As a U.S. citizen, living abroad and not filing US taxes, does earning odd money from the US expose me to additional risk?

Question

I am a U.S. citizen living in Europe. I know I am required to file U.S. income taxes every year, but I don't, and I don't intend to. I do maintain a minimal bank account in the U.S. to pay for occasional purchase on Amazon, etc, but I have not earned any money in the U.S., so my tax liability would likely be zero there anyway, even if I were to file.

I have recently been presented an opportunity to earn some odd money (writing some guest blog posts) for a couple of US companies. Annual income from this is likely to max out around USD $2,000, and may be much less (perhaps as little as $100 or $200).

The fact that I'm a U.S. citizen (and not willing to lie to the companies offering me these contracts) means that these companies will want to file a W9 with my SSN. My intention would be to declare the income on my European taxes, so I would still be taxed, but I know this wouldn't satisfy the IRS, if they were to notice.

Does this open me up to any additional risk that I'm not already exposed to, by not filing taxes in the US? For instance, will this be more likely to earn attention of the IRS?

Answer 1

but I have not earned any money in the U.S., so my tax liability would likely be zero there anyway, even if I were to file.

That's not a direct conclusion. The US taxes its citizens on worldwide income. Granted you have foreign earned income exclusion and foreign tax credits, but they may not offset the entirety of your income/tax liability in the US. In addition, the US taxes the foreign investments aggressively, so if you're invested in various EU-based mutual funds, trusts or retirement schemes (which may translate into foreign trusts and/or PFICs) - you may end up with some significant tax liability in the US (absent helpful treaty provisions). In addition, you're required to report your foreign bank accounts, which you undoubtedly have, to both the FinCEN and the IRS (with slightly different requirements and thresholds).

I suggest going through the IRS resources on the topic.

Does this open me up to any additional risk that I'm not already exposed to, by not filing taxes in the US? For instance, will this be more likely to earn attention of the IRS?

Technically, no. You're already in violation and it is clearly willful. It will add to the evidence against you about your intentional and willful behavior, which will make later resolution of the issue more difficult, but how much more difficult is a question for a US tax attorney.

The IRS may garnish your earnings and force your employers to send your earnings to them. The IRS may also revoke your US passport, or have the US DoS not renew it. But if you're not aware of any such process happening against you already it would probably take a while to materialize. The IRS doesn't actually see the W9s, but they would most definitely see the 1099 at the end of the year. So that's when they'll become aware of your existence, if they're not yet.