alogix
Feb 22, 2012, 02:06 PM
Hi everyone,
My situation is quite complicated and my questions will not be the easiest to answer. However, I would appreciate any input.
I'm a research scholar currently holding a J-1 VISA. I'm from Thailand. I entered the US in 2010 and I'll complete my 2-year stay this April 2012.
For the past two years, I have been granted tax exemption due to the Tax Treaty benefit between the US and Thailand. However, when I casually emailed the University tax department to ask if I am to be paying tax now that I am going on my third year. Their answer was not what I wanted to hear.
They said, my understanding was wrong. I thought/assumed that the benefit would be for the first two years of my stay and if I were to stay longer, I'd have to start paying taxes then. But they said, the tax treaty is granted for the maximum of 2-year stay TOTAL. Meaning, if I were to extend, I will have to pay backtaxes starting from the very first dollars earned back in 2010!
Of course, they apologized profusely for not notifying me in the first place before I signed the treaty form. But it's a little too late now.
I consulted with the University tax department and they said I have two options:
1) Pay backtaxes - that would mean the principal for year 2010 and 2011 (whatever I owe for Federal, State, and County taxes) PLUS interests PLUS penalties
2) Simply leave the country - not have to pay anything - very tempting but difficult to do - please read on
My boss has agreed to increase my salary to help the matter, by not much, but still appreciated. My problem is I don't have that sum of money to give back to the IRS at once. The principal alone would already be at the range of $15,000. And I know that the IRS interests are compounded daily. I don't even know where to begin to do the calculation. If I end up staying, I'd have to do the installment payment thing with the IRS which I dread because I may end up paying way much more than I owe.
I really don't want to leave the country just yet either because my research is going really well and I just don't want to abandon my work half way. The last two years of hard work would go to waste if I leave now. I have a job waiting for me in Thailand but I'm not looking forward to it because it pays less than what I'd get here and it's not exactly the field I have expertise in.
What I want to do is to stay, save up some money, finish my work, get a few publications out, THEN move back. But what if I can't afford paying backtaxes, even in installments.
So now my question is (sorry for the long introduction of my situation), is there a way to negotiate with the IRS at all so that I don't have to pay interests and penalties? Because this is not exactly my fault. I wasn't planning on not paying taxes. I honestly wasn't aware. If I had known from the beginning, I'd have been more than willing to pay full taxes just like everyone else. And would the IRS ever consider a deal where I wouldn't have to pay every dollar I owe?
Thank you so much for reading this far. I hope you can give me some advice/suggestion.
My situation is quite complicated and my questions will not be the easiest to answer. However, I would appreciate any input.
I'm a research scholar currently holding a J-1 VISA. I'm from Thailand. I entered the US in 2010 and I'll complete my 2-year stay this April 2012.
For the past two years, I have been granted tax exemption due to the Tax Treaty benefit between the US and Thailand. However, when I casually emailed the University tax department to ask if I am to be paying tax now that I am going on my third year. Their answer was not what I wanted to hear.
They said, my understanding was wrong. I thought/assumed that the benefit would be for the first two years of my stay and if I were to stay longer, I'd have to start paying taxes then. But they said, the tax treaty is granted for the maximum of 2-year stay TOTAL. Meaning, if I were to extend, I will have to pay backtaxes starting from the very first dollars earned back in 2010!
Of course, they apologized profusely for not notifying me in the first place before I signed the treaty form. But it's a little too late now.
I consulted with the University tax department and they said I have two options:
1) Pay backtaxes - that would mean the principal for year 2010 and 2011 (whatever I owe for Federal, State, and County taxes) PLUS interests PLUS penalties
2) Simply leave the country - not have to pay anything - very tempting but difficult to do - please read on
My boss has agreed to increase my salary to help the matter, by not much, but still appreciated. My problem is I don't have that sum of money to give back to the IRS at once. The principal alone would already be at the range of $15,000. And I know that the IRS interests are compounded daily. I don't even know where to begin to do the calculation. If I end up staying, I'd have to do the installment payment thing with the IRS which I dread because I may end up paying way much more than I owe.
I really don't want to leave the country just yet either because my research is going really well and I just don't want to abandon my work half way. The last two years of hard work would go to waste if I leave now. I have a job waiting for me in Thailand but I'm not looking forward to it because it pays less than what I'd get here and it's not exactly the field I have expertise in.
What I want to do is to stay, save up some money, finish my work, get a few publications out, THEN move back. But what if I can't afford paying backtaxes, even in installments.
So now my question is (sorry for the long introduction of my situation), is there a way to negotiate with the IRS at all so that I don't have to pay interests and penalties? Because this is not exactly my fault. I wasn't planning on not paying taxes. I honestly wasn't aware. If I had known from the beginning, I'd have been more than willing to pay full taxes just like everyone else. And would the IRS ever consider a deal where I wouldn't have to pay every dollar I owe?
Thank you so much for reading this far. I hope you can give me some advice/suggestion.