thanetgirl

I used to work in the US for past 10+ years. I left my last job in 2008 and sadly not being able to find work from that point due to the recession (and needing sponsorship that no-one was offering let alone hiring) I was forced to return to the UK this year.

I pretty much came here with just a suitcase of clothes and am eagerly looking for new work here. It's now become apparent that the IRS is auditing me for my 2006 and 2007 taxes (I didn't know about 2007 until I called them - double whammy!).

My taxes have always been prepared by a friend's parents taxman - but he works from home and is not from an HR Block or similar office. he just used to work for the IRS. He always seemed to get me a good return - but then I was making very good money and not claiming any deductions or dependents so I was always taxed to the highest amount.

I received a letter this month claiming that I owe the IRS just over $10K for my Itemized Schedule A Misc' Deductions, and this is I was told the similar issue for my 2007 tax examination. I do not have any paperwork relating to this as I sold everything I owned before leaving just to afford the plane costs and shredded all my documents and ties with the US before leaving.

The guy that prepared my taxes is not being helpful and after several phonecalls it sounds like he is washing his hands of this issue. What can I do?
I have no money, no job, but I still have a house in the US, could they put a lien on this???? I have tenants that live there, but I make no money from the rent, as it doesn't even cover my mortgage payments on the property itself.

I spoke to the tax examiner today that could not tell me what would happen if I acknowledged the issue but couldn't pay the money. They just said that the exam would closed after 90 days? But what then - will someone show up here in the UK and arrest me? Will I ever be able to enter or work in the US again? And if I did would I have a NEW social security number or would I have my old one, in which case this issue might reinstate once I am filing again.

I am applying for jobs everywhere - so could take one in the US again - but what does this mean with this IRS audit?

What I don't understand is that the money I apparently owe them is more than the tax retun I even received that year (even after penalties and interest?) Can this be right? I am soooo utterly depressed over this - it was bad enough having to give up my life, home, friends and family in the US to have to leave, and now this, on top of not working currently - It's like a noose around my neck.

Any advise would be really appreciated - thanks!

md95065

You can request a copy of your 2006 and 2007 tax returns from the IRS so that you can see exactly what they say.

It is quite possible that there is some fairly simple error that needs to be dealt with and you may not owe the IRS any money at all.

One thing doesn't quite make sense, though. You start out by saying:

but later on we have:

which is strange because if you didn't have any itemized deductions you shouldn't have needed to file a Schedule A in the first place ...

Don't ignore this - get copies of your tax returns so that you can see what you actually filed - ask the IRS for more details about why they think you owe the money, and do all of this in writing so you have a complete paper trail. With any luck you don't really owe any money, but if you do you will have to deal with it.

Bob

I can't really help, but perhaps someone at the IRS office in the London embassy could recommend an accountant to help you out?

And don't forget to keep filing to the IRS, been in the US for 10 years, you're on the hook for filing for quite a while a head even if you don't have anything to pay in the future.

thanetgirl

Do you mean I need to keep filing even if I'm not working. So will I need to file in 2010 for 2009? As I was living in the US until Sep 09 - but not working the whole time.

md95065

Whether or not you have to file depends on how much income you had and a lot of other details. Check out Do You Need to File a Federal Income Tax Return? at http://www.irs.gov for the details.

You should probably also read the International Taxpayer section and, in particular, U.S. Citizens and Resident Aliens Abroad.

thanetgirl

Quote:

"I was making very good money and not claiming any deductions or dependents so I was always taxed to the highest amount."

What I meant there (and forgive me as I am not the most knowledgable on these things) - is that I guess you can, when working ask that you not be taxed to the highest amount of your salary and claim deductions (i.e if supporting children or married etc.,) - I don't even know what these were - but I claimed '0' meaning that whatever my tax bracket was meant to be based on my salary - that tax was taken out in fll each month.

The deductions that the IRS is saying I need to prove are work related deductions totaling to an amount that my tax preparer has stated based on the information I gave him to prepare my taxes that would have been automatically exempt from being taxed. I don't know what that amount was and I now have under the assumptio that he most likely highly inflated this amount, hence being very uncommunitive now.

I am sure I am not making sense - as I am having a hard time making sense of this myself.

md95065

OK - I understand what you mean - you didn't claim any withholding allowances when you filled out your W-4 form for your employer. That determines how much tax was withheld from your paycheck each pay period - note that this was not necessarily the "right" amount, and it in no way guarantees that you have paid enough tax but, in your case, it was almost certainly more than was necessary meaning that you would have been in line for a refund when you filed your return.

Yes - the IRS can ask for proof of any deductions that you claim - you should have receipts or other documents that show how much you paid and what it was for. If the IRS are claiming that you owe $10,000 in taxes for these deductions then they must have been for a substantial amount - probably over $30,000 in total - is that anywhere in the range of what you told your accountant? Regardless you are probably going to have to come up with some kind of justification for the amount or, at least, part of it.

Rete

She doesn't. She said she shredded all her documents. Hon, I don't know why in heaven's name you did this but what is done is done. If you can't prove those deductions, then they are not going to be allowed and this will mean for example, taxable income after claiming yourself as a dependent (wrong word but I can't think of the right one).

Did you get a refund from the feds in 2006 and 2007 after you filed your taxes?

Manc

if you were a green card holder with a 10 year card, the IRS counts you as a permanent resident for the full ten years no matter what status you have with the USCIS

Giantaxe

A competent tax preparer should have retained copies of the records. Sounds like this guy is a little "shady" however.

The IRS can definitely put a lien on a property to satisfy a tax debt.

thanetgirl

No I never was lucky enough to garnish a Green Card (Or would never of left the US and my two dogs that miss terribly).... I was on an H1-B visa for all that time - as I moved around jobs (4 times) so each time I kinda started from scratch with new H1-B's for each job...

thanetgirl

Yes I have no idea how much in 2006 as I cannot see back that far on my statements - but I received a return of about $4900 in 2008 for my 2007 taxes (and was making around $110K at the time). I doubt my 2006 would of been that different.

Sally Redux

Won't you continue to have to file taxes as you own a property?

Michael

Sorry to hear about you tax problems.

If you were in a job that would not normally require an employee to have unreimbursed businesses expenses of $30,000, it is very likely that the IRS will audit your tax return. The IRS may not audit a sales person on commission but is is highly likely they will audit a software engineer since most companies usually reimburse them for their business expenses.

Since the IRS can audit your tax return for 3 years, you should have kept all your supporting documentation for at least that long. If there is any way that you can dig up supporting documentation, you should put your effort into that.

The IRS can put a lien on your property. Unlike most creditors they can also seize property (not very common). However, any sort of criminal action is unusual unless the amounts are very large (millions of dollars) and your action was intentional tax fraud.

http://www.taxhelpattorney.com/artic...er-rights.html

md95065

For example, if any of these expenses were paid for by credit card you should try to get copies of your credit card statements for the period in question - that might help you start to track some of this stuff down.