Taxes

Who can and cannot be a dual national, as well as the joys and frustrations accompanying that status. Includes ROC Passport and Military Conscription issues
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Taxes

Postby Spearhead » 26 Nov 2007, 03:31

I know that as a US Citizen, I'm supposed to pay taxes on total worldwide income. However, if I open a bank account in Taiwan using my TW passport, work for a short time in Taiwan, and even earn interest on the bank account itself, what are the practical chances that the IRS would even find out if this income is not declared? I assume that I can even just keep the money in Taiwan if wiring it back to the USA will attract notice.

I know about the moral issues of tax evasion, etc. so please no condescending replies! Does anyone know of anyone that has done this and actually gotten a letter from the IRS about undeclared income?

Thanks
-Spearhead
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Postby Screaming Jesus » 18 Apr 2008, 18:41

Not very likely. With other countries (like Japan) there is more government-to-government sharing of information, but Taiwan is in this weird diplomatic situation, and the amount of money involved probably isn't worth chasing.

Even if the government there and here opened up all their records to one another, and the U.S. was willing to surmount the language problem, a basic difficulty is that the U.S. system is based on the SS number--which nobody here will ever ask for (except U.S. banks, which are required to do so by law). And it's no good trying to track people according to passport numbers, because those change, and anyway are not cross-listed with SS numbers very well. (Remember, a lot of people don't HAVE an SS number, especially if they are very young, or haven't spent much time in the U.S..)

The IRS can still catch you, however, if your spending patterns back home fail to tally with your ostensible lack of income. They catch a lot of people that way.

Oh, one more thing: although you are required to file U.S. taxes, you shouldn't owe anything unless you make more than about USD 80,000 a year. That's because the U.S. and Taiwan have a tax agreement designed to prevent double-taxation, and the U.S. excludes this amount. Of course, they might still say you owe something--and then what are you going to do, fly to DC to appeal it? (They routinely do this for amounts of under USD 500, because any higher and it triggers some kind of automatic review.) Also, some states may consider you their resident for the purpose of assessing state income taxes.
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Postby Incubus » 18 Apr 2008, 20:29

What if one has been lax in filing for a few years, does the person have to file retroactively or just file and pretend nothing's amiss. I'm being hypothetical, of course. :p
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