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I grew up and lived in the U.S. until graduating from university. After graduation I took a job abroad where I have been living now for 5 years.

Since beginning my job, I have been filing a U.S. tax return and paying some U.S. tax (which is awful because I don't live in the U.S., earn much money in the U.S. or get any services from the U.S. but alas that is the law. It also means I can't save money or invest like my neighbours and friends can. It's absolute tyranny, but I digress)

However I do earn some money in the U.S. - about $3000 per year. This money comes from some friends and family who I do small artistic jobs for. It is much easier for them to send money to my U.S. bank account than to send money overseas, and I use this money when I visit the U.S. once or twice a year.

I am wondering how risky this is for me vis-a-vis the IRS.

On one hand, I might be evading taxes (however little), but on the other if I were to report it, the process is so complicated and time-consuming that I would most likely not do these small jobs anyway. Do I need to worry about this or can I can carry on with these small jobs worry-free?

  • "It also means I can't save money or invest" Why not? – Rupert Morrish Oct 31 '17 at 1:43
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    @RupertMorrish because I have to pay taxes to both the US and my adopted country. Yes some types of retirement accounts are exempt from most - but not all - double taxing, but regular savings are not. Also I cannot take advantage of local benefits like no capital gains tax on sale of primary residence, so I'm at a major disadvantage in the local market, where everything is priced based on this benefit. Basically while the U.S. might be the land of freedom for those inside her borders, once you leave her borders it is hell. – C H Oct 31 '17 at 14:42
  • @RupertMorrish another crucial point is that I am not able to effectively save for my children's education. Foreign tax-advantaged education funds are not exempt from U.S. taxes so there is essentially no point in having one. And I can't open a U.S. one since I am not a resident there – C H Oct 31 '17 at 14:48
  • On the other hand, you'll have a chance to get your children educated outside the USA for so much less that you won't have to save for it. – Rupert Morrish Oct 31 '17 at 20:36
  • Good point on the capital gains tax. – Rupert Morrish Oct 31 '17 at 20:43
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If your gross income is only $3000, then you don't need to file:

https://www.irs.gov/pub/irs-pdf/p501.pdf

That said, pay careful attention to:

https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad

You should be reporting ALL income, without regard to WHERE you earned it, on your US taxes. Not doing so could indeed get you in trouble if you are audited. Your level of worry depends on how much of the tax law you are willing to dodge, and how lucky you feel.

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  • That's what I'm not sure about... I earn around $40K abroad, but only $3K in the U.S. Thus my total earnings are more than $4050, but not in the U.S. – C H Oct 30 '17 at 22:28
  • @CH - it's my understanding that the total income is what counts and all of it must be reported. Your worldwide income is subject to U.S. income tax, regardless of where you reside. – Joe Strazzere Oct 30 '17 at 23:24
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    Your overseas income is below the foreign earned income exclusion (about $85k) so you shouldn't have to pay tax on it, so long as you are working for a company. But you need to declare it. Go see an accountant and get them to help you file amendments to your past few years filings. – Rupert Morrish Oct 31 '17 at 1:25
  • Oh, and you need to file a report for every foreign bank account you have that's had over US$10k in it at any time in the year. – Rupert Morrish Oct 31 '17 at 1:39
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    @Robert Moorish: The threshold for FBAR reporting is a total of $10,000 in all foreign accounts... – DJohnM Oct 31 '17 at 16:01

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