Do you think that living overseas makes you exempt from US taxes? Or do you have unpaid back taxes that you think will disappear when you skip across the ocean? If so, there’s bad news.

There are two countries on earth that require their overseas citizens to file taxes – the United States and Libya. This means that expats are still required to file and, that’s right, pay. Even if you’re paid in a foreign currency, you must pay. Even if you pay taxes in the foreign country, you must pay.

Remember that thing they say about the only two certainties in life – death and taxes? Well, you can’t escape death by expatriating and unfortunately the same goes for your taxes.

However, there is good news. Most US expats aren’t required to actually pay anything. For the year 2010, you must have made over $91,500 before it becomes taxable. That means that most of us living and working overseas are exempt. The IRS also has a system of tax credits for those who are taxed by both the US and the country in which they live, as well as credits for things like living expenses. But you’re still required to file, even if you make well under this amount.

When you live overseas, it’s easy to forget about the mad rush and mass confusion of “tax season.” Forgetting to file will rack up late penalties and you should expect to have an audit waiting for you when you return home. If you’re living overseas to avoid paying taxes, you might be facing much bigger problems.

The Qualified Intermediary Program – They’re Watching Your Bank Account

It used to be easy enough to open a foreign bank account and forget about it. But in 2001, all of this changed with the Qualified Intermediary Program. The QI allows foreign banks to share your financial information with the IRS. If an American citizen opens an account overseas, this is immediately suspect to the IRS, which views all offshore accounts or assets as potential tax traps. They have an agreement with thousands of foreign banks to share this information.

As any Paypal user knows, in 2010 the online banking service began sharing information with the IRS as part of the agency’s push to catch offshore tax cheats. With both Paypal and the QI, the IRS can find out what you make overseas, but it can’t take the money… right?

Unpaid Taxes And Passport Renewal

Of course, everybody wants to be a good citizen and comply with tax law. It’s doubtful that there are actually people out there who would move to a foreign country to escape back taxes! Right?

But just in case there’s a little income tax skeleton in your closet, you might be in for an ugly surprise the next time you renew your passport. There’s a plan on the table to allow the Embassy to refuse to renew your passport if you have unpaid taxes. A 2011 report by the Government Accountability Office suggests that the IRS would reap billions if it were to do this.

Right now, there is a small list of individuals whose passport renewal can be refused. This includes those who have warrants for their arrest, extradition requests or missed child support payments in excess of $2,500. The GAO report itself suggests that “tax delinquencies” could be easily added to the list.

Other Alternatives For Expats

Simply leaving the country doesn’t exempt you from filing or paying US taxes. There are some ways around paying US taxes but they’re pretty drastic. One is to renounce your American citizenship and become a citizen of somewhere else. But since it’s illegal to give up citizenship for unpaid taxes, and all of those who renounce US citizenship are viewed as potential tax cheats, it may be tough to come home for a visit. Without US citizenship, Uncle Sam can easily refuse your visa request.

There are also countries that offer passports to anyone, and some legal professionals online claiming that this is a valid option. But we’re getting into pretty shady territory here. Want to become a citizen of the Republic of Dominica? If you invest enough money there and take a trip to meet the president, you can become one! It’s the cheapest country to invest in and there’s no residence requirement. So the question becomes, “How badly do you want to avoid paying the IRS?”

Income taxes are a fact of life and, unfortunately, it can be costly to have them prepared and filed electronically by a tax service or to buy a computer program to assist you in preparing them yourself. The good news is there are services available to help many Americans prepare and file their income taxes for free. Whether you need help preparing your income taxes or prefer to calculate them yourself using an online tax program, there are options available at no cost to you.

Free Online Tax Preparation Software

In association with the Internal Revenue Service (IRS), there are several online tax service companies that offer free use of their online software as well as one free federal e-file. This service is generally available to individuals who earn an adjusted gross income of $58,000 or less and, in most cases, who file simple tax returns. Each company has its own eligibility requirements so it is important to look at each one before choosing a service. This year, TaxAct.com is offering free tax preparation and e-file of federal taxes to everyone no matter your age, income or type of federal tax form you file. You will, however, have to pay an additional fee to prepare and e-file your state tax form. For more information, visit the IRS website at IRS.gov and click on the Free File logo.

Free Tax Preparation and Filing Services

Free tax preparation and filing services in locations across the country through the Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly Program (TCE) are funded by grants from the IRS. VITA offers tax services to those with low to moderate yearly incomes of $49,000 or less. Trained volunteer tax counselors work with you to prepare your federal and state income taxes and, in many cases, file them electronically. Sites are easily accessible in local schools, colleges, shopping malls, community centers or libraries. The TCE Program offers tax preparation and filing services to people age 60 and older. To find a location near you for either VITA or TCE, go to IRS.gov and type the name of the program into the search.

The AARP Tax-Aide Program also offers free tax preparation and filing services to both senior citizens age 60 and older and low to moderate income individuals. Trained and certified volunteers assist in preparing federal and state tax returns as well as filing them electronically in most areas. There are over 7,000 locations across the country that offers this service. For more information and a location in your area, visit AARP.com. You do not need to be a member of AARP in order to use this free service.

Free Tax Preparation for Military Personnel

VITA, in association with The Armed Forces Tax Council (AFTC) assists military personnel and their families with free tax preparation and filing. This service is available at military installations around the world and the tax counselors are trained in the specific tax needs of military personnel and their families.

Preparing tax returns can be confusing for some people and can also be costly if you use a service. Using one of these free services not only makes it easy but also offers piece of mind that your taxes will be completed by a competent, certified tax counselor.

Business liability insurance is a must-have for all businesses. Even if you run a small operation (e.g., bed and breakfast, pet sitting service, house cleaning service, local newspaper), you need to have liability insurance for your business.

Liability insurance covers injuries and damages suffered by a third party. Do not expect to collect from any claim against it. Liability insurance is meant to pay for any obligations you might incur in case someone gets hurt while he or she is on your business property or when there are property damages or injuries caused by you or your employees.

Not a few people have commented that doing business in America is like working in a legal minefield where even minor issues or senseless disputes end up in lawsuits. You may have read about the millions of dollars ruled in favor of plaintiffs. If you don’t want to risk everything you have worked for, you need to protect yourself and your business from any possible legal threat.

Types of Liability Insurance

Ideally, you should have liability insurance in place before you launch your small business. Remember, anything can happen or go wrong anytime, anywhere. Consult with your insurance agent for the appropriate policy and coverage you need. There are basically four types of liability insurance:

1. General Liability Insurance

This is the most common and offers a broad coverage of protection against lawsuits arising from auto accidents involving your business vehicles, property damage, or injuries to anyone anywhere you’re doing business such as when someone trips on your tripod if you’re a photographer or if your waiter burns a guest with the flambé he’s carrying. Some liability coverage may include libel, slander, and infringement on intellectual property. (You’ll definitely need this if you run a freelance writing business from home.)

2. Professional Liability Insurance

This type of liability insurance is for those who are in the service industry. It covers errors made during the performance of a service such as the malpractice insurance for doctors, and errors and omissions insurance for financial advisors, lawyers, accountants. and other professionals.

3. Product Liability Insurance

This type of liability insurance is for business owners who are in the manufacturing industry. It provides protection against accident, injury, or death that may be blamed to any product you manufacture or develop. Its coverage is best appreciated by toy producers and car manufacturers.

4. Employers’ Liability Insurance

This liability insurance protects you from possible lawsuits your employees might file against your business because of injuries or sickness or for wrongful termination, sexual harassment, and discrimination.

Occurrence Policy vs. Claims-Made Policy

Go online to find the best rates for your business liability insurance. If you wish, you can use an aggregator service to receive multiple quotes from different insurance companies so you can easily compare and make an educated decision. As you go about shopping, you will notice that the rates for a claims-made policy are lower than the rates for an occurrence policy. Don’t merely go for the cheaper premium; learn more about the package you are getting instead.

The occurrence policy is more expensive than the claims-made policy because you remain protected long after your policy lapses. As long as the incident occurred while the policy was in force, any claim against you for that incident will have to be paid by the insurance company regardless of the time of filing. This means that if you get sued three years from now for an incident that happened today, your current insurance will answer for any financial settlement that may be ruled against you in the future even if you have switched to a new insurer by then.

The claims-made policy, on the other hand, provides protection only from incidents that occur during the term of the policy and for which claims must be made within the same time period or for the duration that you are insured with the same insurance company without lapse or gap of coverage.

You’ve been between jobs for months, struggling from unemployment check to unemployment check. Your credit cards are maxed out, and your payments are tiptoeing against the deadline every single time. But you have a rocking resume, your interview skills are insanely sharp, and you can tell that last employer is ready to hire you.

So how mad would you be to learn you’re about to be turned down for your job as an athletic trainer because two of your loan payments were 15 minutes late? We’re guessing furious. The scenario might seem far-fetched, but it’s exactly the type of thing that could happen to almost half of job applicants in the U.S. Read the rest of this entry »