Posted on February 10, 2012 by Don Pomodoro Posted in Issues regarding US persons abroad 19 Comments Key quote at 1:10 in the video! Share this:TwitterFacebookEmailLike this:Like Loading...
I am among 20%, filing return on downloading f1040 pdf file.
I am just cheap — DIY guy, then I end up to pay big for DIY.
Mr. Commissioner, Would that be a reasonable cause ?
I bet they’re afraid of simplifying things because it would X the jobs of a lot of people. 🙂
I believe the Canadian Income Tax plus all the administrative rules is just under 3000 pages. In the US the tax code is almost 72,000 pages.
“The hardest thing in the world to understand is the income tax.”
– Albert Einstein
The Commissioner is smart to seek professional help to prepare his tax returns. I have been doing Federal taxation as a career for 42 years and I would not even think of preparing my own returns. I rely on a competent CPA to it for me and my wife.
Sound advice. But not very realistic for expats living in the third world or in war zones where daily life is a real struggle.
Being a U. S. citizen is kind of like the Hotel California. “You can check out any time you like but you can never leave.”
If you are in a war zone hopefully you are fighting for “Truth, Jusice, and the American way!” in which case regular American military procedures give you a reasonable amount of time to prepare, or have your income tax returns prepared and timely filed.
Every person is unique and has his/her unique facts.
Figure out if you are a US person or not a US person. Ask someone who should know. Get some advice and rely on it. Then move on and do what you think is the right thing to do.
30 Year IRS Vet
When the system is so complex, that the guy in charge can’t do it himself, something is seriously wrong. And the fact that 30 year IRS vet would not do his own tells me we have a major problem! And people say don’t do your own taxes with a straight face, and think nothing about it. I guess it is what it is, the extra cost on top of the tax system, like a “tip” and we all just pay it and accept it meekly. Sad sad sad!
If I were the Chief Operating Officer of a corporation or bureaucracy who had to make a confession like this, and had done nothing or had been unable to effect anything to change the situation, I’d resign. Publicly and with a clear message to the morons in the US Congress who are at the root of all this.
As a retired and loyal Canadian federal public servant of many years, I reluctantly have to agree with Mr. Mospick that the problem isn’t with the IRS employees, it’s with the idiot legislators who have created this morass and the absurd legislative system to lets Bobo the Clown from Slippery Rock, Wherever propose “riders” and amendments that are utterly unrelated to the purposes of the main legislation and lets these bizarre distortions pass without having be read or analyzed for consistency with other laws and programs on the books already (never mind subjected to some sort of benefit-cost analysis of what administering the new law or regulation would entail).
By the way, I’ve done my own Canadian federal (and Ontario, combined!) tax returns since 1969, have never needed an accountant to figure out the forms or the user guide, and have never as far as I recall had to spend more than maybe an hour and a half doing the returns. Mind you, as a salaried employee and now pensioner with none of the thousands of ridiculous exemptions and deductions that the Bobos of Congress have come up with over the years, I end up paying a larger percentage of my pre-tax income in Federal and Provincial income taxes than do most Americans. But I don’t mind, because those taxes give me excellent health care and don’t support an obscene war machine and military-industrial complex that contributes no net benefit to anyone other than fat-cat contractors who make out like bandits while Joe Average American gets screwed over and pays bail-outs to bankers and investment brokers who should be lined up before a stone wall and shot.
But I digress and rant, sorry …
One issue is I wouldn’t touch the Foreign Tax Credit part of a US tax return with a ten foot pole without professional help.
Second is from what I have been reading recently there are quite a few scenarios where a Canadian citizen living in Canada with no US “Personhood” but who makes business trips to the US could have to file not just US federal but also state income tax returns for whichever state they visited. One example I saw was a Canadian truck driver who lives in Canada could not just have to file a US Federal income tax return but also file a US state income tax return in everyone single state they drive their truck into. Now in many cases there would be very little tax owed but an individual state if no return was filed could impose hefty non filing penalties. As US States become incresingly desperate for revenue this could become a big issue. Along these lines a professional hockey player who is a Canadian citizen playing for a Canadian NHL team is now filing close to 20 different tax returns in the US and has been for many years(of course with professional help).
Third the Canadian system since World War Two of dealing with provincial taxation is far more user friendly that in the US because all of the provinces except for Quebec have the administration of the tax system done by the Federal Government which in turn sets certain policies such as having a single return for Federal and provincial taxes, mandating provincial application of income tax to occur on residency etc
Canadians who own RRSP are for tax deferral just the same as Americans IRA.
Tax deferral election on f8801 should have been by default, but IRS wants to have such an election by a click — and fail to do so would require a lot work to ask for 9100 relief and show in good faith.
Do they know anyone who keeps RRSP wants to report income to US while defer in Canada ? I think the answer is none!
This whole process of election is worse than pulling off underwear to have a loud fart (our Chinese saying) — that is at least to prevent strong air pressure to have the underwear damaged.
I should correct. There may be someone who want to report RRSP income to IRS so it can change the base value to reduce future capital gain.
Majority, I believe, want to tax deferral. So by common sense, it should be default election.
ij — Chinese proverb: LOL
The meaning of the proverb is “unnecessary, needless step”.
I made it up on protecting underwear — you know — I am cheap –DIY guy -:)
That is the best rant I have heard in a while. It is a keeper, and it isn’t even a Tpartier making it. LOL
Dear Mr. Mopstick,
I am talking about expats who are small business owners, aid workers, missionaries, researchers, teachers, journalists etc. These are the types of people who typically work in the third world or conflict areas.
These are usually really good people, modern day pioneers. But no matter how much they are willing to comply it is just not realistic to expect them to do so. The paperwork is far too complicated and time consuming.
The only solution it seems is to ditch the US passport.
Re ur… “One issue is I wouldn’t touch the Foreign Tax Credit part of a US tax return with a ten foot pole without professional help.”
Understand that sentiment, but when I had a CPA “professional” with “offshore” expertise doing my first amended return, he got it wrong, and couldn’t explain it. His expertise cost be almost a thousand dollars. I did not return. I ended up having to redo it myself..
I think if your life is simple enough, and all you have is passive interest income, the form 1116 is doable with out those so called experts. I must admit that now, having done 8 of them, I just follow what I did in prior years. Since I have added absolutely no additional foreign financial complexity I think I am ok…
The only problem occurs is when your residence countries fiscal year is out of sync with the US, and if you get a refund on passive income tax paid and credit was already taken, or have to pay additional tax and you hadn’t got a credit for it. Then you have to amend your return to correct. Ugh! Sometimes (usually) the exercise ends up with no additional tax credit or tax expense due to how the form uses the ratios of US income to foreign income. You really have to think about it to understand what it is doing, and if accounting is not your strong suit, it can be a struggle!
I would say, that if anyone tried to read the form instructions, you would be totally a lost how to do it. You can do it in Turbo tax, but it does take some additional work in the forms section to be sure everything is linked properly to get it right. Not the simplest of things to do.
As IRS comissioner, he should be enough of an expert in the system to do a test run for himself. If you sell a dishwasher, you should be able to operate it.
schubert1975 – that was a GREAT rant. That and Don’s video link made my day today. 🙂