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I live abroad; we have a business in China in my wife's name. Due to their visa regulations, I can't be on the business licenses, and am not legally allowed to work, either, so legally my income is 0.
I had some income from the US stock market last year, but less than the threshold for filing.
As I understand it, I don't have to file taxes because of this; however, I'm worried that next year, after we move back and work to start a business, there could be some issues because of a sudden surge in our income. Also, we want to be able to get a mortgage and possibly a business loan... we have plenty of cash in our overseas accounts but a few grand in the US accounts (plus stocks). I've already set up a corporation and LLC in the US and our intention is to start business soon after we arrive so we can post some income.
Anyone have insight into this? Will it be possible to secure loans with foreign assets if you didn't file with the IRS? What if there's no IRS filing from the previous year, but you have current bank statements and books showing an income?
You can file zero returns and generally it’s a good idea to do anyway to prevent others from fraudulently filing one and to actually start the statute of limitations.
As far as your books and records, if they’re clean they’re clean. It may draw attention that there’s a spike but if you have it documented, then it’s just a matter of answering the inquiry and proving it if it actually happens.
When you say you had income from stocks, was it from selling? I skipped filing a return over a decade ago because I was living off stocks and only realized a loss for the year. The IRS contacted me and said I had to file a return for that year despite only having a loss. I had sold around $400k of stock at a net loss. In other words, I did not have any real income or realized capital gains that year.
This was about 14 years ago and I don't know if the laws have changed. At the time, brokerages only reported sales and not the cost basis. My understanding is that they now report the cost basis and the IRS now knows how much is realized.
I’ve always thought if you’ve got a 1099 or W-2, you better file a return, even if the bottom line results in no tax. The IRS likes to match things up.
I haven't checked the rules lately, but since you are married (even to a non-resident alien) I think you must file either a joint return or married filing separately. And, you will have to obtain a social security number or or other tax i.d. for your wife is she does not have one. I agree that you should file if you receive a 1099. I advise checking the IRS rules for someone filing in your situation.
If you file a joint return with your wife, I think you will have to declare the Chinese income. (Worldwide income) You need to consult with a tax person.
I live abroad; we have a business in China in my wife's name. Due to their visa regulations, I can't be on the business licenses, and am not legally allowed to work, either, so legally my income is 0.
I had some income from the US stock market last year, but less than the threshold for filing.
As I understand it, I don't have to file taxes because of this; however, I'm worried that next year, after we move back and work to start a business, there could be some issues because of a sudden surge in our income. Also, we want to be able to get a mortgage and possibly a business loan... we have plenty of cash in our overseas accounts but a few grand in the US accounts (plus stocks). I've already set up a corporation and LLC in the US and our intention is to start business soon after we arrive so we can post some income.
Anyone have insight into this? Will it be possible to secure loans with foreign assets if you didn't file with the IRS? What if there's no IRS filing from the previous year, but you have current bank statements and books showing an income?
Based on my experience, if I were you I would file and report a small amount of income and file a 2555 form also with your 1040 to the IRS. You're not going to pay any taxes on foreign earned income unless it's over 100k USD for 2020. Don't worry about the past, but file for 2020 so your on record.
Also, you need to prepare to move money into your U.S. accounts. It's difficult to be approved for loans with money sitting in overseas accounts. It's also a pain to move money out of China to the U.S. and it's going to take time to do so, esp if you sell your apt in China and you have a good amount of money. There are annual limits to how much the China gov't allows you to send outside the country. We had to find family members and friends to help us send money out.
You can however still use your Bank of China card to buy things here in the U.S. as long as it has that Visa logo and works as a credit card and not just a debit card. I'm sure your wife probably has one. I didn't because I was a foreigner in China and they only would give me a debit card.
I would begin the process of sending money to the U.S. early instead of waiting. It's a bit of a pain in the neck
There are banks that offer mortgages to new residents. I know so because I got a mortgage within weeks of arriving in the US and having never lived here before. Basically, I had a new SSN and no credit history yet I still got a mortgage based on my employment.
I would assume many major banks have such programs so you will have to do some digging to find the right contacts. If it helps, I got pre-approvals from Citi and Wells Fargo but chose WF because they offered me a slightly better rate. BTW, same rates as what they offer to those with stellar credit and not sub-prime rates. This was in 2004 and I think I got 3.875 for a 5 yr ARM, could have been less because I memory fails me.
When you say you had income from stocks, was it from selling? I skipped filing a return over a decade ago because I was living off stocks and only realized a loss for the year. The IRS contacted me and said I had to file a return for that year despite only having a loss. I had sold around $400k of stock at a net loss. In other words, I did not have any real income or realized capital gains that year.
This was about 14 years ago and I don't know if the laws have changed. At the time, brokerages only reported sales and not the cost basis. My understanding is that they now report the cost basis and the IRS now knows how much is realized.
The loss wasn't 400k. That was the net sales. Cost basis was around 410k so loss was around 10k. So it took about 3 years to carry forward.
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