Tuesday, March 6, 2012

Taxes as an American Expat Are No Fun

My current endeavor is researching taxes, and it's hard to think of a more boring activity. (Anything finance-related puts my brain into a deep sleep.)

The United States, unlike almost every other country, taxes its citizens not only on income earned and spent within the country, but also on income earned and spent elsewhere. This means that B and I must pay tax on his salary not only to Singapore, but also to the United States (even though we don't live there and the money earned comes from a Singaporean source). This can result in a much larger tax bill (since Singapore has extremely low tax rates; I think they are about half of American taxes).

Many expats are bitter about this little quirk of American tax law, especially when comparing themselves to other more fortunate nationalities like the British or Australians. I don't mind that much in principle, because as an American citizen I receive benefits even in Singapore (like easy entry to most countries, and the most powerful nation in the world backing me up in case I get into trouble). I suppose it would be better to evaluate AFTER we've paid the tax bill though (since no withholding has occurred from B's salary, we may be in for a nasty surprise!).

The whole situation means we must file taxes both in the United States AND Singapore, and must for the first time hire a professional to assist us. It is all very complicated and troublesome (and a waste of money: we may end up spending like $1000 on tax preparation).

I don't mind paying taxes and supporting all the public services that I benefit from; I just wish they would magically take the money and save me this whole rigmarole.

1 comment:

  1. What a bummer!! I guess I never really knew, but I assumed B worked for a company that sent you guys over and that they'd take care of a lot of that stuff. We've been working with a professional tax person that Mike's company hired and ohhh man, it just seemed overwhelming to deal with on our own. I think Mike could have done it, but I usually just tune that stuff out!

    Luckily, we're all done with it at this point. I hope that it's not too bad for you guys!!