Freesteel Blog » US tax-o-rama

US tax-o-rama

Friday, September 26th, 2014 at 11:02 am Written by:

I have a US passport because my dad is American. I’ve never lived or worked there in my adult life, because I am British, so I didn’t know you had to pay tax on everything, because the Internal Revenue Service does not believe there is such a thing as not belonging to America. They’re an empire. Everywhere else in the world is foreign, so you have to send your money back to the homeland — even if it’s not your home.

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside. [source]

I discovered this in the process of trying to cash in my share options that were part of the deal of locking me in to Autodesk for two years. Unfortunately these share options vested over a three year period. Fortunately, one third of them vested each year. Unfortunately, the vesting date is December, instead of September when I actually joined the company. I did not know that.

I can’t claim these shares without regularizing my tax situation by ‘fessing up and paying back taxes for the last 4 years.

UK taxes are pretty simple — if you don’t waste time on all the loopholes of setting up a one man limited company to pay out income in a share dividend rather than an income to claim a lower tax rate. (You see, unearned income from shares are taxed at a lower rate than earned income of actually working for wages, because we put higher taxes on things we don’t want people to do, like work.)

I do remember how the entire of the United States seemed to shut down for two weeks in April to fill in their tax forms. Surely that’s just due to claiming all those little exemptions and coupon clipping, such as tax relief on their commute to work and their mortgage payments — because the government wants to subsidize the growth of the suburbs and punish people for renting apartments in the city and walking to work.

Surely, underneath it all, there might be something simple I can fill out.

Nope. It’s a nightmare.

This was the page of form i1040-sd which caused me to finally snap and seek help:


I don’t think Franz Kafka could have put this in one of his stories and gotten away with it. A fiction writer is limited to what is believable.

I visited a tax adviser [see him on video here] who dug me out of this hole.

Obviously, the whole business is computerized at his end, and then his expensive software generates hundreds of pages of paper that are mailed off with a cheque in dollars for much more than all of the money that I managed to vest out of Autodesk, which was 67% less than I had been verbally promised.


There are two more years of taxes to fund as well, in addition to the four years of taxes I have already hopefully cleared, if they don’t question any of these 200 pages of calculations already submitted. This is unlikely as their budget has been cut.

Now, I think taxes are great thing. It’s how we pay for civilization, and I like living in a civilization.

But paying tax in two countries with this stupid level of complexity is a bit raw.

Sure, there’s a completely incomprehensible double-taxation treaty, but it doesn’t respect the nuances. For example, there’s a tax-free savings account the UK to encourage people to save money called an ISA. So you don’t pay tax on the gains to the UK government. But to the Americans, this is a foreign investment, so they apply an unfavourable tax rate to it. The double-taxation treaty sort of means you can subtract the tax you pay to the UK from the bill, which is nothing, and pay the US Treasury the remainder. There is no refund if you pay tax in England for something that is not taxed in America, like your mortgage. These differences between the various items explain the 10 months wages that go into this tax bill.

But that’s not the screwed up part. The really bad part is that taxes don’t have to be so complicated.

Why are we paying people to run expensive computer programs encoding all the rules written by the government to take the numbers from our accounts which mean something, before mixing it all up to print out on reams of paper? Why doesn’t the government just buy or build the computer system itself so we can enter our accounts into it directly — like a proper computerized service in the 21st century? Why aren’t filing taxes as easy as booking a plane flight? Why aren’t tax accountants as out of date as high street Travel Agents?

Well, it’s because Americans are in a deeply destructive relationship with American corporations who don’t care how miserable they make their population if it earns them another buck.

Here’s the story from earlier this year:

Imagine filing your income taxes in five minutes — and for free. You’d open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The miserable annual IRS (Internal Revenue Service) shuffle, gone…

It’s already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate…

So why hasn’t it become a reality?

Well, for one thing, it doesn’t help that it’s been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax,… [which] has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit’s disclosures pointedly note that the company “opposes IRS government tax preparation.”

It’s surprising the country has stayed together in one piece for this long. I definitely don’t want to live there. Shame they’re mess spills out to ruin the planet for everyone else.

If you need more American coverage, here’s cop shooting a black guy for taking his seat-belt off too early on his way into a gas station, and here’s the leading news-clown covering the story of the so-called “latte salute” on the day that America goes to war to defend Chevron’s property in the middle-east (the answer to the question “Why this and why now?”). That’s where this money is going to. As it says in the movie Syriana: “everything is connected”.


  • 1. Greg H. replies at 29th September 2014, 12:29 pm :

    Don’t you just love it.

    The american way – take it first – explain it later. Money for nothing again at play.

  • 2. mike replies at 8th October 2014, 1:31 am :

    it takes a battle to start a war

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