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Do I need to pay taxes if I made money through an Israeli company (im in USA)

Discussion in 'Business & Tax Advice' started by rus1239, Mar 18, 2012.

  1. rus1239

    rus1239 Newbie

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    I made money through xtend (matomy media). It is basically banner ads.
    They are based out of Israel and they pay via wire. I never provided anything like an SSN or EIN.
    Presumably, hey won't be sending me any tax forms or reporting my income to the IRS.
    My question is, because I made the money through a company based outside the US, do I still have to pay taxes on what I earn?

    Also, if I do have to pay taxes on what I earn but Xtend won't report it to the IRS, can I get away with not paying my taxes? Or would my bank report everything that was wired to my account?
    I estimate I will probably earn around $50K this year.

    ***I do plan on paying my taxes for anything I earn in 2012. I do not plan on taking a gamble and not file my taxes simply hoping the IRS won't audit me. I am just wondering what are the chances the IRS will know I earned this or not.***
     
    Last edited: Mar 18, 2012
  2. kvmcable

    kvmcable Supreme Member

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    Pay the tax. You can be audited for any reason. Normal protocol during an audit is retrieving all banking records. If an honest mistake or semi-honest (didn't understand tax code, filed wrong form, etc) then you deal with the Civil Division of the IRS (civil is literal in this statement) and they calculate penalty and interest and will set you up on a repayment plan. No biggie. I've been on one for 7 years.

    That being said, if they find you purposely lied or failed to disclose such a large sum the auditor can call in the CID of the IRS. This is the Criminal Investigative Division and they don't screw around. They don't talk about settlements, and not interested in money at all really. They have one job and that is to investigate and see if you intentionally broke any laws. Now these sobs don't answer to any authority in the USA. They are the law and don't need Court orders or Judge approvals to get information. They can solicit any business, Bank, payment institution, etc. They get promotions tossing people in jail. They don't give a rat's ass about your excuses or ignorance. They want a promotion and will do all they can to get you in jail.

    Now if you get a visit from these guys (I had 6 of them walk into my store Sept 2004) you don't say shit. They will be nice and say they're investigating a "possible criminal" investigation. Nothing "possible" about it. Now comes the bad news. An Attorney to battle these jokers is about $450 an hour (no kidding). They are a rare bread and not your typical paper pushers. Mine was the Attorney that tossed Mike Tyson in the slammer years ago. These Attorneys are the cream of the crop. They call you on the phone for 10 mins and send you a $100 bill.

    So do as you wish but now you know what the risk is. If they find you purposely hid income then expect to answer to the CID. If you're damn lucky and talk real nice they might just keep it on the civil side but no guarantee that will happen. If someone is looking for a promotion and have you by the balls they might look for the bigger paycheck and you're the person they'll step on to get it.

    Screw around with bill collectors, merchants, even customers but don't screw with the IRS. They are the Federal REserve's Collection service and they answer to nobody. This was a $120,000 lesson for me.
     
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  3. Moviejim

    Moviejim Registered Member

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    As a USA resident, you are responsible to report your worldwide income from any source.

    As an Israel company, they are not required to report anything to the US IRS. It is up to you. Can you get away with sliding by on it? Maybe, maybe not. It is possible. It's up to you to take the risk or not. You bank does not report your deposits to the IRS necessarily, unless the IRS specifically requests this.

    Bottom line is that you are a US business and required to keep books on your business tracking all income and expenses from all sources. The deposits to you bank account create a permanent record that could be scrutinized for years to come.

    Jim 30+ yr CPA
     
  4. rus1239

    rus1239 Newbie

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    Both of you make great points. Even if I don't file and get away with it this year, I am pretty sure at some point I will get an audit, even if it is years down the road, and if they check my bank records I will be screwed. Taxes are such a bitch! On 50K income you pay like 12K in tax . That is like an entire years worth of rent. O well I guess I have no other choice but to pay the taxes.
     
  5. blackberry

    blackberry Power Member

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    And remember to keep a minimum of 7 years of records for tax purposes.


     
  6. hawgbert

    hawgbert Jr. VIP Jr. VIP Premium Member

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    Talk with an accountant about reducing your tax liability in this and future years, but my advice would be to pay on the money made overseas. Sleeping well at night can't be underestimated, given kvmcable's experiences!