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I had my taxes done by a paid preparer this year. For the past three years I've been married and file jointly with my husband, who is from England and rents out the flat he used to live in. So we have a small amount of income from that.
I could never figure out whether it was taxable by the U.S. govt., or how to report it if it was (exchange rates, what forms, etc.) I kind of figured it wasn't taxable because I know the UK & US have a tax treaty and I'd heard about the "foreign earned income exclusion."
However, this year I learned that it IS taxable on my US federal and state returns, because my paid preparer put it on there. And I now know HOW to report it because I can look at the forms he included and copy that.
I did a very rough estimate and figured that I probably should have paid about $200 more in 2008 and $600 more in 2009.
I can come up with that money and figure out how to do the amendments myself, so I won't have to pay for a preparer. BUT, I would like to know what the penalties and interest will be before I do this.
Basically, the IRS doesn't know about this yet, but as soon as I file an amended return, they will want their money plus interest and penalties. Before I tell them about it, I want to make sure I have the funds to cover everything.
I can't seem to find a calculator or a clear way of figuring out which penalties apply and how much interest, etc. Has anyone amended past years' taxes to include unreported income? What kind of penalties are imposed? Are there other considerations I should be thinking about?
I could never figure out whether it was taxable by the U.S. govt., or how to report it if it was (exchange rates, what forms, etc.) I kind of figured it wasn't taxable because I know the UK & US have a tax treaty and I'd heard about the "foreign earned income exclusion."
However, this year I learned that it IS taxable on my US federal and state returns, because my paid preparer put it on there. And I now know HOW to report it because I can look at the forms he included and copy that.
I did a very rough estimate and figured that I probably should have paid about $200 more in 2008 and $600 more in 2009.
I can come up with that money and figure out how to do the amendments myself, so I won't have to pay for a preparer. BUT, I would like to know what the penalties and interest will be before I do this.
Basically, the IRS doesn't know about this yet, but as soon as I file an amended return, they will want their money plus interest and penalties. Before I tell them about it, I want to make sure I have the funds to cover everything.
I can't seem to find a calculator or a clear way of figuring out which penalties apply and how much interest, etc. Has anyone amended past years' taxes to include unreported income? What kind of penalties are imposed? Are there other considerations I should be thinking about?
I figure now that I know I should have included the income, if I don't report it it's fraud, right? But if the penalties are hundreds and hundreds of dollars, yikes! I just want to be prepared before I do this. (Not to mention this affects my state returns as well.)
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