US Income Tax

[Thaimo]

Along with it being the new year, it's also time for USA citizens to start thinking about income tax. Some of you may not know that the USA embassy has all the tax forms, if you need them. You can get them at the American Citizens Services area. You can also download them from the IRS web site and print them out.

If you need an accountant, I have heard, but never confirmed, that the embassy does have a list of accountants within Thailand who are fully qualified to handle USA taxes.

If you need to contact IRS, you can call them (or any other toll free number within the USA) for free. You need an internet telephone program, many of which are available online, also free. My favorite is Skype. You can download it at http://www.skype.com

I have used Skype to call various toll free numbers in the USA and there is neither a charge nor time limit for the call. Also, I almost always get a connection even better than using a telephone.

The toll free number for IRS is 800-829-1040. If you use a program such as Skype, do not put a 1 in front of the 800.

The IRS web site is http://www.irs.gov

[Beer Chang]

In prior years I've used websites such as Turbo Tax to just doublecheck my calculations but will probably file electronically this year.

[Thaimo]

In prior years I've used websites such as Turbo Tax to just doublecheck my calculations

I used to do that too, until as a result of Turbo Tax I ended up in trouble with IRS. I also ended up with an accountant enrolled to practice before IRS, who fortunately was able to save my butt. She said Turbo Tax is fine if you have nothing much more complicated than the short form, but half her business comes from people who have more complicated returns, did their tax returns honestly, relying upon Turbo Tax, and still were audited and nailed for big bucks. That was the last time I used Turbo Tax. According to the accountant, people with complicated returns who use Turbo Tax to try to save accounting fees are audits waiting to happen, and sooner or later it will, and IRS is not exactly sympathetic. I'll never use it again, even for the short form. It's not worth the hell I went through just to save the price of an accountant, especially since the accountant got me much more of a refund than Turbo Tax came up with.

[lvdkeyes]

I used Turbo Tax for many years and have never had a problem. Lucky, I guess!

[Thaimo]

I used Turbo Tax for many years and have never had a problem. Lucky, I guess!

Me too and I became complacent about it. According to Turbo Tax I had done everything correctly. Unfortunately, according to IRS I had not. I hope your luck holds out, but if you ever have to go through anything similar to what happened to me, I'll bet you won't use it again.

My accountant did say that if your tax return is fairly simple, then Turbo Tax is fine, but if you are doing a complex return, I would think twice about using it if I were you. Bear in mind that IRS has three years to decide whether to audit your current tax return. Seven years if they suspect fraud.

In one respect I was lucky. The IRS agent handling my case said it was obvious that I had made honest mistakes (or Turbo Tax had). He waived the interest and penalty fees, but that was the best he could do.

All I can tell you is both IRS and my accountant say that a large number of people get themselves into trouble every year because of relying on Turbo Tax and similar software. I would much rather pay the accounting fees, which are deductible by the way, and have my return prepared and submitted by a professional rather than relying upon software.

Both IRS and my accountant made it very clear that if you ever do get audited, do not try to represent yourself and don't even talk to IRS at all. Get an enrolled accountant and let the accountant handle it. You know the cliche about any attorney representing himself has a fool for a client. The same applies to audits. Even Clarence Darrow got himself a lawyer when he was sued.

I learned the hard way. I hope none of you will ever have to.

[Bob]

I'm back home by the end of April so there's no way I'm going to try to handle filing the return from here. The accountant will file an extension for me and I'll get him the paperwork by the first week of May. Since I've paid some estimates, hopefully there won't be anything/much due (if so, "mai bpen rai").

By the way, while this has been mentioned before, it bears repeating: Any US citizen with a bank account out of the country which at any time in 2009 held the equivalent of $10,000.00 or more must report it to the US Treasury by June 15, 2010. There's a form at the Treasury website to handle this reporting.

[Beer Chang]

The system is broken if filing a return is too complicated for the the average taxpayer. People filing short forms shouldn't have to go to places like H&R Block.

I spend far too much time on my taxes but if I used an accountant there's still be prep work and I'd still have to doublecheck everything the accountant did. It's also important that I completely understand the process for proper prospective tax planning.

But Turbo Tax and their competitors are good to doublecheck my return as well as experimenting with "what if" calculations.

[Wino]

The tax system is really too complicated. Perhaps the answer is doing away with the present system and pass a flat tax or maybe a value added tax to replace it. I should think that would simplify the system. But knowing today's politicians, it is not likely to happen. I try to understand the system, but find they are constantly changing the rules. I spend too much money on tax prep, but find it easier to have it done.

[lvdkeyes]

The idea of a flat tax has been tossed around for as long as I can remember. Maybe the reason it never gets off the ground is that would close many of the loopholes for the rich.

The money you pay for tax prep is tax deductible.

[Wino]

Some say a flat tax is unfair to the poor, as well.

[lvdkeyes]

Any tax for the legitimately poor is unfair. I qualify that because there are many poor who are poor because of initiative or desire to work. However, I don't know how the government would make that determination.

[Bob]

I'd support a flat tax for personal income taxes only if it's a graduated flat tax (where, maybe the first $15,000.00 of income is 0 tax, the next 10k is 5%, next 10k is 6%, etc.).

Out of the millions of pages of the US tax code (with amendments), 99% are there to benefit the wealthy. With a flat tax, at least everybody would be treated the same with respect to the income reported. However, there's also a problem with the reporting of income - with the little guy having all his income being reported for him and the wealthy dudes the opportunity to simply not report a fair amount of their incomes (because they have a lot of sources other than a check from an employer).

[Beer Chang]

Out of the millions of pages of the US tax code (with amendments), 99% are there to benefit the wealthy.

That's right, It's a myth that the USA tax system is progressive.

[lvdkeyes]

The tax code was written by wealthy politicians, so naturally it benefits the wealthy.

[Beer Chang]

The tax code was written by wealthy politicians, so naturally it benefits the wealthy.

Absolutely.

[Wino]

The tax code may have been written by wealthy politicians, but they are politicians elected by the people. Let's demonize the rich!

[Bob]

The tax code may have been written by wealthy politicians, but they are politicians elected by the people. Let's demonize the rich!

Your logic flies over my head. Yes, the politicians (almost all of them millionaires) are elected by the "little" people but the little people don't have the connections or the financial wherewithall to run for political office. Let's see....Bloomberg (Mayor of New York) spent over a $100,000,000.00 (yep, that's right!) to just get elected.

The US isn't that different from anywhere else - the rich get richer and the poor get poorer. And the studies show that the gap between the poor and the rich has been growing at an alarming rate since the early 1990's.

Yea, I'll demonize the rich and feel fully justified in doing so. They keep getting a bigger slice of the pie and, if the trend keeps going, we'll see another revolution some day (and it damn well might be justified).

[Beer Chang]

Yes, in democracies everyone gets a vote, but the system is such that the ruling elite, the invisible government comprised of rich guys who contribute to both parties, stay in power.

[lvdkeyes]

I don't know why, but the naivete of some people still astonishes me.

[Wino]

People seem to find it easy to blame someone for the woes of the country. The naivete of some people is astonishing! Why do people love to blame it on the rich, blame it on George Bush, blame it on the republicans, blame it on the media, blame it on Sarah Palin, etc., etc. The US income tax code started in 1913 and has been tweeked by many through the years. The elite will usually try to take advantage of the system, but that is human nature. The system still works. Compared to many other western countries, the US system isn't too bad. Don't demonize the rich, to many "you" are in the rich category.

[lvdkeyes]

Who has caused the current financial woes of the US? The rich republicans like Bush. By US standards I am most certainly not considered to be among the rich.

[Wino]

Yeh, Yeh Bush. Bush is to blame for everything. Perhaps by US standards you aren't rich but by Haitian standards and probably half the world, you are.

[lvdkeyes]

Bush is absolutely to blame for what happened during his presidency.

[Wino]

Some people like to see the world in black and white. Life doesn't quite work like that.

[lvdkeyes]

And others like to look through rose colored glasses.