Utterly Taxing: An Expat’s Filing Saga - Part One
by Sarah M. Duncan

When I made the decision to spend a year living and working in New Zealand, I gave it a lot of thought. I thought about my plane ticket, obtaining my visa, what to pack, what I wasn’t allowed to pack, and what I was required to pack in strange and frustrating ways. Once I arrived, I thought about money, where I could get the cheapest curry, which clothes I could afford to ‘drop’ from my backpack to avoid developing a hunch, and how insanely cold it is to sleep in a tent in the forest when it’s raining.  

But I never thought about filing my US income taxes.
 Like America and everything I had left there, taxes seemed far, far away, a requisite act of a world I no longer subscribed to.

That fantasy did not last long. Around December, I got a kind but nudging email from my father, asking me, dear, if I had managed to remember I would have to file my taxes this year with the rest of western civilization, regardless of the fact I was on a magical mystery Kiwi excursion. What did the IRS care if I was having an impromptu pasta dinner with a bunch of mid-sixties world travelers in the middle of Central Otago? I had my patriotic monetary duty like everyone else. Here’s looking at you, Capitalism.

Still, as far as I was concerned, I had ages to do my taxes. After all, it was only December. Being overseas, I knew I had a two month extension over those back home, which made my tax return due on June 15th. Having decided I would tackle this project mid April, I happily carried on not thinking about my taxes like the rookie to adulthood I am.  
Months passed, and the middle of April knocked on my door, tapping her watch with raised eyebrows. By this time I had settled into one place, landed a job, and finished digging out all my documents from the various pockets of my dilapidated luggage, so with a brave face and a strong cup of coffee, I sat down one sunny sassy April afternoon and set out to go, see, and conquer.

There were only two wee problems.

  1. I didn’t have a blasted clue what I was doing AND
  2. I’m no good with numbers.

I’m not just talking about arithmetic or algebra here. I’m talking about all varieties of numerical situations, from traditional multiplication to how much one tips at restaurants. Without fail, I somehow always manage to miscalculate the amount of time it will take me to sprint from my house to my place of employment in the morning, and if you asked me a question about ‘The Metric System,’ I’d think you were talking about a band.

So, not only was I in a foreign country attempting to do my expatriate taxes by myself with little knowledge of the right forms, terms, or processes, I had the added hurdle of seriously lacking the fundamental ability to comprehend our  numerical and financial system in the first place.   

Out of sheer necessity, I forced myself to start with what I thought I knew, or at the very least, with what I had in front of me.  I opened up my 2008 Well Known Computer Software, and when Well known software said it was checking for updates, I naively concluded this meant 2008 was changing over to 2009. When I discovered my error, my next step was to purchase and download the new 2009 program, but with so many options, I became royally flustered. Did I want the free starter download, or the seventy dollar ‘Deluxe’ version? “Free” sure sounded good, but which one would have information for those abroad? It was like ordering a really expensive pizza, except in this scenario choosing the ‘wrong toppings’ would cause extreme financial consequences that would be delivered hot, fresh, and ready to your doorstep in under a half hour. Ding!

Swinging there on the end of my rope, I recalled a conversation with a housemate of mine about what a &%*#@ disaster her efforts to file and claim her taxes had been, and how, defeated, she had eventually given up on the 2,000 dollar tax rebate she was owed. She simply could no longer take the strain.  “Don’t even try doing it yourself,” she had said bitterly, in between ripping her hair out in sizable clumps (she wasn’t over it.) “Pay somebody to do it. There’s a reason why they’ve got that job.” Great. All I could dream about that night were all these words coming at me…

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Needless to say, I got zero hours of beauty sleep that night!

Perhaps she had a point. I clearly did not have one single solitary clue what I was doing, nor did I have the right information or a plan on how to acquire it. I had settled on the 25 dollar basic software and attempted to fill out the forms, but every fill-in-the-blank was geared towards current US residents only.  With nothing much to lose, I found TaxPlanner online and contacted one of their qualified CPAs, our friend Edward Parsons. Less than ten hours later, I received a reply. My SOS had not only been heard, the hearer had actually bothered to keep my ship from sinking.

“Sarah,” it read, “look for form 2555. I don’t know if Well Known Software has it, but hopefully it does. Once you find it, read about the foreign earned income exclusion - specifically the physical presence test in our website under 'expatriate tax returns'.”

At last! A direction! Someone who knew what they were talking about! No, I did not have any idea what he meant by ‘physical presence test’ or ‘foreign earned income exclusion’ were, but I knew where to look to figure it out, and that was a big step. Finally, things were definitely starting to look up.

(Stay tuned for part deux…)