Sunday, February 8, 2015

Possible Solution to My USA Income Tax Problem

Does anyone know more about this?

Considering that my husband and I moved to Israel in our very early twenties in 1970, going on forty-five 45 years ago, we're very upset about the recent law and enthusiastic enforcement of it requiring that all American citizens, even expats who earn little money and ask nothing of the USA Government must file tax returns. Remember that we pay for our American Passports. Finding a qualified accountant here in Israel to do it for us will cost a lot of money, which we don't have to spare.

For us, relinquishing American citizenship isn't an option. We have close family there and need to visit without the hassles of visas.

This morning before checking my yahoo mail, I saw an interesting headline in their news about freebies for seniors. Look at this:
Free tax preparation. The Tax Counseling for the Elderly (TCE) program offers free tax help to all taxpayers with an emphasis on those age 60 and older. Volunteers, who are certified by the IRS, specialize in pension and other retirement-related tax issues. Use theTCE locator tool to find a site near you. And AARP Foundation Tax-Aide offers free tax preparation for low- to moderate-income taxpayers, especially those 60 and older, at more than 5,000 locations.
I plan on clicking the links here for more information, but I'd like to know if anyone how there reading this knows more, thanks. I'll be visiting the states soon.

PS How can I get an American "senior citizen card?" I missed out on train discounts in a previous visit, because the ticket checker didn't recognize my passport as official proof.


Sammy Finkelman said...

Those people anyway may not be an expert in those things.

What you may need to find is a sample return which deals with the complexities - and just put your own numbers in there - - or perhaps Turbo Tax or some other tax software can do this?

I'd say anyway, find somebody else who filed a tax return.

Once you know the special forms to use, you can probably just download them online.

Batya Medad said...

Really? I'm terrified to do this alone. you wouldn't believe that my father was a CPA. He's still alive but too brain-challenged to help now.

Tzivia in AliyahLand said...

Congratulations! This post has been selected as one of the finest of the Jewish world this week in Haveil Havalim, the Yikes-it's-Yitro edition, over at Adventures in AliyahLand.

Sammy Finkelman said...

I think there are some other problems.

There might be something that is tax exempt in Israel but taxable in the United States (or the opposite - some kind of income that Israel taxes but the United States doesn't.)

So the amount of income might have to be computed, and because all these transactions took place under a different tax system, you don't have the records readily at hand.

For capital gains, there is also the problem of calculating the basis. That's a problem also in the United States if you sold a house but in the meantime had made improvements. Or bought and sold a lot of the same stock.

If these records are not being kept for you, you are forced to make your best guess. Your best guess is legal, and the proper way to proceed, but, theoretically, an audit, which is unlikely, could make assumptions in favor of the IRS for anything not proven. That, of course, could be litigated.

There is also a very large earned income exclusion from U.S. taxes - I think $100,000 - but that's earned income, not things like royalties or capital gains.

There are also tax credits against foreign income taxes and so on, all governed by tax treaties..

It's probably more a question of filing forms than paying any taxes.

Sammy Finkelman said...

Another possible problem is if you borrowed money and repaid it and the transaction was not all in U.S. Dollars. There could be a foreign currency gain - or loss.

I just read about that. So I have no idea what this really is. This may only apply to transaction done not using your usual currency.

Currency gains of $200 or less form personal transactions are not taxable, and after that only what's above $200. This $200 is per transaction, or per trip. A trip is considered one transaction.

Losses are not deductible, it says, but I would expect that, like gambling losses, they are deductible against gains in the same tax year.

The IRS I suppose, will interpret conversions back and forth as starting from and ending with U.S. Dollars.

Maybe, in the case of a capital gain, the initial purchase had to be made with converted U.S. dollars. And maybe it doesn't count until or unless it's repatriated or converted into U.S. dollars or something.

It might be nobody really cares about that.

Batya Medad said...

Thanks but Greek to me. I think it's a lot of nerve for the Americans to want to know all about my Israeli bank account and pension plans. I was told that's what they want. They're searching for hidden treasure, and I don't have any. We've work hard and saved what we could.