they have Asian offices. If your wife grew up in America, I KNOW she saw the same commercials around "TAX TIME" that I did. They advertise heavily every year from January to early April.

Hope that information helps