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As an US resident I did everything wrong... how to fix my TAX situation?

Russky

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Mar 22, 2021
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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.
 
If you have significant money , Why are you living in USA. Move to some Tax Free Island and enjoy life.
Well that was the plan until it went to hell, due to circumstances outside my control. That's why I was contemplating abandoning the green card but the question is the "covered expatriate" status. Can I just file the 8854 without a single tax return filed for over 10 years?
Agree with accountants. Surrender your green card if it servers you no purpose and be done with it. Or keep it and start filing tax returns.
If my only clean option is to abandon the greencard, then my concern is regading to the covered expatriate status.

One of the reasons I was even considering finding a way of keeping the green card and being compliant was because I have some extended family in the US, a partial solution I had found was to become a PR resident. But the life in the island is complicated, having seasonal hurricanes and blackouts is quite unappealing.
 
Well that was the plan until it went to hell, due to circumstances outside my control. That's why I was contemplating abandoning the green card but the question is the "covered expatriate" status. Can I just file the 8854 without a single tax return filed for over 10 years?

If my only clean option is to abandon the greencard, then my concern is regading to the covered expatriate status.

One of the reasons I was even considering finding a way of keeping the green card and being compliant was because I have some extended family in the US, a partial solution I had found was to become a PR resident. But the life in the island is complicated, having seasonal hurricanes and blackouts is quite unappealing.
Move to Dubai with 24/7 electricity with super safe environment . If you do not like Island.

or

Than Pay tax.
There is No free lunch in world.
 
Everything in life is Risky .
Do it at your own risk.
Is crypto is in KYC account ?

If yes than there will be problem in Future with significant amount , small amount Nobody cares.

If no what need of worry, Who knows you own crypto ?
Thank you for your input azb1, but no offense, your suggestion actually doesn't make sense and based on your answers it seems that you aren't familiar with the specifics of the US tax laws and you are having trouble understanding the technical details that I've already laid out.

I would like to hear the opinions from those who are actually experienced in this area.
 
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Thank you for your input azb1, but no offense, your suggestion actually doesn't make sense and based on your answers it seems that you aren't familiar with the specifics of the US tax laws and you are having trouble understanding the technical details that I've already laid out.

I would like to hear the opinions from those who are actually experienced in this area.
Yes True I am not expert .
Learning New Things Everyday.
All criticisms are welcome.
 
The only two choices I see are to file returns for all years or pay exit tax and forever be a covered expatriate which will affect how you can gift to family in the US. The returns and exit tax form must be accurate or you will never have peace of mind because they will always be able to come back after you.
 
The only two choices I see are to file returns for all years or pay exit tax and forever be a covered expatriate which will affect how you can gift to family in the US. The returns and exit tax form must be accurate or you will never have peace of mind because they will always be able to come back after you.
Hi Kermit, thanks for sharing your opinion.
So the exit tax would be inevitable if I decide to abandon, but would that tax be calculated based on what I declare in the form 8854?

Btw, what do you mean to be a "covered expatriate" forever? I didn't know it was a permanent status. Would that cause troubles if I decided in the future to go back as a tourist or an entrepreneur visa?

Would it be more sound to start filing tax returns starting from now to the next 5 years, and then abandoning the greencard?
 
File for the last 5 years and take the hit, its not worth the future problems you could face.
Abandon the greencard and look for somewhere more palatable.
If you ever wanted to go see the family in the US and your not clean you could end up in jail.

Take this as a lesson and then look to get a jurisdiction that will be crypto friendly and use what you have to reinvest and hope to make back the losses in the future.
 
Take this as a lesson and then look to get a jurisdiction that will be crypto friendly and use what you have to reinvest and hope to make back the losses in the future.
I totally agree, also do proper research it is important to avoid lot's of troubles. The fact that you already landed here at offshorecorptalk is your best move so far.

For people that don't know about how to go about such setups the mentor group gold is a right choice.
 
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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.
If you expatriate and renounce your residency, the IRS is going to look for the last 6 years of tax records. If there are no tax records the IRS is going to ask why you did not file and will audit you requesting your bank statements for the last 6 years and will calculate your taxes and propose a tax return filing for each year. Please note that penalties for not filing, penalties for not paying and interest will be applicable.

It will be a good idea to request your tax return transcripts and account transcripts for each of the last six years. Many times the IRS files a substitute return for you after 3 years of the deadline to file. This might be your case.

If you never worked and received the support of your extended family, you did not need to file and that will be enough for the IRS, but it depends of the flow of funds that your bank account received during the years.
 
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If you expatriate and renounce your residency, the IRS is going to look for the last 6 years of tax records. If there are no tax records the IRS is going to ask why you did not file and will audit you requesting your bank statements for the last 6 years and will calculate your taxes and propose a tax return filing for each year. Please note that penalties for not filing, penalties for not paying and interest will be applicable.

It will be a good idea to request your tax return transcripts and account transcripts for each of the last six years. Many times the IRS files a substitute return for you after 3 years of the deadline to file. This might be your case.

If you never worked and received the support of your extended family, you did not need to file and that will be enough for the IRS, but it depends of the flow of funds that your bank account received during the years.
Thank you for replying. Although I suspect that you won't get this message because you got banned, apparently lol.
I wonder if it is worth going to the streamline filing compliance procedures first, or just ignore the past, start filing taxes for the next six years and then renounce the greencard+8854.

Btw, @Admin I wonder why Fulton was banned.
 
Thank you for replying. Although I suspect that you won't get this message because you got banned, apparently lol.
I wonder if it is worth going to the streamline filing compliance procedures first, or just ignore the past, start filing taxes for the next six years and then renounce the greencard+8854.

Btw, @Admin I wonder why Fulton was banned.
Ban is lifted. I am back. Thank you. You can try filing 2020, but that might trigger an IRS letter asking for previous years and file for the years they will ask.
 

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