The Expat Life: Taxin’ Season

The only things guaranteed in life are death and taxes.

Unfortunately for American expats, taxes is double the trouble on a yearly basis. Luckily, death is still a singular occurrence no matter where you live. I think nobody wants to experience death more than once but I digress.

But yes, American expats experience the pleasure of taxes of back home and the country of residence. The United States is one of two countries (the other being world power Eritrea) that “double tax” it’s companies and citizens. A great example of that good ole “American Exceptionalism”.

However, the recent tax bill passed by congress removed the double taxation on companies but not on citizens and green-card holders who live abroad.

Even Meghan Markle will be in the cross-hairs of the IRS every year she files taxes while living in the United Kingdom as a member of the British Royal Family.

And that is not just filing tax returns on income. Any asset you have including property, bank accounts and private or public pensions have to be reported to the IRS. This is the main area where it gets tricky as you will be wise to account for anything and everything in your name.

And that includes any assets shared between you and a non-American spouse. That is where it is most complex and Megan will have to account for that due to her future marriage to Prince Harry.

My marriage is nowhere near as high profile but I am in the same situation due to my marriage to my Swedish wife Sanna.

Only a few days ago I sent this year’s tax filing in the mail from here in Sydney to the designated location for tax filers abroad which is in Austin Texas. Just in shipping alone I had to spend 41 Australian Dollars (roughly 32 American Dollars) to meet my legal requirement of filing taxes for the year while also proving that I am not making enough money to owe the US Government and also disclosing every single account or asset I have outside of America to ensure Uncle Sam that I am not hiding any money Panama Papers-style.

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This was the thickness before I included records of my British bank accounts which was roughly another 20 pages.

This year’s tax filing was over 100 pages and weighed almost 1 Kilo (2 lbs) and took hours of time to make sure I did it correctly.

Meanwhile, Sanna doesn’t have to worry about the Swedish taxes and can solely focus on the Aussie tax season since her home country and it’s tax law has a lot more sense than mine.

The question though is why. I have asked my self a few times while I make sure I have a copy of every single payslip from the previous year since the idea of a W-2 is foreign to foreign countries. Since most countries do the calculating for you, all you need to do is make sure the government got the math correct. It’s called return-free filing but I will get to that a little later.

I have learned the expat filing process the hard way through trial and error, and a lot research online. Some people go to accountants, but I stubbornly refuse to due to the principle of not paying someone to file my taxes to prove that I don’t make enough money to pay taxes back home. I can prove that fact by myself. Maybe when I become a millionaire/billionaire (or even a hundred thousandnaire), I will consider paying a third party to either make sure I pay my fair share to the US Treasury or make sure I don’t pay a dime (once again, Panama Papers-style).

Back to the why. Why does the US Government including Congress (creator of the current laws) and the Treasury (enforcer of the laws) have such a desire to waste everybody’s time including their own? Based on the news of the IRS website crashing on tax day, maybe information technology should be a higher priority than a few million expats, many of whom mostly are not making outrageous incomes and/or trying to hide vast amounts of valuable assets.

This is not a good look.

Again, why though?

To not lose out on much needed tax income?

To ensure Americans are not hiding hoards of money off-shore at a Swiss, Cayman or Bahamian bank account?

To keep all Americans on the grid?

Or all of the above?

I really haven’t found a complete answer. I am curious of the past and current reasons for the US being the only “developed” nation to double tax its citizens. America is considered a “developed” or “advanced” nation but examples like our antiquated tax policy reminds us that we are not as developed as we would think.

I do have a solution of my own. How about expats be valued like American corporations and eliminate double taxation? If that is not a motivation, then how about join the rest of the world in regards to common sense income tax law.

If you are concerned about lost tax revenue and you rely on 10 million American expats to fill the gap, then I suggest you actually take a closer look at the current tax code and maybe raise taxes instead of the current slashing of corporate and high income tax. Just an idea.

In regards to the disclosure of any off shore financial holdings, the sheer consumption of time and energy needed for this exercise actually incentives secrecy more than anything else. Instead, the IRS should focus on countries and/or companies (including banks specifically like HSBC) they believe, and have been proven, to have assisted Americans both in the US and abroad who actually practiced different forms of tax evasion and/or fraud.

Now back to the whole process of filing taxes in general. I will safely assume an easy majority of Americans both home and away can agree that the government can and should do the taxes for us.

I only foresee a strange fringe section of people who think letting the government do their taxes is surrendering control to the big bad government. Or they make money off of the third party filing companies like TurboTax. Or they really really like filling out forms.

However, I think most people would rather go with the idea of return-free filing. I think Adam does a great job at blowing a hole in the current status quo and lay out the reasons for considering such a filling system.

Yes, it can be that easy. I live in Sydney and the experience of doing taxes here and doing taxes for home are night and day. It might sound like a hyperbole, but filing taxes for the US while abroad can be months in the making. Especially if you forget to constantly make copies of important documents and you realize later that you need them and thus forced to frantically backtrack and locate your vital missing paperwork.

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Meanwhile, filing my taxes (or lodging your taxes as it’s referred to here in Australia) took me no more than 30 minutes which most of that time was me learning the Australian Tax Office website and process of lodging my taxes via the MyGov website. Also, the whole thing was done online with the option to print stuff off for your own records.

I have written different people of congress about the elimination of double taxing and/or the need to consider improving the process of filing taxes in general but my words of persuasion has gone unheard.

Even if you disagree with me on how we can make the procedure of filing taxes better, I surely believe you agree with the fact that we need to modernize our tax system.

Changed Perspective: From the Expat Looking In

Here is a letter I wrote to the editor of my hometown newspaper, The Gainesville Sun. 

I wrote this letter as an expat observing the infancy of the Trump Administration and overall explaining my feelings on America as it is in the global community.

This is my letter below (here is the link of the letter on the newspaper site):

I have had the amazing opportunity to live abroad in multiple countries including my current residence in Australia. If you talk to anybody who has lived outside of the US for a decent period of time, you will notice that person’s American identity has forever been warped and changed. Your viewpoint of the perceived “greatness” of America changes and a brutally honest perspective is formed.

Then again, America’s greatness has always been limited. Ask any minority group.

President Trump is a caricature of the societal norm of the ruthless and heartless Individualistic Capitalism parading as “American Exceptionalism”. If you really look at the history of the US, there are stories of soaring greatness in both achievements and atrocities. However, I am still a proud American and after seeing some of the World, I know America can be truly exceptional if we are willing to change our thinking as a nation.

Michael L. Byrd, Gainesville (Sydney)

New Amendments for a Better America

The US Constitution.

One of the core fundamentals of American Society and a 200 plus year-old legal binding contract of the government and the people it serves.

Of course that contract was not perfect from the beginning and had to be modified and amended to improve the lives of Americans while also guaranteeing their freedoms.

Amended to define our freedoms (1st Amendment)

Amended to abolish slavery (13th Amendment)

Amended to prevent a dictatorship (22nd Amendment)

Amended to bring slight clarification to a still confused election system (12th Amendment)

Yes, the last amendment was ratified only 26 years ago (after a 200 year wait) but last amendment of any importance was in 1971 with the  26th Amendment banning the denial of voting rights of anybody over the age of 18.

But in a ever more complex and unequal world, the constitution is showing its age and inflexibility.

Amendments to the US constitution are rare and tough to come by. Remember, the constitution is almost 230 years old there has only been 27 amendments or “improvements” to it. That includes an amendment (21st) to repeal a previous amendment (18th).

Us Americans take pride in rarely changing the constitution as we see this as a sign of stability compared to other nations like France who has had 15 different constitutions since the French Revolution.

I can agree that at this point any idea of a brand new American constitution is a hyperbole and will never happen. Moreover, it will place the whole county (and the world for that matter) into peril. In this case, it’s better to go with the “status quo” in a way.

Now comes to the debate between how the constitution should be interpreted and amended. That’s the main debate in constitutional law classes on law school campuses and courthouses across America. On one side, people who think the constitution is a “living document” and should be able to adapt to modern situations through changing interpretations of the original laws. In contrast, there are people who believe in the strict following of the original meaning of the constitution and the only way to change the constitution through the very tedious process of amendments.

Sidenote: There are a lot resources on the matter for deeper research (Originalism vs Living Constitution).

I was not a law student so my stance on the matter is basically founded on my civics class in high school, observations of political and legal activity and the internet.

I am more liberal than conservative. I think the law should be flexible to adapt to an ever changing world. However, I can be a stickler for following established procedure.

Because of that duality, I have a foot in both camps of legal thinking right now and shall not be moved. I want the courts to understand that the thinking of the founding fathers was immense in foresight however even they couldn’t see too deep into the future of the American Republic. Remember, a decent number of the founding fathers were slave owners while another group was willing to tolerate the practice at the time to ensure all 13 Colonies would come together in independence.

Even though the amendment process is daunting, once the amendment is ratified it is very tough to repeal. It only happened once because Americans love their liquor and they realized that after banning it.

I want to place my 2 cents on the need to amend the constitution of these United States of America.

Below are my suggestions for the next 4 or so amendments needed for further progressing our nation into a more complex and globalized world:

28th Amendment – Designation of term limits on persons in Congress

29th Amendment – Further formalization of the rights of the residents of Washington DC

30th Amendment – Modernization of the electoral college

31st Amendment – Formalization of Campaign Finance for federal elections

The thirteenth, fourteenth and fifteenth amendments were called the Reconstruction or War Amendments because they passed during the five years following the Civil War.

Well, I will call these amendments the Progressive Amendments because they will represent the growth, evolution and progression of the US Democratic Republic.

I will write about each of my new amendments in the near future and explain why these additions to the US constitution will promote political diversity but also limit the influence of money in politics.

 

 

 

Upcoming: My Views

I have just returned from a road trip through Australia. Since I am back, I know this area needs some attention.

I just want you all to stay tuned to this space for new articles. 2018 should be interesting: The US mid-term election, a national election in Sweden, President Trump and of course, top news and topics of the day.

Stay tuned.