Taxation as storytelling

Filing My Taxes - 1040 Form; photo b PT Money (, via Flickr Creative Commons

Filing My Taxes – 1040 Form; photo b PT Money (, via Flickr Creative Commons

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.

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10 comments for “Taxation as storytelling

  1. April 20, 2015 at 8:24 pm

    So sorry Cathryn. We too have experienced new US tax regulations from half our pension that comes from Fidelity, USA. They[US] make us file and notify our pension regulator every three months. They are five months behind in sending our pension because the new regulations and US withholding tax. I am sure this is all orchestrated through the Republican Congress.
    We are moving to Sandalwood in May and the house goes up for sale soon.

  2. April 20, 2015 at 10:22 pm

    Sounds awful. Cathryn. You should build into your yearly routine some kind of reward for completing the task. Hope you are well!

  3. April 23, 2015 at 10:31 am

    I hear you, Cathryn. I’m also a dual-citizen, and the tax issue in the U.S. has been making me seriously consider trying to give up my U.S. citizenship

  4. April 23, 2015 at 10:37 am

    Sorry to hear about your quarterly reporting requirements and paperwork and, good grief!, the slowdown in sending your pension. It is crazy making and mean spirited. Fortunately, spring is here with its soothing beauty, and soon you will be making a major and, we hope, good transition to the new home.

  5. April 23, 2015 at 10:40 am

    I wish a yearly reward could offset the weight of paperwork. But it’s hard to head into the end of the year knowing what’s ahead. And it is increasingly hard to accept the annual implication from the country of your birth that you are somehow a criminal who has to prove her innocence every 12 months.

  6. April 23, 2015 at 10:41 am

    This is not a choice we should have to make, Lydia, but each year more of us are doing just that because of the draconian tax laws for expats.

  7. April 24, 2015 at 9:05 pm

    Thom does most of the paperwork in this house, and that includes my business taxes. He is a SAINT!

  8. April 25, 2015 at 9:36 am

    Sainthood’s definitely a category for a husband who does your taxes!

    Doing Canadian taxes is easy as a resident. Doing US taxes as a “nonresident alien” is about as alienating as they can make it. For example, I used to own Canadian mutual funds. I can’t any more because the U.S. considers them foreign, suspect investments and taxes them at 45%, on top of what Canada taxes. Because I live outside the U.S., Congress has decided I must be hiding income so requires any financial institution with which I deal to submit an annual form to the U.S. so they can compare the form with what I submit. Many European banks and financial institutions now refuse to hold accounts of any kind for American expats because of the onerous paperwork. And on it goes.

    For the first 20 years of my expat life, I did the paperwork myself or paid an accountant a reasonable amount. It was worth it to me to keep my U.S. citizenship. Now, faced with Congress’s increasing animosity toward expats and its punitive tax code, I am having to ask myself if the stress is worth it.
    Aside from Eritrea, no other country in the world taxes its non-residents on worldwide income. And while I am able to show each year that I owe no taxes in the U.S., proving that requires weeks of paperwork or an astronomical accounting fee. The regulations change annually and have become complex, confusing and punitive so, understandably, very few “foreign” accountants are willing to do expat taxes, and those who do can charge high fees. Imagine what that means for Josephine Taxpayers like me, who can’t afford the high fees and just have to do our best, with the IRS always threatening high penalties if we make mistakes.

  9. April 25, 2015 at 10:42 am

    Hi Cathryn,
    It sounds like a in incredible pain in the neck. What bothers me most about this is that while they are hounding storytellers who are trying to put a little something away for their retirement, rich people like Mitt Romney are stashing millions in offshore tax havens and finding loopholes so they don’t have to pay a cent, or certainly not their fair share.

  10. April 25, 2015 at 6:52 pm

    Those with deep pockets hire lawyers and accountants to lead them through the labyrinth of tax avoidance. Those of us with limited means, who are just trying to be honest and law-abiding, end up feeling like targets.

    I find it extremely painful that the country of my birth is trying to force me to either return (not very practical at this point) or forfeit my citizenship.

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