Tuesday, March 27, 2012

My March Madness

On my other blog, Steveso Thinks I posted something about filing my US income taxes and how stressful it was. After posting that I realized that I might be of interest to readers of Retired in Malaysia, so forgive me for reposting it here.

I haven't posted here in a while because of a stressful situation. My own March Madness. No, I'm not talking about basketball. I'm talking about filing my income taxes and other financial filing obligations to the ever congenial IRS. Filing income taxes for most Americans is a somewhat stressful situation, but when you live overseas, as I do, it is a royal pain in the ass.

For most people who live in the United States filing your income taxes is usually quite simple. You can purchase software at Best Buy or other computer store and file your taxes with it. Or you can purchase and download the service from TurboTax or H & R Block and file your taxes online. You can also search online for a free service to file your taxes online. If you are not comfortable with filing your taxes online you can prepare them yourself using the old fashion paper method or you can pay someone to do it for you.  There are many varied options available, as long as you file from the US.

When you are an American citizen living abroad, the ever so helpful income tax preparation companies really screw you over. And to add to this insult our own government does everything possible to make your life miserable. I have a very simple income tax return, as I do not work and don't have all kinds of financial instruments and investments. What should take about a hour or two, for Americans living in the US, ended up taking me two days. The first thing I did was to search the IRS website for any new information regarding e-filing for taxpayers living abroad. I found 3 sites that offered free e-filing. I checked these out but they had a number of ridiculous restrictions. For some odd reason only people below a certain age could free file from abroad. H & R Block has the minimum age as 52, which makes absolutely no sense. There were 3 other sites which offered the possibility of filing with a foreign address and had no age restrictions. TurboTax also offered a free file for expats, who could use a US mailing address.

    I decided to try one of these and finished entering all of my information. At the end I was notified that I did not meet the minimal adjusted gross income and so I needed to pay a small amount ($7.50). No problem I figured. Think again. They would not accept a foreign credit card. I tried TurboTax and 2 others with the same annoying results. Don't these idiots think that if a person lives abroad that they may also use a credit card issued abroad! It's strange that I can buy clothes, electronics, vitamins and just about anything else under the sun, online, from the US and pay with a foreign credit card. I did try the free TurboTax version which turned out to be not so free, when I got to the very end of the procedure. I finally did find a free site with no ridiculous restrictions and managed to file my Federal returns.

Next I had to do my state taxes. All of the sites I tried also were able to file my state taxes. The problem here was that after filling out all of the forms I was notified that my state, Massachusetts, did not accept e-filing from abroad. I had to download the forms and file the paper returns by regular mail. It was interesting to note that when I attempted to do my state taxes on-line, each of the different sites came up with completely different amounts of tax I owed. So much for accuracy.

Now that I had fulfilled my duties to the IRS and the state of Massachusetts, I then turned my attention to the US Department of the Treasury. Since I live abroad the government assumes that I am a terrorist, a terrorist group financial supporter or a money launderer and I am using my vast wealth from my social security and meager pension for illegal activities. Because of this I have to file a form (the FBAR) with the Treasury Department every year detailing all of the foreign bank accounts I own or have my signature on and telling how much money was held in these accounts at the highest point. Fortunately I do not have over $200,000 in foreign bank accounts, because if I did I would have to fill out yet another form.

It's amazing that since I live abroad the government wants to make sure that not one penny, that they could possibly get their hands on could be hidden. Yet this same government refuses to give me any of my money that I have paid into Medicare, simply because I live abroad!

Well now that this bullshit is out of the way for another year I can relax and spend more time on my blogs, which I have been neglecting lately. Speaking of that, this post is really a gripe, complaint or a kick and I should have put it on my new website, Kicks and Kudos , but it is way too long. While I was dealing with the stress of my taxes, I wasn't dealing with the stress of promoting Kicks and Kudos and trying to get people to visit and post. I invite all of my readers to visit my new site and make a comment. Thanks,


  1. Understand your frustrations....as an Aussie we have a similar system. However, there are options but these need to be studied VERY carefully. I'm quite used to wading through hundreds of pages of complex documentation, and this is what it needs to get on top of all of this and execute the solution I did.

    Basically because of means testing in Oz I could never receive pensions, health care etc., so I thought why hang in there? Basically I legally "exited" and moved all my money and assests offshore into accounts that are out of reach of governments. I have crossed all the "t"s and dotted the "i"s and am no longer liable for taxation in Oz. It can be done, but requires a lot of work and effort, which many people are not willing to do.

  2. I salute you. Good job. Unfortunately as a US citizen the octopus like arms of the IRS are always near your bank account. The only way not to pay taxes is to relinquish citizenship.

  3. I can understand the frustration of filing tax returns especially living abroad as a US citizen. One thing I am very careful about is efiling. One never knows if the info you input and send online can be hacked and now I have a bigger problem on my hands. So here in US and print the IRS forms and attach the check and send by mail (with delivery confirmation).
    Watertown I wanted to ask another Q related to the total cost of living in Penang. If we (me and my wife) were to rent 2-3 bedroom apt/condo in a reasonable area and with regular ever present utility bills etc say 1-2 time to eat out in a week with beer etc ..any idea what the cost of living in Penang be on a monthly basis? Just trying to figure out what I need to have coming in on a monthly basis. I know we will need medical attention (especially my wife) but I will leave that aside for the time being.

    Warm Regards


    1. Hi Vin.
      I'll try to answer you questions as best as I can. Most people here eat out usually every day. If you like and eat local food it is extremely cheap. A meal for 2 would be about $5 and with 2 liters of beer, $13. Of course if you went to a western style restaurant it would be more. We go out most nights, because it is cheaper than having to cook for ourselves. We go out mabe 1 or 2 times for Italian food or American style Tex_Mex or Cajun.But that still is quite cheap. Regarding utilities electricity would be your biggest expense, depending how much you you use A/C or your dryer. We have a lot of electrical gadgets and pay about $60 per month, Water is about $1.60 every 2 months. We use bottled propane here and I get it every 6 months (we don't cook much and have an electric oven). I think I paid about $12 the last time. I would think that with a very nice 2/3 bedroom condo in a good, safe area and monthly expenses you would spend between $1500 and $2000 per month to live quite comfortably. If you want to spend more you could live like a king and queen.

  4. Thank you watertown..that is helpful. I will begin to work on some #s to include some $$ for medical expenses, prescription etc . It is a good start and help me to see how much I need to live reasonable well in retirement.

    Warm Regards