Claiming Dominican Income

AlterEgo said:

I know that US Citizens must declare income from anywhere in the world, I presume LPR do too. It's how Charlie Rangel got in trouble, didn't declare income on a house in DR that he rented out.

And YES, IRS does ask if you have any foreign bank accounts, and you must disclose them. Big fines if you don't.

They're getting much stricter on the LPRs too. My brother-in-law and sister-in-law both turned theirs in for a 10 yr visa - their grown son [20-something] was stopped at immigration at the airport in NY and taken to an office. They told him he had to spend 10 months in the USA or give up his green card. He didn't stay, so I guess he's giving it up.

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Sorry, but what is a "LPR"?

nas said:

Sorry, but what is a "LPR"?

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"Legal Permanent Resident"

All this time I thought LPR meant "Long Playing Record"..............

B in LaLa Land...........

keepcoming said:

This may have been covered but I need a bit of guidance. My spouses cousin who is a LPR status in the US is being audited by the IRS for unclaimed foreign income. He makes little in the US, maybe $2000-$3000 but he does have foreign income from the DR, Mexico and somewhere I forgot. He always has done a tax return for the US income but never on any other income. Question is does he legally have to claim the income from the DR, etc..and would he have to claim money he has in any bank accounts here. According to what the IRS is saying he does. I know he will need to hire a tax attorney for this but I am just wondering what others do in these situations. Bad part is he is not legally divorced (he tried one of the "illegal" divorces here in the DR but the US would not recognize it) and he has a house with his estranged wife in the US and the IRS wants to put a lien on it. By the way he is one those who believe the rules don't apply to him because low and behold so and so did the same thing and there was no problem. Idiot is a understatement for this guy. My tax situation is a bit different so I really don't know all the answers. His mother is losing her mind over this because she is afraid he will lose his LPR status in the US over this. And of course me being American she has had me on the phone countless hours over this. Thanks in advance for any guidance.

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How did the IRS find out that he had foreign income?

keepcoming said:

This may have been covered but I need a bit of guidance. My spouses cousin who is a LPR status in the US is being audited by the IRS for unclaimed foreign income. He makes little in the US, maybe $2000-$3000 but he does have foreign income from the DR, Mexico and somewhere I forgot. He always has done a tax return for the US income but never on any other income. Question is does he legally have to claim the income from the DR, etc..and would he have to claim money he has in any bank accounts here. According to what the IRS is saying he does. I know he will need to hire a tax attorney for this but I am just wondering what others do in these situations. Bad part is he is not legally divorced (he tried one of the "illegal" divorces here in the DR but the US would not recognize it) and he has a house with his estranged wife in the US and the IRS wants to put a lien on it. By the way he is one those who believe the rules don't apply to him because low and behold so and so did the same thing and there was no problem. Idiot is a understatement for this guy. My tax situation is a bit different so I really don't know all the answers. His mother is losing her mind over this because she is afraid he will lose his LPR status in the US over this. And of course me being American she has had me on the phone countless hours over this. Thanks in advance for any guidance.

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For citizens all foreign income must be reported, and if the total value of all foreign financial accounts exceeds $10,000 at any time in the year then those assets must be reported (not as income). I don't know if it's any different for permanent residents.

bronzeallspice said:

How did the IRS find out that he had foreign income?

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They probably didn't yet, but hope to find out in the audit. They're probably curious about how he maintains his lifestyle on $2000-$3000 per year? One trip each to the Dominican Republic, Mexico, and someplace else wouldn't leave much for stuff like rent and food.

Idiot is a understatement for this guy. My tax situation is a bit different so I really don't know all the answers. His mother is losing her mind over this because she is afraid he will lose his LPR status in the US over this. And of course me being American she has had me on the phone countless hours over this. Thanks in advance for any guidance.

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This not your problem. He seems to be a sabelotodo. Let him fix his mess and tell his mother that he very well may his LPR por creerse listo.

They never read the story of Rep. Charlie Rangel? Not declaring worldwide income is a serious issue.

he had to prove his income. Sooo he gave copies of his contracts with the companies who paid him (told you he is not the brightest bulb in the bunch)

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lmao!

You know if he had claimed the foreign income and that income is from work, he wouldn't have paid much. The foreign income exclusion is upward of $90k a year, no social security taxes either if he's employed and self-employment tax only if he is self-employed. So the fines will be high now but the actual taxes he has to pay won't be in the full $600k of income. All unearned income, however, is taxable (rent, interest, dividends, etc.)

waytogo said:

All this time I thought LPR meant "Long Playing Record"..............

B in LaLa Land...........

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(your age is showing!) :laugh:

well I can understand how a Dominican would think that he could get away with it, because the tax man here is most likely so bribeable!!! Not so the IRS. They have demonic power. They can seize your bank accounts and put a lien on your house so that they will be paid when it sells, you can KEEP the house, you just cannot sell it.

Best to get a tax attorney unless he simply does not have the money to pay anything> then the best bet is to FLEE!!

Once he files a proper return with how much he owes, the IRS will sweep his bank accounts .Yes, I know because it happened to me, I did not file for three years.. divorce, death of my mom, stuff... and when I finally filed, I owed more money than I had at time. They put an IMMEDIATE lien on my house. AND an IMMEDIATE sweep of my bank accounts. The bank closed the account. Then because of the credit check system, I could not open another account, not in that bank, not in ANY bank/Not even a savings account. It took me about a year after all the taxes were paid and the lien lifted for me to get a savings account in another state. I told the bank what had happened and they said, ok, you were honest with us, so we will let you open a checking account. But it was hell going through it.

I had figured that once i filed, we could talk about how to pay.. Even my accountant was shocked at how fast they swooped. Must have been the very DAY that they got the returns.

Now you can open up a charge account with the IRS and owe them taxes, they charge interest. But I do not know if this applies to LPRs as well. Might.

Tell him to move whatever money he has in the States into a bank account under someone else;s social security number. Then get a good accountant.

Or, he can turn over the house leave the key under the mat.....

Send a letter to the IRS and tell them where to find it.
and head for the DR

VERY stupid to mess with the IRS. DO NOT DO IT!

It is true that he probably would have paid no tax, and probably could have had massive deductions as doing business for himself. The tax code is riddled with loop holes that a good accountant can work.

He probably saved himself a couple of hundred bucks a year on the accountant

And will probably lose his green card and his house.

And, it serves him right

Expat-in-Cabarete said:

You know if he had claimed the foreign income and that income is from work, he wouldn't have paid much. The foreign income exclusion is upward of $90k a year, no social security taxes either if he's employed and self-employment tax only if he is self-employed. So the fines will be high now but the actual taxes he has to pay won't be in the full $600k of income. All unearned income, however, is taxable (rent, interest, dividends, etc.)

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The foreign income exclusion is only for residents of foreign countries, or people who are out of the USA 330 days of the year. A permanent resident is ineligle for the former, and the latter is grounds for pulling permanent residence.

As a rule of thumb, hire a great tax attorney and ALWAYS claim ALL income (domestic, foreign or extra-terrestrial) and the IRS will leave you alone. My belief is if you pay them they will generally leave you alone, although I've been audited a few times with the only additional expense being the tens of thousands of dollars for the accountants to prove I did it right <sigh>.

Pay the taxes, life is waaaaayyy too short!