This is my situation:
I never declared any taxes ever in my 10+ years of legal residence in the US. I had been relatively poor most of that time, working for my extended family in the US. My bank account had always less than 10K USD and my coinbase account has always had less than 10K USD (until recently, the value of my mini portfolio there passed a bit over 10K).
I consulted with a CPA in 2014 to regularize my situation, as my crypto stash was growing in value. The CPA at the time told me that I am doing such a good job at being under the radar and that I shouldn't ruffle any feathers by declaring any of it, that besides the IRS didn't even know what the hell a cryptocurrency was, and the CPA thought it was a joke.
Around 2018 my crypto assets appreciated quite a lot, so I consulted with another CPA and told me the crypto division in the IRS was understaffed and I shouldn't even worry about undeclared taxes, the plan was to file some backtaxes and then become a resident of Puerto Rico but then suddenly the CPA disappeared without filing anything. And since the pandemic I am stuck in my country of origin and lost the chance of becoming a PR resident.
What's worse, in this crypto bullrun I was forced to liquidate some crypto which technically would be triggering a tax event, which is something I was contemplating to be doing after getting my PR residence decree approved, but now that plan is ruined.
Now my assets are worth quite a lot and my situation is beginning to stress me out.
I know that a typical bookworm by-the-book accountant would tell me to brainlessly declare every single penny I have, but the problem is that some of those funds are in exchanges where I technically lied about not being an "US person" to get access to altcoins that would be otherwise unaccessible. So declaring the crypto stored in these exchanges would potentially expose another can of worms.
So I began to wonder if I should simply abandon the greencard and cut myself with all ties with the US, before they realize it.
But because I never filed a single tax return, it may trigger the covered expatriate status... I also asked yet another CPA if I should at least file tax returns for the last five years to avoid the covered expatriate status, but then he said to not do it as it may trigger a red flag, and again why would I make noise if I am under the radar and to simply abandon legal status and file 8854.
I wonder if this CPA thinks that I would be okay because even though I would be technically a covered expatriate, the total assets in the US financial system (bank and coinbase) is barely about 10K USD.
Am I surrounded by idiots or do they have a point? Or is there another solution available that I am not considering that would help me to go legit, without the need of abandoning my green card status?
If this topic is too controversial for the forum, and the moderators decide to delete the post I would understand.
For those who read this far, thank you for your time, I am not only in need of the collective intelligence of this community, but also for recommendation for some kickass creative tax professionals, as you can see, I had very bad luck in getting professional help for my case.
Cheers,
pycc
PS: Now that I understand the law a bit better I also realize that I lost lots of opportunity to declare ginormous losses... oh, well, live and learn they say.
I never declared any taxes ever in my 10+ years of legal residence in the US. I had been relatively poor most of that time, working for my extended family in the US. My bank account had always less than 10K USD and my coinbase account has always had less than 10K USD (until recently, the value of my mini portfolio there passed a bit over 10K).
I consulted with a CPA in 2014 to regularize my situation, as my crypto stash was growing in value. The CPA at the time told me that I am doing such a good job at being under the radar and that I shouldn't ruffle any feathers by declaring any of it, that besides the IRS didn't even know what the hell a cryptocurrency was, and the CPA thought it was a joke.
Around 2018 my crypto assets appreciated quite a lot, so I consulted with another CPA and told me the crypto division in the IRS was understaffed and I shouldn't even worry about undeclared taxes, the plan was to file some backtaxes and then become a resident of Puerto Rico but then suddenly the CPA disappeared without filing anything. And since the pandemic I am stuck in my country of origin and lost the chance of becoming a PR resident.
What's worse, in this crypto bullrun I was forced to liquidate some crypto which technically would be triggering a tax event, which is something I was contemplating to be doing after getting my PR residence decree approved, but now that plan is ruined.
Now my assets are worth quite a lot and my situation is beginning to stress me out.
I know that a typical bookworm by-the-book accountant would tell me to brainlessly declare every single penny I have, but the problem is that some of those funds are in exchanges where I technically lied about not being an "US person" to get access to altcoins that would be otherwise unaccessible. So declaring the crypto stored in these exchanges would potentially expose another can of worms.
So I began to wonder if I should simply abandon the greencard and cut myself with all ties with the US, before they realize it.
But because I never filed a single tax return, it may trigger the covered expatriate status... I also asked yet another CPA if I should at least file tax returns for the last five years to avoid the covered expatriate status, but then he said to not do it as it may trigger a red flag, and again why would I make noise if I am under the radar and to simply abandon legal status and file 8854.
I wonder if this CPA thinks that I would be okay because even though I would be technically a covered expatriate, the total assets in the US financial system (bank and coinbase) is barely about 10K USD.
Am I surrounded by idiots or do they have a point? Or is there another solution available that I am not considering that would help me to go legit, without the need of abandoning my green card status?
If this topic is too controversial for the forum, and the moderators decide to delete the post I would understand.
For those who read this far, thank you for your time, I am not only in need of the collective intelligence of this community, but also for recommendation for some kickass creative tax professionals, as you can see, I had very bad luck in getting professional help for my case.
Cheers,
pycc
PS: Now that I understand the law a bit better I also realize that I lost lots of opportunity to declare ginormous losses... oh, well, live and learn they say.
