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Living the Life

A Taxing Day

“The only things certain in life are death and taxes” and April 15th is the due date for the latter in the United States. Both federal and state tax returns are due at 12 pm midnight. If you’re getting a refund, you may have filed early (though certain U.S. states will likely not process refunds any time soon), or you may be procrastinating like millions of others. Regardless, it’s a day spent dusting off the calculator (or the accountant), collecting financial records and receipts and preparing the tax return. If you’re an expat, it may be several days as you may have to do more than one return for more than one country or state.

Al Capone

Al Capone was sentenced to 11 years for tax evasion.

To File or Not to File
There is no question. If you have earnings in the United States greater than the personal exemption ($3,650 for 2009), you must file a return. Don’t think that just because you’re not a permanent resident that you’re immune. The Internal Revenue Service imposes serious penalties if you file late or not at all and they are more than willing to prosecute and bring criminal charges. After all that’s how Al Capone ended up at Alcatraz.

Assets and Earnings
As this is income tax, if you have income from another country then you must file a return there as well. This usually happens if you move mid-way during the year or continue to carry assets in your country of origin. You may choose to liquidate your assets prior to the move and while this may save you the trouble of filing more than one tax return, it may not be financially to your advantage. You should discuss this with a financial expert especially if you wish to keep property or retirement savings plans in your country of origin.

e-Filing
A boon to expats as most countries allow you to file your tax returns electronically. Or at the very least, you can download the required forms from the government. In the U.S., online web sites like TurboTax will charge a fee for creating an account and helping you do your returns but their step-by-step interface and their online community bank of questions and answers are well worth the cost. TurboTax will also keeps your return records from year to year for reference, interface with most financial institution and large organizations for financial information and can file multi-state taxes.

Having tax season in the middle of Spring and the growing season is rather ironic. Procrastinators certainly don’t need warm sunny days as excuses to put off doing their taxes. However, the IRS is punctilious in its accounting and has a long arm and a long memory — they will find you. Better to have one or two taxing days a year than many taxing years.

Death and Taxes is an excellent infographic of how collected taxes are used in the U.S. See where your $ are going.

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