Uncle Sam is re-writing my story, and I do not like it.
Expats have many reasons for living outside the boundaries of the 50 states. Although some may want to escape taxation, most are ordinary people whose lives took unexpected turns.
In my case that unexpected turn was love. I followed it to Canada, fully anticipating the emigration was temporary. A quarter of a century is a very long “temporary”. Up to that point in the story Uncle Sam and I still agree on the story of who I am: an American who just happens to live outside the country.
I am also a Canadian, both because of a citizenship ceremony and because two and a half decades have made my adopted country dear to me. I figure anyone who lives in a country that long bears responsibilities to it. One of those is voting, which only citizens can do. I also regularly report to Canada Revenue Agency and pay my share of taxes. Paying taxes is another way of showing gratitude for the benefits a country of residence bestows on us.
Here’s where Uncle Sam’s storytelling kicks in. The U.S. is the only industrialized nation that requires non-resident citizens to keep filing, year after year, even if they owe no taxes in America. Until a few years ago, I was able to do that without too much trouble.
Then Uncle Sam began eying expats as a potential source of revenue to offset what politicians were stealing from the public treasury. Those busy vote seekers were slashing taxes right and left, ensuring their rich pals would not be bothered by such nuisances as contributing a fair share of their wealth for the common good.
With dollars in ever shorter supply on the home front, Uncle Sam looked around for revenue. That’s when he began re-writing my story, along with the stories of every other expat. Our once kindly uncle began viewing us as criminals, threatening us with massive penalties if we did not comply with an increasingly convoluted and punishing tax code for expats.
Uncle was not satisfied with our reporting all our income. He wanted proof we were not hiding anything so required new forms with duplicate information, including one we have to send annually to the Financial Crimes Enforcement Network. (How’s that for making sure we don’t miss the implication?) He also threatened our banks that if they did not report every penny we had in our accounts, the U.S. would no longer do business with them. And if we overlooked one of the dizzying number of forms or made a mistake in filling it out, we were threatened with penalties as high as $10,000 per infraction.
We expats got the sense Uncle Sam had a new story of who we are. In this one we were criminals. If we could prove our innocence, we were given a one-year reprieve. Next year we could prove it again or pay the price.
That story does not fit my sense of self. I do not recognize myself as the criminal Uncle implies I am. I also do not like the anxiety that descends on me every December, as the stressful season rolls around again.
So I am giving some serious thought to the impact of this story Uncle Sam is telling about me as an expat. Stress is a killer. The science on that is clear. Uncle Sam’s expat story stresses me out for 3-4 months every year. During this year’s stress-filled exercise in complying with Uncle’s requirements, I could feel my blood pressure rising to unhealthy levels.
I could, of course, hire an accountant to do my U.S. taxes, but the reasonably priced one who used to keep me compliant threw in the towel. She said the increasingly convoluted requirements meant annual, expensive training that was not worthwhile for her firm. I tried another accountant. She discovered the first one had overlooked some forms. To make me fully compliant she charged me $2436, after knocking $500 off for my being a new customer. She would have cheerfully done so year after year for $1200 to $1500 per year.
Given my small income, paying that much just to show I don’t owe any taxes in the U.S. feels like landing on some strange planet where I do not understand the culture or language. So for the last three years I have done my own U.S. taxes. Last year three different IRS agents gave me three different answers to one question I asked. I did not blame them for the discrepancies, even though I’m the one who would bear the cost of a wrong answer. They were all friendly and helpful, but they are dealing with a mind-numbingly complex tax code.
So I just went ahead and filled out form after form after form, said a small prayer and sent them in. I did that again this year. (Online filing is not possible for expats. None of the tax software companies provide the forms we need to be compliant.)
For the first time ever, I am considering relinquishing my citizenship. That pains me more than I can say. But given what we know about the physical impact of stress, I have to ask myself if hanging onto my U.S. passport is a fair trade for the possibility the accompanying stress will shorten my life.
With taxes headed by snail mail to the Texas address where Uncle Sam gathers expat returns, I’m beginning to regain my equanimity. But in only a few months the stress will start building again. I don’t honestly think I can handle that until the day I die and don’t want to shorten the years I have left. So I am thinking long and hard…and with a heavy heart.