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I'm a GC and I can tell you there's NO WAY to legally pay zero taxes unless you're either: 1) Making so little money that you fall below taxable thresholds 2) Having business losses that offset any income 3) Lying Even if he's writing off every possible business expense, self-employment taxes ALONE would be 15.3% of net income. There's basically no way around that unless he's incorporated in a specific way, but then he'd be paying corporate taxes.
Your neighbor is almost certainly either exaggerating or breaking the law. As someone who's worked in tax compliance for years, I can tell you that the IRS has gotten very sophisticated at catching unreported income, especially in cash-heavy industries like construction. Even if he's legitimately maximizing every business deduction available - vehicle expenses, tools, materials, home office, etc. - there are still minimum tax obligations he can't avoid. Self-employment tax alone is 15.3% on net earnings, and that applies regardless of how many deductions he takes. The lifestyle you're describing (new truck, vacations, pool) while claiming zero tax liability is exactly the kind of red flag that triggers IRS scrutiny. They have algorithms that compare reported income to spending patterns, and auditors are specifically trained to spot these discrepancies. If he's really bragging about this to neighbors, he's being incredibly reckless. The IRS takes tax evasion seriously, and the penalties can be devastating - not just back taxes, but interest, fines, and potentially criminal charges. I'd stay far away from whatever "system" he thinks he's using.
This is really helpful insight from someone with actual compliance experience! I'm starting to think my neighbor is either completely delusional about his tax situation or setting himself up for a major fall. The fact that he's openly bragging about it makes it even worse - like you said, that's just asking for trouble with the IRS. I definitely won't be taking any "advice" from him about taxes!
I'm in the exact same situation! Filed about 3 weeks ago and just found out mine's coming by check too. Based on what everyone's saying here, sounds like I should expect another 2-3 weeks minimum. Really wish the state websites were more transparent about timelines - it's so stressful not knowing when to expect it!
Totally feel you on the stress! I'm new here but dealing with the same thing. The waiting is the worst part when you're counting on that money. Have you tried calling your state's tax department? Sometimes they can give you a better estimate than the website, though the hold times are usually brutal š
Just wanted to chime in as someone who went through this last year! My state refund also switched from direct deposit to check unexpectedly. Turned out it was because I had moved and updated my address after filing but before processing completed - the system couldn't match my bank info to the new address so it defaulted to a paper check. Took about 5 weeks total from the date it showed "check mailed" status. The silver lining is that paper checks are actually more secure than you'd think - they use special security features and tracking. Hang in there everyone, it's frustrating but the money will come!
I had the exact same issue last year! I used H&R Block, uploaded Form 8332 for my daughter, and was told they'd mail the 8453. Six months later, my ex got a letter from the IRS saying the dependency exemption was denied because they never received the form. When I went back to H&R Block, they admitted they "couldn't find any record" of mailing it. I ended up having to file an amended return and mail everything myself with certified mail. H&R Block did cover the fees for the amendment since it was their mistake, but it was a huge hassle. Definitely don't just trust that they're handling it!
This is such a frustrating situation that unfortunately happens more often than it should. I work as a tax compliance specialist and see this exact issue regularly. Here's what you need to know: 1. **Immediate action needed**: Don't wait any longer. Contact H&R Block's office manager (not just any employee) and demand written confirmation that your Form 8453 with attached Form 8332 was mailed, including the date and IRS processing center address. 2. **If they can't provide proof**: Mail the forms yourself immediately with certified mail. You can still submit Form 8332 even after the original return was filed - just include a cover letter explaining the situation. 3. **Timeline matters**: The IRS typically processes these within 6-8 weeks once received. If your ex filed claiming the dependency exemption without the supporting form, his return might be in "pending" status or he could receive a notice requesting the documentation. 4. **Protect yourself**: Going forward, always request a copy of Form 8453 and tracking confirmation for any mailed documents. Many preparers are supposed to provide this automatically but don't always follow through. The good news is this can still be fixed, but time is critical. Don't let H&R Block's confusion delay your action any further.
This is really helpful advice, thank you! I'm definitely going to contact the office manager tomorrow morning. One quick question - when you say "include a cover letter explaining the situation" if I have to mail the forms myself, what exactly should that letter say? Should I mention that H&R Block was supposed to handle it originally, or just focus on getting the form processed? I don't want to say anything that might complicate things further with the IRS.
Has anyone here dealt with selling a Treaty of Amity company? I'm considering buying one from another American, and wondering about tax implications of the purchase/sale transaction.
I sold my Treaty of Amity business last year. It's treated as selling foreign stock for US tax purposes. You'll have capital gains based on your basis in the company vs sale price. The buyer doesn't inherit your tax reporting history - they start fresh with their own filing requirements. Make sure you do a final Form 5471 indicating the ownership change. The trickier part was the Thai side - you need to work with the US Commercial Service at the Embassy to transfer the Amity certification, which has its own fee structure and documentation requirements.
This is such a helpful thread! I'm in a similar situation - American looking to start a business in Thailand under the Treaty of Amity. Reading through all these responses, it sounds like the key takeaways are: 1) It's a Thai company with special ownership privileges, not a US company 2) Form 5471 is definitely required for CFC reporting 3) FBAR and Form 8938 likely needed for bank accounts 4) GILTI and Subpart F rules can apply 5) FEIE is still possible but gets complicated with company ownership One question I haven't seen addressed - does the type of business matter for these reporting requirements? I'm looking at starting a consulting business vs. my friend who wants to do e-commerce. Would both have the same IRS filing obligations, or do certain business types trigger additional requirements under the Treaty of Amity structure? Also, has anyone worked with a US tax professional who specializes in Treaty of Amity businesses? It seems like regular expat tax preparers might not be familiar with this specific structure.
Great summary of the key points! Regarding business types, the IRS reporting requirements are generally the same regardless of whether you're doing consulting, e-commerce, or other activities - if you own a foreign corporation, you'll need Form 5471, and the FBAR/8938 requirements depend on account values, not business type. However, the TYPE of income your business generates can make a big difference for tax purposes. Consulting income is typically considered active business income, while certain e-commerce models (especially dropshipping or digital products) might be classified as passive income under Subpart F rules, potentially making it immediately taxable in the US. For specialized help, I'd recommend looking for CPAs or EAs who specifically mention "international tax" and "controlled foreign corporations" on their websites. The American Chamber of Commerce in Thailand sometimes has referrals for US tax professionals familiar with Treaty of Amity structures. You want someone who understands both the US CFC rules AND the specific nuances of how the Treaty of Amity interacts with standard international tax provisions.
James Maki
dont stress about it, they usually come right b4 tax season starts
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Oliver Fischer
Just wanted to add that if your brother moved since last year, he should definitely update his address with the IRS before they mail out the new PIN. They don't forward these letters and if it goes to the old address, he'll have to jump through hoops to get a replacement. The address update can be done online or by calling them directly.
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Ahooker-Equator
ā¢Oh wow, that's a really good point about the address update! I didn't even think about that. My brother actually did move a few months ago so I'll definitely tell him to update his address with the IRS right away. Thanks for the heads up!
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