| “I am American living in a foreign country for 10 years and was self-employed during that time and did not file any tax returns during that time. My income was probably not enough to owe tax even if I were living in the USA but due to my not setting foot in the USA for 10 years Im not worried about the income tax. I was not aware of self-employment tax until recently and getting a bit worried about it as my income has increased during the past year.”----> Inquiring about the outcome of not filing your individual taxes is an intriguing one, and depending on your point of view, no doubt would cause certain arguments to come to the fore regarding a belief that tax filing can be legally circumvented. In general, you must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive. As a self employer, an independent contractor or etc, as long as the amount on Sch C line 29/31 is $400 or exceeds $400, you need to file your return with the IRS and your state and need to pay self employment tax to the IRS as long as the amount on Sch SE line 4 is $400 or exceeds $400 . ALSO, if you are filing as a sole proprietor, partner and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.However, you do not have to pay estimated tax for the current year if you had no tax liability for the prior year ;y ou were a U.S. citizen or resident for the whole year ;y our prior tax year covered a 12 month period.
“So if I were to file for the past three years to take advantage of the "expat amnesty program" that is being advertised by the irs at this time what would happen in regards to self-employment tax from previous years before that time?”---->The expat amnesty program has nothing to do with your delinquent taxes. UNLESS you file your returns and pay taxes, then, you owe to the IRS, you are subject to penalties/interest .Any US person who has a financial interest in or signature authority or other authority over any financial account in a foreign country must IRS Form TD F 90-22 due by June 30 of the year following the year that the account holder meets the $10,000 threshold. The granting, by IRS, of an extension to file Federal income tax returns does not extend the due date for filing an FBAR as long as the aggregate value of these accounts exceeds $10,000 at any time during the calendar year. The IRS has introduced the 2012 Offshore Voluntary Disclosure Program, which provides reduced penalties for US expats who are delinquent in filing the FBAR (Foreign Bank Account Report). So, as said previously, for example, as long as you have self-employment income and you owe more tax than you have withheld during the year, you are required to file estimated tax payments. Failure to make these payments on time may result in penalties, usually expressed as a percentage of tax owed. Certain circumstances may exempt you from payments or result in a waiver of penalties if you work within IRS guidelines. The IRS expects that you will pay 90 percent of your annual tax owed during the year, either through withholding payments or through quarterly estimated income tax payments. You may also need to pay quarterly if your salary withholding will not cover at least 90 percent of your tax obligation. You may make payments based on your estimated income for the year, or to equal 100 percent of your tax obligation for the prior year.
“Is there a difference in the degree of pursuance for income tax vs. social security tax? “--->As a self employer, you are NOT subject to FICA taxes unlike an employee, however, you need to pay SECA taxes as long as the amount on Sch SE line 4 is $4oo or exceeds $400. Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves, like yourself. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. The 2010 Tax Relief Act reduced the self-employment tax by 2% for self-employment income earned in calendar year 2011. The self-employment tax rate for self-employment income earned in calendar year 2011 is 13.3% (10.4% for Social Security and 2.9% for Medicare). The Temporary Payroll Tax Cut Continuation Act of 2011 extended the self-employment tax reduction of 2% for calendar year 2012 so the rates for 2011 remain in effect for 2012. For self-employment income earned in 2010, the self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
“How many years back could they seek self-employment tax?”---> The statute of limitations limits the time during which an action can be brought by the IRS for an audit and the time for IRS tax collection activities. Generally, there is a 3-year statute of limitations for the IRS auditing a tax return and a 10-year statute of limitations for the IRS collecting tax. This applies in all noncriminal cases where taxpayers actually file returns. The three-year clock starts when the return is due (disregarding extensions), or the IRS receives the return, whichever is later. However, no tax return(OR If the tax return was prepared by the IRS under the authority of the Tax Code the statute of limitations does not apply.) or fraudulent returns with the intent to evade tax (false returns), willful attempt to evade tax or failure to file. The code allows the IRS to assess penalties for these cases at any time. For assessments of tax or levy made after November 5, 1990, the IRS cannot either collect or levy any tax 10 years after the date of assessment of tax or levy. For assessments of tax or levy made on or before November 5, 1990, the IRS cannot either collect or levy any tax 6 years after the date of assessment of tax or levy.If you have a refund due based ( I do not think that you are subject to tax refund(s))on estimated taxes paid in, the refund is only able to be claimed for a period of three years after the return for the tax year should have been filed. For example, if you were eligible for a refund based on 2007 taxes withheld, the return should have been due on April 15, 2008. You must claim your refund by April 15, 2011.
 | 
Linear Mode
