# Streamline for what years? QD? Help



## boat (May 17, 2014)

Hello all- Great info on this forum. I have few questions that you all might be able to help with. First some info-


Moved out of the states in 1987.
Came back to US and worked a summer job 1995-1999. Did not file. 
Moved out of the states in 2001.
Move with my wife to NZ in 2005. Got residency. Joined the NZ tax rolls. Pay taxes. 
Worked overseas out of NZ, but still paying my NZ taxes. 
My wife and I each make about 60K a year each in 12'. Less in previous years.

A couple weeks back we heard the word FBAR for the first time, and are now trying to get compliant with the US tax system. All the same reasons for not filing. We were below the FEIE limit ... paying our NZ tax ... and such. 

My questions-

My CPA tells me maybe to a QD or to enter the Streamline. For the Streamline she says we need to file 2010-2011-2012 because they are the delinquent years. (She says 2013 is not due till June 15.) And 2013 we just file as a normal return. Is this right?

In 2012 I was on a job where the business sold. At the end of the sale one of the interim owners gave me a tip of 9300 Euros for being around and being helpful and positive during the sale. My CPA tells me that this tip should be considered Self Employment and thus I need to pay 15% on it and this puts me over the 1500 tax owed for 2012 and thus I will be considered Hi Risk. She says even I look at what I paid in NZ (33%) it does not count toward self employment tax. When I look at the 1040 form it says "wages, tips ..." etc but she says no it's self employment and must be taxed. I don't mind paying, but I don't like the high risk aspect. Any ideas?

In 2010 I worked overseas. The owner who paid us was from the US, but we were in Tonga the whole time. My CPA tells me again Hi Risk. 

Lastly how "high risk" would it still be fine to enter the Streamline? 

Thanks!


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## BBCWatcher (Dec 28, 2012)

boat said:


> For the Streamline she says we need to file 2010-2011-2012 because they are the delinquent years. (She says 2013 is not due till June 15.) And 2013 we just file as a normal return. Is this right?


Yes. You must also file FBARs for 2007-2012 inclusive plus 2013. FBAR is FinCEN Form 114.



> In 2012 I was on a job where the business sold. At the end of the sale one of the interim owners gave me a tip of 9300 Euros for being around and being helpful and positive during the sale. My CPA tells me that this tip should be considered Self Employment and thus I need to pay 15% on it and this puts me over the 1500 tax owed for 2012 and thus I will be considered Hi Risk.


Did you receive other income from that business, as an employee? Or was this business sale involvement some freelancing?



> Lastly how "high risk" would it still be fine to enter the Streamline?


Nothing you've described so far concerns me, for what it's worth. The Streamlined Program seems like a very good fit.


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## boat (May 17, 2014)

Did you receive other income from that business, as an employee? Or was this business sale involvement some freelancing?

I was working on a boat for 18 months. The boat sold, and the crew went with the boat, then the boat was resold a couple weeks later and the crew was let go. For that couple weeks we continued to get paid from the original owner as it was all a transition that takes time. The second owner felt he should have been paying the crew and thus transferred the gratuity without any paperwork, contract, or anything. 

I also wonder then, working on boats this year we sometimes get tips from the customers. Should that be considered self employment also? That puts us into a serious double tax situation as we would then be paying 33% in NZ and 15% to the US? 

Thank you much for your help, and confidence to enter the Streamline.


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## Bevdeforges (Nov 16, 2007)

It's 2010, 2011 and 2012 because what they want is current year (i.e. 2013) plus three years in arrears. 

On the "tip" income, I wouldn't be too quick to declare it as self-employment income. Did you declare it on your NZ taxes? From what you've said, I think you would be justified to treat it as a sort of "severance" pay - basically you earned the right to it from the prior employment, and it should basically have the same character/treatment as your income from the "old" owner of the boat.

They aren't that strict about foreign earned income, and you always have the right to categorize it as you feel is appropriate under the circumstances. If they have questions, they'll be in touch. But at least you've reported it. 

Despite what some would have you believe, the IRS really has no way to trace most foreign payments like this. They're generally going to accept it however you file it, unless there is some evidence somewhere on your forms that you're "hiding" something somewhere. 
Cheers,
Bev


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## boat (May 17, 2014)

*Thanks again!*

Thanks for the help and advice. Comforting to know other people who have gone through this are out there.


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## BBCWatcher (Dec 28, 2012)

Yes, I would check the IRS's definition of self-employment, particularly the one concerning "independent contractor" status, but your description does not immediately suggest self-employment in my view.

That said, it might not be such a bad thing to get some U.S. Social Security credits in the bank. You're getting close to the 10 calendar years of non-trivial contributions into the U.S. system, aren't you? That'd be enough to qualify you for some U.S. Social Security retirement benefits (payable practically anywhere in the world) and U.S. Medicare.


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## boat (May 17, 2014)

*Self employeed vs employee*

Great help here. Another question I would like some ideas on. In my job I am clearly an employee. I get a regular monthly paycheck, I have no stake in the business, I work regular hours, one of my contracts even states that I can not work for any other entity, etc. I meet all the requirements when I read the list of differences. 

Because I am offshore from my country of residence, New Zealand my CPA back home files me as Self Employeed. The tax comes out to be about the same, but he says because there are no witholdings it is a paperwork jungle to file as an employee when I work offshore. 

The thing is NZ and the US have no tax agreement for self employment income. My US CPA tells me she will file me as an employee, that I clearly am, and take the FEIE. 

Am I setting myself up for a conflict of some kind? 

Thanks again for all the great information and advice.


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## BBCWatcher (Dec 28, 2012)

If you clearly meet both country's definitions and file accordingly, I don't see a problem. I could see how either/both tax authorities might ask questions about that apparent discrepancy, but questions are only questions. As always, keep careful records.


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## Bevdeforges (Nov 16, 2007)

Despite all the Sturm und Drang about having to file two sets of tax returns/declarations, it's pretty rare that the tax authorities bother to compare the filings, unless they have some indication of massive fraud or underreporting involving the "other" returns.

Definitions can and do vary greatly from one country to another. So comparisons of tax returns are more likely to reveal differences than much of anything being the same.
Cheers,
Bev


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## islander_expat (Sep 18, 2013)

If you're going in to the streamlined you can look at the questionnaire to determine your risk ranking. As BBC said, there's really nothing that screams out "high risk" based on your posts.

Good luck


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## islander_expat (Sep 18, 2013)

Link to the Streamlined Procedure


Instructions for New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers


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