[Istreet]

Well, like I said I dug a pretty huge hole and forgot to build a ladder on the way down. See, I owe the IRS a lot, it just passed the 50k mark in total, state and fed. After the interest and penalties, which is running over 1500 a month. I am also in debt about 40k as well, and in the process of filing bankruptcy, haven't gone to a judge yet but wolring with a lawer to get everything in line first. I have $0 liquid cash, $0 in assets I own nothing but the clothes I wear. Now I have also been living outside the US for about 7 months now, with my uncle working for him, I earn a place to stay amd that's it. I don't have a paycheck, he just gives me the necessities and in turn I work. So my total income for the gear 2015 is $0, and whatever I owe on my credit cards gets turned into income or something I don't know how that works. So what are my optipns? I know paying the money isn't going to happen, it just isn't possible with my level of work experience, my DUI and lack of higher education. I want to be able to come home someday amd not get blocked from leaving the country again. If there is anyrhing I missed feel free to ask.

[joypulv]

I don't think you would go to prison for tax evasion, unless you committed other types of crime/fraud along with it. You would just be garnished for the rest of your life, including Social Security (a certain %). I don't think you would be able to leave the country whenever you want. You seem to be asking for a lot of 'options.' You don't really have more than 2.

I'd love to hear how c.c. debt gets turned into income. And how you file for bankruptcy and pay a lawyer to help if you don't have a dime.

Generally people hire a debt consolidation company that employs former IRS agents. They seem to be the only ones who can negotiate away the huge interest rates and penalties. They take their fees out of your first few payments to your debtors.

There are jobs in the US, believe it or not. Tough ones in freezing cold and harsh conditions, such as oil and gas fields. There are skills you can learn for jobs that go begging, like underwater welding. Your other US option is to sponge or be homeless.

[Fr_Chuck]

You file bankruptcy and get an tax attorney to see about forgiveness on some of the tax problems.

How is taxes getting worst all the time if you don't owe taxes. As long as you file, and don't hide income they will just garnish you forever.

[joypulv]

Oh they get worse and worse, from usury interest rates and steep penalties!

[AtlantaTaxExpert]

Okay, a couple of things:

Joy, the interest rates charged these days by the IRS are NOT usurious anymore. In fact, at about 3-4%, they are rather bargain basement, especially when compared to what credit card charge. Also, those tax relief companies you see advertised on TV with the "former" IRS agents do not always perform as advertised. In fact, the cases where they get rid of all of the penalties and interest and taxes owed are the exception, NOT the rule.

That said, the bankruptcy should take care of the credit card debt, the forgiveness of which IS considered income by the IRS. However, if the credit card debt is discharged under a bankruptcy, it is NOT considered to be income; see link below:

https://www.irs.gov/uac/Home-Foreclo...t-Cancellation

Even if that were NOT the case, the OP is clearly insolvent, so submission of Form 982 by a competent tax professional should get the debt "income" excluded from the tax return.

Note that separate submissions must be done for the IRS and for the state in which the OP is living while filing the bankruptcy.

Also, the OP is in fact getting paid for his work: the place he stays rent-free and the food he gets in exchange for his work is considered "like kind" income. However, the combination of his personal exemption and his standard deduction may completely offset any taxes owed.

As for the original tax debt, if it is old enough, the taxes can also be forgiven by the bankruptcy. If not, an enrolled agent can submit the needed paperwork to have both the IRS and the state write off the tax debt as NOT collectible.

To Istreet, the original poster (OP), discuss these issues with the bankruptcy attorney, who should be using a competent tax professional to handle the tax aspects of your case. If your financial situation is accurately portrayed in your post, then, eventually, the tax debts and penalties and interest will be written off by the IRS and state, and the bankruptcy will do what it is intended to do: give you a fresh financial start in life.

The bankruptcy will also kill your credit rating, but that too will pass with time, and, after seven years, will completely fall OFF your credit history. While waiting for the seven years to pass, work hard to get the needed education and job skills so you can get on with your life as a productive citizen of either the U.S. or in whichever country you decide to settle.

Good Luck!

[joypulv]

THANKS - good information

[catonsville]

As always ATE, good and helpful information.

[AtlantaTaxExpert]

Glad to help!