Let's Compare Tax Returns

Miscellaneous and Personal Stuff I Must Share
1

Let’s compare tax returns, or
This has got to be a joke, but I’m missing the punchline, or
Americans must only put up with this because they think the rest of the world does.

As many of you know, I recently moved to the USA, and since it’s March, I decided to go pick up my tax forms. This proved much harder than I thought it would be based on my experiences in my home and native land. Let’s compare, shall we?

Acquiring a Tax Return

In Canada: You go to the post office to pick up one booklet, about the size of Time magazine, that contains absolutely everything needed to do your taxes. All your schedules, including spares of every form in case you make mistakes, and all the instructions. Depending on your province, you may need a second booklet, which will be thinner. If you’re really lucky, and have filled out taxes before, and haven’t moved lately, you can fill out the short form, which has just 34 pages of insructions, about half of which you can ignore because it includes proper instructions on filling out your name on your return. You’ll only get this if the government mails it to you.

In the U.S.: Go to a post office, but end up being told the forms are at the nearest library. Go to the library, and stand stunned as you look at 50 loose forms, schedules, and booklets. Ask attendant if there is one booklet with everything included, and they look at you like you’re from Mars. Pick up two of everything, because you don’t know if you are a resident of New York state, because even though you live here, you’ve got a little card saying you’re a non-resident. Note ironically that every schedule is printed with a line saying “For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see page xx.”

The Length Of Your Tax Return
In Canada: it’s an 11”x17” sheet, folded over once. Totals 4 pages. You might have some more schedules, but most of those you leave at home.

In The U.S.: One 8.5” x11” sheet, both sides. But you have to figure out if you need the 1040, the 1040A, the 1040X, the 1040EZ, the 1040NR, etc…

Filling Out a Tax Return
In Canada: filling out your taxes takes 3, maybe 4 hours. Longer if you have an excessively complicated status (say, you’re a self-employed farmer whose mother died and you inherited her stocks, and you’re left taking care of your brain-damaged nephew who’s half-native). But if all you have is income, scholarships, RRSP contributions, dividends, medical expenses, and charitable donations, most of the time you’re just doing math to see if you should claim your credits this year, or hang on to them for up to 5 years.

In The U.S.: Haven’t done this yet, but it does not look pretty. I had to read until p.15 to see which return I have to file, and I’m getting referred to pub.519. By going back to page 10, I see that I can get pub. 519 from the IRS website, because it wasn’t in the massive pile of forms, schedules, and booklets at the library.

Sending In Your Tax Return
In Canada: mail it in the enclosed envelope, or call it in, or e-file. Make sure it’s postdated by midnight, April 30th.
In The U.S.: Buy your own damn envelope and file by April 15th, or call it in, or e-file.

2

Isn’t there a Quick Tax equivalent for the US? mean, I can do mine in 30 minutes and don’t even need an envelope with the online filing proceedure.

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Step 1) Ignore all paper forms and laugh at the poor slobs standing before the table in the library looking distraught.

Step 2) Purchase turbo tax/tax cut/file friend, etc. and follow entry instructions.

Step 3) Send return into electronic ether. Wait 3 weeks, receive refund directly into bank account, and spend to your heart’s content.
It took me three or four years of doing it the traditional (ie–mind-numbingly aggravating) way, but now that I’ve figured out the secret it’s really not a big deal. It took me less than an hour to file this year.

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belladonna’s suggestion is really the best, but if for some reason you need/want to file the paper version, it might help you to know that next year the IRS will automatically mail you the same forms you used this year. Then, if your situation has changed such that you need a different or additional page, those are the ones you seek out at the P.O. or library.

I believe you can also get many of the forms online.

As to why all the forms are not in one booklet: Most people get them in the mail. The IRS does not want to mail every possible form to everyone. I don’t think it would be possible to get every possible U.S. tax form in a publication the size of the Manhattan phone book!

Last time I got a 1040 in the mail, it had an envelope included, too.

IMHO the form looks more daunting to you because it’s new. When I did them on paper, it rarely took me more than a couple hours. It took longer when we had something more complicated, like capital gains or rental income, but only the first year when I had to read up and figure it out.

Again IMHO if you are a reasonably literate and numerate person with ordinary salary and interest income you should not need a paid preparer.

5

I don’t know, but it might not be that simple for someone who is a citizen of another country and is working here as an expatriate. Just guessing, since when Deloitte Touche did my taxes when I was working as an expat in other countries, they created me little 100 page booklets that were completely decipherable.

This year my taxes are pretty whack for a couple of reasons, and even though I’m using Turbotax it’s still confusing and complicated. Deloitte Touche offered to do my returns but I don’t trust them to get me all of the money the Feds owe me, which I estimate as in the $5,000-8,000 range.

6

I’m not a licensed tax preparer, lawyer or accountant, so please don’t take this as gospel. But is the federal income tax procedure different for non-citizens? I thought it was the same. Earned here, taxed here? Again, I could be completely wrong on that.

7

Australia

Go to www.ato.gov.au. Download e-tax software (free). Complete questionnaire. Approve Electronic Funds Transfer (EFT) and submit return online. You don’t have to send in hard copy supporting documentation, just keep it on file for seven years or so.

I’m just a salary earner; I don’t own a business, so my return is fairly simple. My last return took me about 20 minutes.* My tax return was electronically deposited into my bank account within two days.

There’s an alternative whereby one goes to the post office and picks up a manual tax return (about 10-20 pages?) and explanatory material (magazine sized), but why bother?

  • I have some experience working with tax and studied taxation law, which speeds things a bit.
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My wife is studying to become an accountant (in the US). The IRS has a “deal” for accountants where they’ll send you “one of each” – one copy of each tax form in existence for that year. I think it’s for study and/or having them around so you can photocopy ones you need for clients.

She got it. Two stacks of 8.5 x 11 forms, the vast majority of which I’d never heard of, about a foot deep (each stack) in a huge box.

Astounding. I can’t recall if the instructions were in there too (it was a couple years ago), but I don’t think so.

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You don’t care how many forms there are if it helps you get more money back.

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Okay, I can’t be much help here, but I’m going to be nitpicky, just because it bugs the heck out of me every year. The thing you send in to the IRS is your tax return. The thing you want them to send you is your refund. Gets very confusing sometimes around here.

Sorry, but it drives me crazy.

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Just to keep things straight, what about municipal/county and state taxes? Does TurboTax and other recommended procedures here handle those? 'Cause that’s the one thing I always heard was different between Canada and the US (in Canada there is only one return to fill out, unless you live in Quebec).

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Are you sure? I fill in form 1116 every year, but they never mail me one the following year. I just get a standard booklet with the 1040s and schedules A to D.

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I’m a non-citizen. I’m also a non-resident for immigration purposes, but regarded as resident for tax purposes, except for the child credit where I become non-resident again (i.e. I don’t get it). The forms I fill in are exactly the same as those a citizen does.

14

That does complicate matters. I’m a British citizen. Complicating factors include:

[ul][li]what exchange rate do you use for foreign income?[/li][li]foreign organization are geared to the tax system im their home country and often do not produce the information in the right way or at the right time for the US system. For example, the UK tax year ends April 5, so you get a bunch of information (but not 1099s) shortly after that.[/li][li]if you have income abroad, it may have foreign tax deducted at source, in which case you have extra work to do to avoid paying it twice.[/li][/ul]

On the exchange rate issue, I tried a demo version of Turbotax (importing data from Quicken) and it got my taxes completely wrong because it treated my UK income as £1 = $1.

15

I only completed my return w/o TurboTax once, in 1988. That first time the total tax due came out to an incredible sum and I ran crying to my dad because it scared me so badly. He straightened me out-I had forgotten the standard deduction.
The next year I had a computer and used Quicken and TurboTax. I would never ever do my taxes without uses a computer aid of some form again. The software has every form and interviews you through it and will run an audit prior to finishing.

16

Well, none of my first three posts in this thread actually answered the OP. Initially, I found the US tax system much more difficult than the UK. However, now I’m used to it, it’s not that hard. I don’t use Turbotax for the reason I gave before (it gets foreign income wrong), but I do use Quicken and find it easy to run of reports that give the answers to fill in on the form. I fill in 1040, Schedules A, B and D, and Form 1116. That’s still more onerous than the UK system, but not terribly hard.

All the forms and publications are online, so it’s easy enough to get what you need.

17

Japan.

If you’re an ordinary salaried employee, pretty much everything is handled through your company and you hardly have to do a thing. Around January, your company gives you a form to fill out listing your dependents and other info, and then just withhold the tax rate that the government tells them to. Around April or May (the tax deadline is March 15) there’s an extra bit in your paycheck from the refund.

If you’re a business owner, work at somthing other than an ordinary salaried job, or have special deductions you want to make, it gets a little trickier, but only a bit. You go to the local tax office (I went today, since I do acting work that doesn’t withhold taxes) with a set of forms that you received in the mail back in January, fill out a form listing your income and the deductions you want to take, run it through one of the computers they have available (there’s also a small army of people constantly hovering over people checking if they need any assistance. Very helpful folks), and receive a form saying how much you owe. You can then take this form to the post office or bank and pay it there. Taking care of the forms took about 20 minutes.

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I do know about tax software, but I resent the idea of spending money to do my taxes. Filling out a tax return should be simple enough to do it myself in a minimal amount of time-- and up North, it is!