| I don't know if this applies to you, but state-side the sale of an asset wouldn't be counted as income. According to this: http://time.com/money/2803550/income-taxes-on-home-sale/ If you lived in your previous home for at least 2 years, then you'd take it's original sale price plus closing/brokerage/etc costs as your "basis". Then take your later sale price subtracting those same costs. You get a $250,000 credit on profits. So to me (a complete layman who's maybe not very good at taxes), that means if I buy a house for $200,000 plus 5% closing costs, my original expenses were $210,000. I later sell it for $450,000 minus 5% closing costs. That's $427,500. I've made $217,500 for holding onto the asset for two years. I should probably play the lottery. ;-) Because I'm under the $250,000 single filing credit ($500,000 for joint filing couples, but I'm not sure how that'd work in your case since you're not a US citizen), I don't owe anything. Say I did really well and made $400,000 in pure profit though (selling my $210,000 in the neighborhood of $600,000+). You still get the credit so your taxable profit is $150,000 (assuming the joint filing credit wouldn't apply). That's taxed as capital gains. Not income. Which is a regressive tax. The highest rate is 20%. That'd be a $30,000 tax bill. This all assumes you even put her on the title for the old property. If you didn't, then the sale doesn't mean anything necessarily. That she had access to the money through a joint banking account after the sale might complicate things? In general I've found the IRS to be very helpful. They're not interested in prosecution (IME). They just want their due. And they're pretty flexible in making that happen. Once upon a time I owed $15,000 in taxes from previous contract work, and hadn't filed in a few years because I was scared of the consequences. That's about the worst move. By not filing I racked up something like $1,000 in non-filing penalties each year as well as paying 10% interest on the amount owed. When I finally did get my act together and contact them they waived further penalties, suspended the interest on the amount owed and set me up with a $300 a month payment plan. There are a lot of horror stories out there. And bad things do happen to good people. But I'd like to imagine that most cases work out more like mine. If I were in your position, I'd make it a priority to talk to a tax attorney, being sure they don't have a reporting obligation. It probably won't cost more than a few hundred dollars just to get some advice. Then I'd get a second opinion. Once I had some confidence I had a grip on the situation and how it was likely to play out, I'd talk to the IRS on my own, get on a payment plan if necessary, and put it behind me. I'm not sure it applies in your situation, but stateside, simply avoiding filing properly is about the worst thing you can do. It doesn't just go away on it's own. That only makes it worse (interest and penalties). But you know, I'm just some random guy on the internet. Figure out if tax attorneys have a reporting obligation and talk to one maybe? Good luck! |
As she didn't file, she didn't know that you need to file an FBAR annually for each foreign account. And the penalties for not doing so are those mentioned above 25% of the balance a year for 5 years.
and there are plenty who do file who don't know to file an fbar too.