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Tax Help Needed.

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  1. willbec1 willbec1 is offline

    Posts: 681
    Joined: Feb 08

    Jul 21st, 2011 (7/21/2011 12:54am)

    So say a friend of mine, who just graduated from college last year is finally giving up on online poker. However he hasn't calimed any of his winnings in the last couple of years even though until this year they haven't been much. However this year, he planned on playing taxes but BF caught him off guard financially and hurt the money he had set aside for taxes later on. So now like i said he is moving onfrom poker, but since BF has opened a bank account in Canada and amassed around $13,000.

    Now his questions. He is going to start working at a normal job when he gets back and needs to use most of the money for living expenses. Hence, can't afford to pay this years taxes not to mention prior years. So anyways. Onto the questions.

    1) How would be the best way to get his money back home safely, without raising any flags.
    2) If he starts a regular job and files a tax reutrn will it be at a higher chance of an audit being its his first year filing. (aside from part time jobs)
    3) Will the fact that he opened and closed a foreign bank account in a few months time raise flags?
    4) Do foreign banks report statements to the IRS?
    5) What are the penalties for getting caught


    Basically he just wants some advice on whats the best route to go. Thanks in advance
     
  2. MattAKA MattAKA is online now

    Drysdale
    Australia

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    Jul 21st, 2011 (7/21/2011 1:33am) in reply to willbec1

    1) how much can he cross the border with in cash? i know a few people who have worked and been payed overseas and then when coming home just bought the maximum allowed back in cash that you dont have to declare (10k i think) put it under the bed use it for everyday things overtime and whose to know
  3. hussainsajwani hussainsajwani is offline

    Chicago, IL
    United States

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    Jul 21st, 2011 (7/21/2011 2:08am) in reply to MattAKA

    1) How would be the best way to get his money back home safely, without raising any flags --> As Matt suggested carry as much cash as u can. Best way to do it without having someone track it.

    2) If he starts a regular job and files a tax reutrn will it be at a higher chance of an audit being its his first year filing. (aside from part time jobs) --> No.

    3) Will the fact that he opened and closed a foreign bank account in a few months t
    ime raise flags? --> Dont think so since the amount is small. But thats not necessarily tax related. Thats more of a DHS question. But doubt DHS will have any flags for that.


    4) Do foreign banks report statements to the IRS? --> Good question. Dont know. Pretty sure they dont unless IRS does personal audit. Even US banks dont report statements to IRS so doubt foreign will (checking statements that is).

    5) What are the penalties for getting caught. Penalities not so much. Interest yes. The IRS is more concerned about people filing taxes and being honest. Usually they dont go after small fishes. I rmr from my days when i did professional taxing. I came across multiple people who i knew were outright stealing 4-5k in refund money. However, I soon learned that the IRS does not care and will not give me any incentive to even report people who were stealing small amounts through shady credits.
     
  4. Nole91 Nole91 is offline

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    Jul 21st, 2011 (7/21/2011 3:04am) in reply to willbec1

    Any advice other than "pay the taxes" is irresponsible.

    Tax return can be filed without making a payment and IRS will agree to a payment plan to settle the debt.

    The only question I will answer is #5. The penalties can be extremely stiff for someone who chooses to knowingly evade paying taxes. Any steps you take to "hide" the money would make the situation worse.
     
  5. donkiman donkiman is offline

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    Jul 21st, 2011 (7/21/2011 5:49am) in reply to Nole91

     
    Originally Posted by Nole91 View Post

    The only question I will answer is #5. The penalties can be extremely stiff for someone who chooses to knowingly evade paying taxes. Any steps you take to "hide" the money would make the situation worse.

    Would liquidating an offshore account, smuggling it into the US, and never depositing it into a US bank or claiming it on any tax form be considered "hiding"?
     
  6. MYBLUEDOG MYBLUEDOG is offline

    Greenville, MS
    United States

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    Jul 21st, 2011 (7/21/2011 2:19pm) in reply to donkiman

     
    Originally Posted by donkiman View Post

    Would liquidating an offshore account, smuggling it into the US, and never depositing it into a US bank or claiming it on any tax form be considered "hiding"?

    I think if you have to ask that question, the answer is quit obvious. The intent of this posting on the forum is to hide the true nature of your income.

    lol, at your ability to think straight
  7. Gags30 Gags30 is offline

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    Jul 21st, 2011 (7/21/2011 5:24pm) in reply to MYBLUEDOG

    you should def talk to an accountant...and perhaps someone else that can help sort out your issues with money, like perhaps a financial advisor or something
    170 2 

    Gags30 is an instructor at PocketFives Training . To get more of his advice and to watch his training videos, click here.

  8. tyson219 tyson219 is offline Moderator

    New York, NY
    United States

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    Jul 21st, 2011 (7/21/2011 5:44pm) in reply to Gags30

    With respect to the foreign bank account, you need to be filing a form with the IRS if aggregate foreign account balances exceed 10,000. Seems too risky not to attempt to withdraw the money, sneak it into the US and not file a tax return without at least talking to an accountant.

    http://www.irs.gov/businesses/small/...148849,00.html
     969 
  9. StayCalm StayCalm is offline

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    Jul 21st, 2011 (7/21/2011 5:52pm) in reply to tyson219

    The IRS doesn't care about $13,000. You will almost certainly never be audited unless you are making over 6 figures.
  10. clantaztic clantaztic is offline

    O Fallon, MO
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    Jul 21st, 2011 (7/21/2011 5:53pm) in reply to tyson219

     
    Originally Posted by tyson219 View Post

    With respect to the foreign bank account, you need to be filing a form with the IRS if aggregate foreign account balances exceed 10,000. Seems too risky not to attempt to withdraw the money, sneak it into the US and not file a tax return without at least talking to an accountant.

    http://www.irs.gov/businesses/small/...148849,00.html

    I thought Ann Margaret Johnson said earlier this year that the 10k balances no longer need to be filed anymore.
  11. wackyJaxon wackyJaxon is offline Admin X

    Vilnius
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    Jul 21st, 2011 (7/21/2011 6:00pm) in reply to clantaztic

    She said they no longer needed to be included if they are in your poker accounts. If you hold more than $10K in foreign bank accounts, however, you are still supposed to disclose this.
      1 
  12. clantaztic clantaztic is offline

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    Jul 21st, 2011 (7/21/2011 6:11pm) in reply to wackyJaxon

    Oh ok, thanks jaxson
  13. Gags30 Gags30 is offline

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    Jul 21st, 2011 (7/21/2011 8:37pm) in reply to StayCalm

     
    Originally Posted by StayCalm View Post

    The IRS doesn't care about $13,000. You will almost certainly never be audited unless you are making over 6 figures.


    this is just generally bad advice...especially when it comes to the IRS and whatnot, i don't care if you owe them $1 or $1,000,000...you should do everything the right way and make sure you are paying your taxes
    170 2 
  14. StayCalm StayCalm is offline

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    Jul 21st, 2011 (7/21/2011 9:34pm) in reply to Gags30

     
    Originally Posted by Gags30 View Post

    this is just generally bad advice...especially when it comes to the IRS and whatnot, i don't care if you owe them $1 or $1,000,000...you should do everything the right way and make sure you are paying your taxes

    I didn't say he shouldn't pay his taxes. I just said the IRS doesn't care about $13,000, which is a fact. I was an accountant for 2 years and know how they operate.

    Also, if $13,000 was your total income for the year, you would only need to pay taxes on like $3,000 (maybe even less) of it after all the exemptions/credits you could take, which would come out to like $450 owed. This whole situation is just lol
    Edited By: StayCalm Jul 21st, 2011 at 09:38 PM
  15. Frank Hough Frank Hough is offline

    Rochester, MN
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    Jul 22nd, 2011 (7/22/2011 11:13pm) in reply to StayCalm

    For what it's worth, in response to the original question. By the way I am a tax professional with a PTIN and did income taxes for clients in 2011. If you are concerned that you had gambling winnings in the past which were not claimed on your tax return then you can amend your returns from the previous years to show the gambling winnings. The IRS will then send you a bill for the difference between what you payed, or were refunded, in those years and what the correct amount should have been. The 13k of foreign income is subject to taxes in the country where it was earned; it also should be reported on your Federal and state income taxes in the U.S. and you will get to claim an exemption for foreign taxes paid, so you will only pay taxes in the U.S. if you would have paid more in the U.S. than the foreign country - you will owe the difference. The best advice I can give you is to report the income on your returns and set up a payment plan if you owe money. The other questions about how do I smuggle it without raising red flags and things like that are not worth answering.
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