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.

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