IRS STATUTE OF LIMITATIONS:
Often American expatriates do not file a US
>> tax return under several mistaken assumptions. The three main ones are:
>> . They file and pay taxes to a foreign country of residence.
>> . They earn less than the foreign earned income exclusion.
>> . After many years of not filing to remain under the radar.
>>
>> Actually US tax laws require US citizens and resident aliens to report
>> their worldwide income annually unless their income is below the
>> combination of a Standard Deduction and Exemption amounts. In 2007 a
>> Single filer's Standard Deduction was $5,350 and Exemption $3,400. So
>> unless as a Single filer you were below this $8,750 ($5,350 + $3,400)
>> threshold, filing an income tax return in a foreign country does not
>> excuse you from filing stateside. The Foreign Earned Income Exclusion
>> (FEIE), worth $85,700 in 2007, is intended to help US filers from being
>> taxed twice on their foreign income. But FEIE cannot be applied against
>> investment and other forms of income. Nor can it be taken if IRS
>> challenges a nonfiler to report prior year foreign earnings and decides
>> against allowing FEIE. So even if those foreign earnings are excluded
>> from
>> US taxation, they are still reportable. Staying under the radar is
risky,
>> especially as IRS is steadily increasing its reach via international
tax
>> treaties and auditors. The worst scenario is to be discovered and face
>> possible criminal sanctions for tax avoidance. Under IRS Statute of
>> Limitations, taxpayers have three years to claim a tax refund. IRS has
>> three years to audit a tax return or assess additional taxes. And ten
>> years to collect outstanding tax liabilities. Anyone who has not filed
a
>> US tax return for some years from overseas should take the offensive
>> approach by filing rather than being put on the defensive by an
>> aggressive
>> and suspicious IRS auditor. The Service asks that three years returns
be
>> filed. [Source: The Tax Barron Jun/Jul 08 ++]