Old Client

[S T]

I have a client that has sought me out - Last returns I prepared were around 1992 or 1993, and he has not filed US tax returns since then.

He moved to Mexico, having a difficult time obtaining information from him on foreign income, - has US income only on some interest earnings and a distribution of Trust on his Mother's estate/trust.

Question is that he has not filed any necessary returns, so as I understand it, an Ex-Pat is subject to a Statute of Limitations on each year.

Now, the client is concerned, as he applied for and is receiving Social Security Benerfits, and has no filings for US returns for the last 18 years or so

Thoughts?

Sandy

[taxmandan]

I'm not the most knowledgeable about SSA but if he didn't have credits for working during 20 of the last 40 quarters how does he qualify for Social Security payments? There are requirements for working and paying into the system before someone qualifies for pension payments. Sometimes missionaries have been caught by that situation, when they return to the US of A and do not have any Social Security coverage.

As far as taxes, American citizens are required to report worldwide income and pay tax accordingly, subject to the foreign income exclusion if applicable. I would get an 8821 from him and check with theIRS on the last six years for SFR returns and/or any income reported. He needs to be more forthcoming about his income all those years if he wants my help though. If he hasn't filed required returns, the statute of limitations has not started yet so he has exposure for collections (15% of his SSA).

[David1980]

I'm not the most knowledgeable about SSA but if he didn't have credits for working during 20 of the last 40 quarters how does he qualify for Social Security payments? There are requirements for working and paying into the system before someone qualifies for pension payments.

The requirements aren't so bad that he couldn't have met them before moving to Mexico.

"Anyone born in 1929 or later needs 10 years of work (40 credits) to be eligible for retirement benefits. "

http://www.ssa.gov/pubs/10072.html

Basically you need 40 credits and can get up to 4 per year. You don't need all that much income to get the 4 credits.

"In 2011, you earn one credit for each $1,120 in earnings—up to a maximum of four credits per year."

http://ssa.gov/pubs/10024.html

So you could earn $4,480 and have earned your maximum qualifying credits for 2011.

Of course, earning the minimum necessary to qualify and having a long period with no earnings at all would probably have a negative affect on the amount of social security benefits you'll receive when you start getting the benefits.

"Retirement benefit calculations are based on your average earnings during a lifetime of work under the Social Security system. For most current and future retirees, we will average your 35 highest years of earnings. Years in which you have low earnings or no earnings may be counted to bring the total years of earnings up to 35."

[S T]

SSA Retirement

I have no idea on his SSA retirement - just that he had enough credits to receive some tiype of benefit.

Thanks for the references

This client, as I stated, I have not prepared returns since about 1993
This is not the only request that I have had from him relating to filing a US return since he moved to Mexico, and now it is getting "wearisome and worrisome" for me, as I do not have a clue what he has been doing relating to Foreign Income - I do know that there is a business in Mexico "whether under his name or is "significant other" and that is another issue. He could possibly be married, but keeps representing himself as "single"

I have actually sent him links to a few people that are on the internet for "Ex Pats" and filing, but he continues to seek my adivce

I am "tired" of dealing with this one! So I will continue to send him info so he can arrive at what is the "best" and "Proper" procedure, and try to remove myself .

Thanks,

Sandy

[JohnH]

Nice decision, Sandy. Sounds like this client has enough ambiguities and uncertainty to cause anyone's alarm bells to start clanging. Maybe he's getting advice from someone else but doesn't like what he's hearing, so he's trying out other fact patterns on you to see if he can get different answers that he likes better.

[kpangelinan]

Nice decision, Sandy. Sounds like this client has enough ambiguities and uncertainty to cause anyone's alarm bells to start clanging. Maybe he's getting advice from someone else but doesn't like what he's hearing, so he's trying out other fact patterns on you to see if he can get different answers that he likes better.

This is what it sounds like to me as well.