USA IRS Audits - Anyone?

[StayAtHomeDad]

Hi. Hope this is an okay forum. If not, please move to where appropriate.

I have a buddy down the street that seems to think he will be audited by the IRS while living here in the Phils. And, it got me wondering, if there is anyone here who has had to endure an audit while living overseas. I went through one about 30 years ago in the US, and it was no fun at all. Wound up turning out okay, but it made a young man feel much older for sure. I cannot imagine the stress that would be associated with having to defend against an audit from the other side of the world.

So, if you have any experiences with an overseas audit, please share them here. I think it might be of help to more than a few people living here permanently.

[Dave Hounddriver]

38 minutes ago, JeSsDaDdY said:

if you have any experiences with an overseas audit

Not from US but from Canada.  Someone dropped a dime on me and the Canadian Tax People shut down my bank account so I had zero money to live here or get home until I contacted them to come in for an audit.  They had sent a letter to my last Canadian address telling me what they calculated I owed them.  I did not feel I owed that much but I knew I owed them some.  Many of us underestimate what we feel we should give the tax man.

Anyway, I borrowed the money, paid what they said I owed, they released my bank account, I repaid the money.  I think it was my ex-wife who reported me but I will never be sure.

I have known another Canadian in a similar position who was told he owed much more than I was hit with.  He agreed to make installments to pay them as it was cheaper than going back to fight it.

[OnMyWay]

43 minutes ago, JeSsDaDdY said:

Hi. Hope this is an okay forum. If not, please move to where appropriate.

I have a buddy down the street that seems to think he will be audited by the IRS while living here in the Phils. And, it got me wondering, if there is anyone here who has had to endure an audit while living overseas. I went through one about 30 years ago in the US, and it was no fun at all. Wound up turning out okay, but it made a young man feel much older for sure. I cannot imagine the stress that would be associated with having to defend against an audit from the other side of the world.

So, if you have any experiences with an overseas audit, please share them here. I think it might be of help to more than a few people living here permanently.

I think the vast majority of RETIREES living in the Philippines have incomes far below what the IRS is interested in.  So you should be safe unless you really give them a big red flag.  As per the other topic, say for instance you have $500,000 in a bank here, did not report it to the IRS, and your bank reports it to the IRS.  That would be a red flag.  Or, as Dave just posted, someone reports you for something.

I have a few American neighbors that I know are wealthy, so hopefully they are being careful with their taxes.  Probably most use a CPA, as do I.  My taxes are not that complicated but if any thing comes up, he is on the phone with them right away, sometimes talking to IRS staff he has talked to before, and getting a handle on the situation right away.  That could help avoid real audits.

[JJReyes]

The US Congress has been reducing the IRS budget for sometime now.  The result is less agents.  Unless you have tax liability that will result in additional payments exceeding $50,000, it is highly unlikely the IRS will ask that you haul your behind to their office for a full blown audit.  Audits are expensive because of the manpower requirements.  You may get a letter claiming that you owe them some money which you can pay or contest.  None of us are in the tax bracket that would trigger an IRS computer to go crazy.

[StayAtHomeDad]

Well, I hope you guys are right. I don't want to have fight the "tax man" from abroad. Although, I have read that they do all expat audits via mail instead of making you appear in person. So, there's that I suppose. Still, don't want to have to go through it. Like I said above, the audit I went through as a young man was indeed frightening and perhaps scarred me a bit for life. lol

[StayAtHomeDad]

54 minutes ago, Dave Hounddriver said:

Not from US but from Canada.  Someone dropped a dime on me and the Canadian Tax People shut down my bank account so I had zero money to live here or get home until I contacted them to come in for an audit.  They had sent a letter to my last Canadian address telling me what they calculated I owed them.  I did not feel I owed that much but I knew I owed them some.  Many of us underestimate what we feel we should give the tax man.

Anyway, I borrowed the money, paid what they said I owed, they released my bank account, I repaid the money.  I think it was my ex-wife who reported me but I will never be sure.

I have known another Canadian in a similar position who was told he owed much more than I was hit with.  He agreed to make installments to pay them as it was cheaper than going back to fight it.

Wow that's almost as scary as the IRS, I think. Could you not have just had them deduct the amount you owed (or they said you owed) from the account they seized? I know in the US, that if the IRS takes control of an account, the first thing they do is empty it out as payment toward taxes you owe.

[roddavis]

8 hours ago, JeSsDaDdY said:

Wow that's almost as scary as the IRS, I think. Could you not have just had them deduct the amount you owed (or they said you owed) from the account they seized? I know in the US, that if the IRS takes control of an account, the first thing they do is empty it out as payment toward taxes you owe.

For the US IRS had to reply to this. Having retired here in the PI. I used some funds from my IRA to live on until my 62nd year (about 3 years) till I started getting Soc Security benefits. Still, I filed taxes to USA using TurboTax online so the USA had my PI address on file. Well it seems I miscalculated how much I took out from my IRA for living expenses here that were reported come tax time. Sue enough, they sent a letter to my PI address stating I still owed an amount over $5000. So they requested I send the overdue amount ASAP and I had 30 days to do that!.

Well you bet that I got my mail in time here in PI, haha! It took for like 2 months before I got the letter! IRS didn't wait. My Soc Security check is auto deposited in a bank account in the US. I logged into my account and noticed my normal amount was a couple hundred dollars light! Guess who? The IRS started taking funds out of my account! So no audit notification since I was abroad. Did some checking and turned up some info about the IRS you might like to hear about. They can take money out of account in the US without your permission. But if that account gets your Soc Sec benefits, They cannot touch this( also applies to State Taxes). Instead they can deduct up to 15% of what you receive in the direct deposit or monthly check .

Now you can establish a different amount with IRS online( the link is in the letter sent) and negotiate a lesser amount than 15% which is what I did! How much, depends what you can negotiate and IRS agrees upon. Now here is an additional bit of trivia. If you owe the IRS more than $50.000 they can put a travel restriction on your passport so you can not leave the US, don't think it would apply returning, just leaving! Luckily not in that situation, found in my research. Aren't taxes FUN! 

[Dave Hounddriver]

9 hours ago, JeSsDaDdY said:

Could you not have just had them deduct the amount you owed (or they said you owed) from the account they seized?

No, because hey cannot seize it until they have evidence of guilt.  They can just freeze it.  Quite a difference actually.

[StayAtHomeDad]

54 minutes ago, Dave Hounddriver said:

No, because hey cannot seize it until they have evidence of guilt.  They can just freeze it.  Quite a difference actually.

Ooh..ouch. Yeah, I see what you mean. Taxes really bite.