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Drowning in questions

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lostintaxlation

Junior Member
Florida Resident

I am in a big mess.. I have no idea where to even start.
I left the US and began working in Germany in Oct. 2004.
I had a visa and had taxes withheld (in Germany).
I filled a return in Germany for Germany in 2005.
I did not file under US.

In April 2005 I left to work in Holland.
My employer did not do the visa or other necessary paper work (despite constant questioning and requests by workers)
and listed everyone under freelancer, although we were in fact by definition employees.
We received no benefits and no taxes were withheld.
I stopped working for them in June of 2006.

Because they had us working as employees (even though they listed us under freelancers) they should be responsible for back taxes and penalties (right?)\
What should I do to insure that they are held liable?

In July of 2007 I began work as an independent contractor for a company based in the US.
I have no idea what I must do in order to operate legally because the information is so confusing on the IRS.gov site...
tax for here, tax form there, quarterly taxes, estimated taxes, self employment tax, random taxes for taxes!
it sounds as if I simply must pay 90% of my money away in taxes.
.. it sounds like punishment for not working in the system of employee.

I need to get this mess figured out and am so lost in it I don't know what to do.
SOO much red tape has my mind in a whirl and thinking that I will end up in prison for ignorance.

What do I need to do.. please some one help me :( Is there anywhere I can go.. some one to talk to to find a clear answer?
 


LdiJ

Senior Member
Florida Resident

I am in a big mess.. I have no idea where to even start.
I left the US and began working in Germany in Oct. 2004.
I had a visa and had taxes withheld (in Germany).
I filled a return in Germany for Germany in 2005.
I did not file under US.

In April 2005 I left to work in Holland.
My employer did not do the visa or other necessary paper work (despite constant questioning and requests by workers)
and listed everyone under freelancer, although we were in fact by definition employees.
We received no benefits and no taxes were withheld.
I stopped working for them in June of 2006.

Because they had us working as employees (even though they listed us under freelancers) they should be responsible for back taxes and penalties (right?)\
What should I do to insure that they are held liable?

In July of 2007 I began work as an independent contractor for a company based in the US.
I have no idea what I must do in order to operate legally because the information is so confusing on the IRS.gov site...
tax for here, tax form there, quarterly taxes, estimated taxes, self employment tax, random taxes for taxes!
it sounds as if I simply must pay 90% of my money away in taxes.
.. it sounds like punishment for not working in the system of employee.

I need to get this mess figured out and am so lost in it I don't know what to do.
SOO much red tape has my mind in a whirl and thinking that I will end up in prison for ignorance.

What do I need to do.. please some one help me :( Is there anywhere I can go.. some one to talk to to find a clear answer?
We can only advise you here regarding US tax law.

If you are a legal resident or citizen of the US, then you are required to file a US tax return, every year, based on your world wide income. You are entitled to a yearly foreign income exclusion of 80,000+ (depending on the tax year) as well as credits for foreign taxes paid on any income in excess of the exclusion amount.

Therefore, you need to file US tax returns for all years that you did not.

The US company that you are working with, should automatically do backup withholding on your pay, in the amount of 30%, because you are physically located abroad. You will still be entitled to the foreign income exclusion, but you will have to file a tax return and you will be subject to self employment taxes. The amount that the employer withholds should be sufficient to cover those taxes, therefore you do not need to make any quarterly or estimated tax payments.

You need to find a tax preparer that can help you with the US tax returns. Due to the foreign income exclusion they will be quite complicated.

If you cannot find someone locally who can help you (the US embassy might be able to recommend someone) then find someone located in the US and work with them by fax, phone, email and snail mail. I handle tax returns for several clients who live abroad, and I know that many other tax professionals do the same.
 

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