Working under/over the table and U.S./Calif. taxes

[shiner]

I have a feeling this is a stupid question but, for those Americans working under the table in Spain, do you file federal/state taxes in the U.S.?

To anyone from California, who maintains residency there, but works in Spain (legally or otherwise) how do you deal with state taxes? In doing research I've found that most states won't make you pay taxes, if you're living abroad, but that there are 3-4 that require you to - one of which is California. I've read that even if you've been living outside of the country for 10 years they will come after you when you come back.

Being only 31, but having been audited twice already in my life I have good reason to be paranoid:)

Advice and stories greatly appreciated -

-hallie

[saiguanas]

This may not be what you are looking for and I'll be the first to say that I have no clue since my state doesn't have an income tax, but if you've been audited twice at 31 and have some doubts/questions about how to handle income tax on under the table income in a foreign country, I would definately get a very good tax professional, one that is expensive, and get advice from them. I wouldn't waste time with what someone else has gotten away with because you don't seem to have your IRS Avoidance Device working properly.:D

You never know with the IRS. They may have some kind of "estimated" income for folks like you. I would go to a reputable CPA that has experience with situations like this.

Good luck and, even though they are evil>:D , you don't want to mess with the IRS.

[djS]

if you getting cash in you hand and dont show it via the bank dont tell then you where working as you have to pay there aswell ..... if you in college in spain and work parttime you ok as you need momey to live then show as you get away with the tax bracket

know what to show whan payying tax back at home and i am taxed at home the diffrentance off spain , bank accounts and so on
So time to ove ful time to Spain

Tax is cheaper there aswell
look up IRS website and you find out are ask at home what you need to do with you account ...

jurdy

[richardksa]

Try asking this over at
http://www.expatriatecafe.com/forums/index.php?

They seem quite savvy bunch.

[Jerezano]

It's a good question. Regardless of what you make, you have to declare your world-wide income. Unless you are really raking it in though I doubt you would have to pay tax back in the US, but this supposes that you are paying taxes to your host country. The tax authorities would probably also want to see some form of justification for your wages in Spain, either pay slips or your Spanish tax declaration. Working under the table, you obviously won't be able to provide these, but there is probably little the US government would say to the Spanish government about it. Now having already been audited twice maybe you should rethink whether its a good idea to be working under the table.

[Jon Hundt]

I'm from California. I've been living in Holland for 6 years, working legally. I file a US tax return every year, but I don't have to pay anything, the US exempts me from paying because I'm paying taxes to the NL government.

I never heard that about paying state taxes. I was under the impression that I owe the state nothing, because I am not a resident of the state. You pay taxes to the state in which you reside, don't you? If you don't reside in the state, you use no state facilities or services, therefore you are not liable for those taxes.... I thought. I will have to look into that. My first instinct was to dismiss your statement, but that would be pretty stupid if you're right and I'm wrong!

[saiguanas]

I'm glad we don't have state taxes. I don't know how you guys survive.

[Jon Hundt]

ahh, saiguanas, we survive because we get to live in (former) republic of California, which is a very pretty place.

[Acosta]

ahh, saiguanas, we survive because we get to live in (former) republic of California, which is a very pretty place.


And there are many Mini-Republics within Khalyfornya;

PRof Santa Monica -
PRof Santa Cruz
PRof San Francisco -
and many others :)

[sandy]

Shiner, you pay Uncle Sam income tax on all your legally made income world wide. You get an exemption of (I believe) $75K. If you make more than that, you will have to pay even if you pay income tax to a foreign country.

If you don't maintain your residency in CA, you don't have to pay state income tax. However, if you have a bank account in the state, a house you rent out for rental income, you will have to file a return, and pay if there is an income.

sandy
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www.excelwines.com (http://www.excelwines.com)

[shiner]

Thanks to everyone for their replies. Lots of advice is GOOD.

The thing is - I do want to do everything correctly and legally. This may sound really dumb but even if I worked under the table I would be too scared of the IRS to try to not pay taxes on the $$ I make.

California is a harsh mistress. It is difficult from what I've read to disengage yourself from residency. I would indeed have to move my bank accounts and change my license - and she demands state taxes no matter where you live in the world - I've read through all the online tax documents. Unfortunately, I have to be my own CPA.

Since I want to maintain residency here and keep voting then I accept getting fully f*&#ed over.

If I were to file taxes on what i made under the table, would the U.S. require a copy of my Spanish work permit?

btw, neither of my audits came under intentionally deviant behavior. The first was when I started college and thought I had to report my fiancial aid. I ended up getting more money back than I had gone for - so was good. The second time my job said, "oh well, you only made 150 off us so you don't legally have to report and we don't have to send you a W-2." Like an idiot I was like, "okay." Sure enough the IRS comes round and says, yeah if that was the only $150 you made! but add it into the income from your other job and you've cheated us." So I ended up paying over $900 on the $150 I didn't report (fine + interest over the months it took them to work on it you see...) And if I had reported it, I would have gotten more of a tax refund. The irony! I was in grad school at the time and think my annual income was about oh...$18,000. IRS - doing it's job. But I'm okay with it, really.

[Jon Hundt]

here's what I just read from the State tax site:

You are required to file a Nonresident or Part-Year Resident Income Tax Return (Long of Short Form 540NR) with California if you have income from California sources, such as, rental income, income from the sale of property, or partnership income in 2006 and you are:

* Single with a total income from all sources of $13,713 or more
* Married with joint income from all sources of $27,426 or more.

And:
Nonresidents must file a return if they have any California source income and their income from all sources is more than the filing requirement amounts for residents.

Not specifically mentioned is interest on a bank savings account. I think it might be worth your while to talk to a tax attorney and try to clarify this issue.

It certainly sounds like CA is as you described "a harsh mistress". I know a guy who had to pay a quarter million dollars tax on stock options that were worth less than 10K in real life. It's enough to make you want to move to the back-woods and become a survivalist anti-new-world-order maniac.

Holland is also ruthlessly efficient at taxation.

[sandy]

I don't think the IRS will ask for your Spanish work permit. It is not their jurisdiction. I think they only care if you pay tax on whatever income you made, legally or not.

I assume if you want to maintain your CA residency, you will not do things differently than you do now even though you are not physically there. I wonder if you have the option to maintain part-residency and still retain the right to vote.

I agree with others that it's probably best you ask a tax attorney or accountant.

sandy
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www.excelwines.com (http://www.excelwines.com)

[Jon Hundt]

I maintain no residency in California, but I still have the right to vote. But - that right is limited to State and Federal elections, not all the local issues and candidates that are so amusing in American elections.

[sandy]

Hmmmm....I am surprised you can still vote in state elections. Isn't that a bit like......mmmmm......a Texan or a New Yorker can decide if Arnie should be the governor of CA?

sandy
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www.excelwines.com

[Jon Hundt]

I think it would be different if I registered as a voter in another state. I am a registered voter in California; my last legal USA residence was in California. Even though I no longer reside there I maintain that registration by participating regularly in State and Federal elections. All of the ballots, registration and election information is sent to me by the State of California.

The assumption is that I will return one day to my home state, and that I retain an interest in state politics.

I could remain a California voter even if I moved to another state within the US, but then I wouldn't be able to (legally) vote in that state's elections. I imagine that there are people who do vote in different locations, maybe people who maintain more than one residence. I don't know how those cases are handled, I struggle to maintain one household!

[sandy]

I think it would be different if I registered as a voter in another state. I am a registered voter in California; my last legal USA residence was in California........


My head is spinning...:confused::confused::confused: