"The avoidance of taxes is the only intellectual pursuit that carries any reward." - John Maynard Keynes
I went to H&R Block to do my tax return yesterday. It took almost three hours of non-stop work by my representative, and sometimes multiple representatives, who had never seen a tax return quite like mine. Let's review:
- In the 2006, I lived in New Hampshire, Kentucky, Texas, Italy, and briefly, Ohio. Of those, I held jobs in NH, KY, TX, and IT. Yes, IT stands for Italy, which inconveniently for me is not in the United States, and is not recognized as a country by some members of the United States Government. We'll get to that later.
- I paid a state income tax in KY and TX but not NH.
- I paid a national income tax in all four places.
- I received over $1,000 from Asbury in January as the back-end payout of a grant to do mission work in Romania. Thoughtfully, they listed this money as self-employment wages so that I'd have to fill out an extra form, and pay extra taxes on it.
- I graduated from college in May. It's this fact that ended up saving me.
So we reworked everything again. We realized I was paying $67 to send a form so that Kentucky would send me a $4 check. We ditched that form. We realized that I was under-utilizing using my college tax credit, which would more than compensate for me not filing for foreign tax credit, so we ditched that form, too. In the end, my refund ended up being a little north of $100, which is less than thrilling, but at least I don't owe money.
But did you hear me back there? "Filing for Foreign Tax Credit?" "Under-utilizing my College Tax Credit?" I learned a lot about taxes yesterday, didn't I? I've never filled out my own tax forms, so it was all pretty new to me. All this fun new knowledge aside, though, I also learned something that was much less exciting:
I applied last January to for a form from the U.S. Government stating that I am, in fact, a U.S. citizen who pays taxes in the United States, and therefore am not liable to be taxed anywhere else - certainly not in Italy, while working at that haven of international unity, the Olympics. You'd think they'd jump all over this to make sure that the money I earned ended up where it belonged, in the hands of the U.S. Government. But they did not. They sat on the form for two and half months, then returned it with a note saying essentially - and I'm not making this up - "we don't really understand what you mean when you say 'Italy.' What country, exactly, are you going to? Please be more specific this time." So I send the form in again, once again writing "Italy" in the destination blank
By this time, I'd received my payment from the Olympic Committee, minus the $1100 they removed for taxes - over a third of what I'd made. They promised to wire me the rest just as soon as I turned in that letter from the government stating I'm a tax-paying citizen of the United States, but if I can't get that in by the deadline, I'll lose all the money.
A couple of weeks later, I call in to check on the form - I'm getting frustrated again, just thinking about it - and they pass me around for a bit before assuring me that my form will be sent out in a couple of weeks. I call a couple of weeks later, and they said I never sent in any form, and they have no record of anyone with my particular SSN ever calling them. So I send in another form. And then another. Nothing happens.
By the end of May, I'm desperate - the deadline for the form is the end of June and I still don't have this most basic of letters (apparently it's a pretty common letter and should only take a few weeks to receive). I call several times and sometimes I am assured that the form will be there in a week or so, and sometimes I'm told that I've never applied for such a form and they have no record of me. And so I hope that at least some of the time they're telling the truth, and wait for the form. But it never comes.
June passes and the form deadline slips past. Then, a week or so later, the letter comes. I hurriedly rush the form to Italy, e-mailing ahead to let them know it's coming. But it's too late. The money is gone.
A few days later, I get another letter. Not a copy of the original letter, but a response to one of the other applications I sent in. The next week, I get yet another letter. The IRS may not have been swift, but they were thorough - they returned letters for three out of the four applications I sent in within 7 days of each other.
I was pissed, but I got over it. But yesterday, I discovered while filling out my tax return that as a result of my being a poor student, I would've gotten to keep every cent of that money. I could've been $1100 richer last summer - I could've bought a car that actually worked, or bought a bunch of cool t-shirts, or put $1100 of food into my stomach and be $1100 fatter. That money was all mine to keep, but instead it's funding industrial expansion in Milan. Yesterday just made me mad all over again, only I also had to pay H&R Block $400, so I was doubly pissed.
I hate this time of year.