Phew. It’s gone 15th October and my tax returns are finally submitted right on the extended deadline. US tax returns are a COMPLETE mystery to me. In my time in the UK I always paid tax via PAYE – very occasionally I even got the odd small refund. There isn’t a PAYE system here (at least I don’t think so) – you have to file your own. But you don’t file just ONE return – that would be way too easy. There are multiple different ones – a Federal one, a state one and a local one. Confusing or what?
I was lucky enough to have had my former employer pay for my tax returns to be done for 2008. This year (2009 return) I was pretty much on my own. I had absolutely no idea what I was doing. For a start I ignored the letters from the local tax collection group – I assumed that any dodgy looking organisation asking for 1-2% of my hard earned cash had to be a scam. It turns out it wasn’t a scam… Then there’s the state tax, which varies from state to state (eg 0% in Nevada, about 6% in Pennsylvania and a whopping 10% of global income in near bunkrupt California).
I know what you are thinking – how hard can it be to calculate a percentage of whatever you earn? Not hard. The challenge is that this whole system is designed for you to be able to submit deductions for various obscure things. Which is why people employ highly creative accountants to ensure that they pay the least possible amount of tax. And the forms are so complicated that it is nearly impossible to work out where the numbers go. Nightmare.
Anyway after a healthy amount of procrastination, I extended the April deadline (the very simple online form to do this makes me think this is rather common) and got some help from accountants. My aim for this year is to start collecting a whole pile of things to deduct for next year’s forms. Thank goodness I finally managed to convince the UK tax folk that I didn’t need to do one of of their returns too.