The Day I Did My Taxes

It had been over a decade since I last filed my taxes. But no longer can I be labelled as a tax evader – as of today I am a law-abiding citizen. My justification for not doing them was that I was living outside the U.S. (yep, it’s been ten years now!) and in a legal grey area. I have been worried though, as to whether this would hold up or not.  

There are exactly two reasons that I finally broke my streak and did my taxes this year:

The first reason is fear. I was and still am afraid that the U.S. government will revoke my passport, that I will have to go on the run from the IRS, jumping from one country to another on fake identification. This is an unlikely scenario, but at the very least I would be forced to pay some backed taxes and a hefty fee, right? Honestly, I have no idea. It’s fear of the unknown. 

The second reason is curiosity. I wanted to see what the whole process was like. I’ve heard that doing your taxes can actually save you money depending on what deductions you get.

So last month I spent several hours on the IRS website, downloading and filling out forms, inputting my figures and finally came out with some god-awful sum to pay.

I then buckled and signed up for TurboTax. It cost $80 to relieve the headache. My total paid to the IRS: $11.

I also of course get the 1040 form filled out so that I can replicate it next time and do it on my own. 

I had two forms from two different investment banks showing how much tax I owed on stocks and brokerages. I did not have a W-2 because I don’t receive one working in a foreign country.

I think the key to making it work is having your deductions (line 40) be more than your adjusted gross income (line 38). I was being taxed heavily on ‘ordinary dividends’, so in 2017 I’m going to try to reduce that part of my portfolio.

I didn't see any mention of the Foreign Earned Income Exclusion, though it's certainly worth looking into if I do declare income in China (I didn't this time since I had no W-2 form).