why: so the government won’t be able to use your money for whatever the fuck they’re planning for the next 4 years.
as a traveler, none of my money has been funding Israel, for example.
one-step method: you basically fill out one extra tax form called FEIE while you’re doing your taxes, write down the dates you were outside of the country, and then since you aren’t in the country and are not receiving any services from the US, you don’t have to pay income tax up to a certain amount (it’s a little over 125k this year).
If you were employed by a foreign company that has no presence in the US how exactly would the IRS know whether you’ve earning more than $125k?
Because money keeps getting deposited in your bank account every two weeks and you’re not reporting any income.
Banks hand all of that information over.
Maybe I’m not understanding what you mean, but if someone works and lives abroad for 330 days of the year they’ll likely have a bank account established within that country so that they don’t have to deal with all of their daily financial activities being international transactions.
There is a system whereby foreign banks are obligated to report accounts held by Americans to the US for “anti terrorism” purposes.
And as a us citizen you are also obligated to report all of your foreign accounts in a FBAR filing each year.
Perhaps I’m the one who misread. I took OP’s comment as saying working for a foreign company with no presence in the US while living in the US. On a second read, that might not be what they meant.
they wouldn’t know initially.
you report your income, and then if the IRS suspects foul play, they would check later.
If you’re making over 125k, then you’ll likely have some kind of connected web/media presence that would allow them to at least circumstances confirm your position and standing within the field.
they could also check your bank balance and international holdings against the amount you said you’ve been making and see if it matches up.
they could also check your bank balance and international holdings against the amount you said you’ve been making and see if it matches up.
Does the IRS have authority to issue such requests to foreign banks? How would the IRS even know what foreign bank to issue these requests to?
Sorry, I have no knowledge about what information is communicated across international borders with regards to the banking world and how this gets tracked on a per-individual basis.
“Does the IRS have authority to issue such requests to foreign banks?”
issue requests, sure.
and companies with an international presence or countries with a working relationship with the US would be happy to respond to the IRS at least in rough confirmation.
4 out of 5 people in the US would never have to worry about making more than $125 k a year, but if you’re reporting $60,000 annual income and then buying a house every year, the IRS would start looking into it.
irs interest depends on how large the income disparity appears to be before they start officially investigating and probing for more certain corroboration and confirmations.
it’s just like your taxes in the US.
If you have a yard sale and don’t report it, the IRS isn’t going to pay attention to the extra $200 you didn’t report that year unless you happened to sell a personal boat later that year for 200k.
it’s all about what flags the interest of the IRS.
“How would the IRS even know what foreign bank to issue these requests to?”
If you have over 10,000 usd abroad in total, all foreign holdings included, you are required to file what is called an fbar that year, which really is I think five fields on one form, you fill out the name of the Bank, address, the country and the amount.
that’s so the IRS can keep tabs on. approximately how much you’re making versus how much you say you’re making if you’re keeping your savings overseas.
“…gets tracked on a per-individual basis.”
No worries, these are all great questions and I’m treating them like a refresher course.
The IRS is largely dependent on self-reporting whether us citizens or residents are inside or outside of the country, which largely works because maintaining a believable fiction about your income is not easy to consistently pull off and consequences for self-reporting income incorrectly are so much higher than the amount of taxes most people are going to pay that it makes sense to self-report as accurately as you can.
The federal government is well aware whenever a person enters the country and quite possibly for exiting.
yes, customs and border protection keeps records of legal entries and exits to and from the US.
why?
