US taxes in DR? Confused

Jan

Bronze
Jan 3, 2002
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485
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Santo Domingo Este
www.colonialzone-dr.com
I'm returning to DR to live I hope this time forever.
I have some questions about taxes and such. I have asked my old accountant here in USA he said one thing. I called another and he said something else. I do not understand all formal language when I read the info on line about paying USA taxes when living abroad.
So heres the questions.
I have a web site now. I am making a little money from the affiliates and paid advertisers. How do I claim this when I live in DR? Do I have to claim this? If I have to claim can I use all the typical business deductions, office (home office in DR and physical office rental), fees, mileage, tickets to and from DR since it is a sight about DR, cost of computer and servers and such?
I would rather not do the taxes so if I register the site in DR as a business there then do I have to pay taxes in DR?
Or should I just say forget it and not worry about taxes at all?
I know there is a certain amount of money one can make in another country where they do not have to claim but what about a business or money making hobby?
I have asked the questions to many in USA and I get different answers each time.
 

Chip

Platinum
Jul 25, 2007
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Santiago
I will answer the stuff I know about for you.

One, I was told by the IRS that I had to pay all taxes on all monies that I and my wife earned when we lived in the DR in 2000.

We currently have moved back to the DR and I understand this rule hasn't changed. As far as the IRS being able to audit you effectively to know about foreign income and bank accounts, this I don't know.

Also, I understand from one of the legal experts on this board that no taxes are due by residents (and citizens?) to the DR IRS for any monies earned in the US.
 

Jan

Bronze
Jan 3, 2002
1,812
485
83
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Santo Domingo Este
www.colonialzone-dr.com
So, I would need to file as a business in USA. Claim all my deductions, mileage, office expenses, profit and loss, cost of going to DR. Taxi fees, rental of an apartment and all could be deducted on my USA taxes then? I do not make much income with the site and I have no other income.
How does one go about filing a business tax return for USA while living in DR?
 

Jan

Bronze
Jan 3, 2002
1,812
485
83
64
Santo Domingo Este
www.colonialzone-dr.com
If I plan not to return to USA, run the web site from DR, who would get my taxes? If I need to pay the tax to DR can that be claimed as expenses on my USA tax return? If I never live in USA again do I still need to pay taxes in USA?
 

AnnaC

Gold
Jan 2, 2002
16,050
418
83
Jan I'm sure Mr Guzman will answer your question but in the mean time here is a quote taken from http://www.dr1.com/forums/legal/57142-taxes-immigration.html#post467113



"Dominican income tax law is primarily territorial. All income derived from work or business activities in the Dominican Republic is taxable, no matter if the person is a Dominican, a resident foreigner or a non-resident foreigner. On the other hand, income derived from work done abroad, even by a Dominican, is not taxable in the Dominican Republic.

The exception to the principle of territoriality is income from financial sources abroad (Articles 269 and 271 of the Tax Code). A Dominican or a resident foreigner receiving income from financial investments abroad (stocks and bonds, certificates of deposits, etc.) must pay taxes in the DR on their income from those investments.

Social security benefits and income from pension plans are not considered income from financial investments.

For the resident foreigner, this obligation only starts three years after obtaining residency. Enforcement of this last provision, however, has been very weak.
 

aegap

Silver
Mar 19, 2005
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Jan, I believe there's a threshold in income (USD$80,000 I think) before you actually have start paying.
 

Chip

Platinum
Jul 25, 2007
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Santiago
Jan, I believe there's a threshold in income (USD$80,000 I think) before you actually have start paying.

I don't believe that is correct. Back in 2000, according to the IRS, I had to claim all income, incl foreign, even though it was less than US20,000.
 

Jan

Bronze
Jan 3, 2002
1,812
485
83
64
Santo Domingo Este
www.colonialzone-dr.com
One accountant I spoke with did quote that under a certain income that one does not need to claim anything. My only income is from affiliate payouts from my web site and for paying advertisers. What would this income be considered as?
According to the post Anna made I would have to claim taxes in DR. Would the payment of these taxes be claimed in USA as a business deduction (cost of running a business)?
The income this last year is not much. Maybe less than $2500 and after you calculate the expenses, computer, internet, programs and all it is maybe half that much as clear income. But next year there will be more (I pray).
I wouldn't worry normally but the affiliates are registered under my social security number.
 

aegap

Silver
Mar 19, 2005
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Foreign Earned Income Exclusion


If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $82,400 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts
IRS.GOV - Foreign Earned Income Exclusion
 

Bronxboy

Well-known member
Jul 11, 2007
14,107
595
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Foreign Earned Income Exclusion


If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $82,400 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts
IRS.GOV - Foreign Earned Income Exclusion

Correct!!!

Being a CPA myself, I can confirm this.
 

Jan

Bronze
Jan 3, 2002
1,812
485
83
64
Santo Domingo Este
www.colonialzone-dr.com
So the money I made the beginning of this year while living in usa I do need to file in USA? Even if it is only affiliate income from placing others ads on my web site?
Then once I am in DR. I will be running my site from there. Does this then count as foreign income or is it still USA income? I will be receiving monies from the affiliates plus getting money from Dominican advertising. So the Dominican money would be foreign income and the american money, no matter how small the amount, would have to be filed in USA?
 

Chip

Platinum
Jul 25, 2007
16,772
429
0
Santiago
So the money I made the beginning of this year while living in usa I do need to file in USA? Even if it is only affiliate income from placing others ads on my web site?
Then once I am in DR. I will be running my site from there. Does this then count as foreign income or is it still USA income? I will be receiving monies from the affiliates plus getting money from Dominican advertising. So the Dominican money would be foreign income and the american money, no matter how small the amount, would have to be filed in USA?

Check into the exemption that aegap posted.

In my case, my address is in the DR and I have until Jan 15 of the following tax year to pay into my income tax "account" that the IRS has for me. If you don't pay anything into this account by then you probably will be fined.

I also have heard that if one doesn't pay their taxes and live abroad that legally they could lose their citizenship but I can't remember where I heard it and if they apply it often. I don't know how it would affect the use of your US passport or bank accounts - maybe if they go after you it could be a problem.
 

Jan

Bronze
Jan 3, 2002
1,812
485
83
64
Santo Domingo Este
www.colonialzone-dr.com
So it would be paying taxes 2 times? In USA and in DR?
This is web site income and not that much. Could it be considered a hobby by any chance?
So I would keep track of every expense. Like the price of extra luggage to carry my computer to DR, my rent, my office space, my tickets, transportation-mileage in DR? Just as I did when I had a real business in USA (this is the first year that I had a web site).
This way my business would never make a profit (so far this year I made almost $2000usd). It will be minus big money!
So then what about the local and state taxes if I do not live in USA?
This is just so confusing to me.