The Frau can tell any American hoping to live abroad what the worst part is: taxes.
According to Time, the U.S. is the world’s only industrialized nation that taxes citizens who live overseas, even if their income is generated in a foreign country and they never return to America.
Yes, there is a $97,000 (CHF 84,750) exclusion (not excluding the pain of still having to file). But if one lives in a high-cost country like Switzerland, this is a joke. Graduate students often make more than this in Switzerland. Hey, you’ve got to pay for your CHF 28 plate of Kung Pao Chicken somehow.
For The Frau, the worst part isn’t actually the requirement of paying U.S. taxes, even if it feels like taxation without representation.
The worst part is that it is all so confusing. The worst part is that it costs Americans abroad so much time, stress, and extra cash beyond the tax owed. And finally, the worst part is that the government gives you no mercy and treats you like a criminal despite how well intentioned you may be. If you don’t pay your U.S. taxes by April 15 each year, you pay huge penalties, UP TO 25%. The Frau asks you, what bank do you know of do you get 25% interest rates from?
Anyway, this means that most American expats, besides paying double taxes, also pay yearly penalties (and huge postal fees since electronic filing isn't possible) for their double taxing pleasure. This is because you can’t figure out what you owe the U.S. government until you file your local country taxes first. So you are always behind. You can’t win. This is the worst part of the worst part.
Big companies, most recently, Ernst & Young, were hired by Mr. Frau’s company to help to do the complicated taxes that most Americans living abroad face. But Ernst & Young did more harm than good. In fact, one year, Ernst & Young USA failed to translate Swiss Francs to U.S. dollars on the U.S. tax forms. Failed! The Frau had to correct them. And every year, The Frau and her husband kept paying huge penalties for late U.S. taxes despite so-called professional advice.
Finally. Finally, after another $4,000 late fee from the U.S. government, The Frau and Mr. Frau decided to ditch Ernst & Young. This year, they tried Taxes for Expats.
Disclosure: Taxes for Expats offered $350 off the service if The Frau blogged about the experience. Nothing said she couldn’t blog about them negatively, and trust The Frau, she would have had it been a bad experience!
To be fair, Ernst & Young had done so terribly, both in communication and in actual taxation form filling, that it didn’t take much to be better. But Taxes for Expats was much, much better.
First off, it was shocking, because whenever The Frau or her husband had questions, Taxes for Expats actually returned their emails promptly. This had never happened with Ernst & Young.
Then, Taxes for Expats translated Swiss Francs to USD correctly. In fact, everything appeared to be done correctly, both on federal and state forms.
Then…which had never happened in six years with other big tax preparers, Taxes for Expats actually told The Frau and Mr. Frau that they could avoid some of the huge late penalties by paying estimated tax by April 15 and they estimated it for them with a form they could mail in! Who knew? Not Ernst & Young.
So, moral of the story.
Double taxes suck.
Taxes for Expats doesn’t.
If you’re an American in a confusing tax situation, The Frau highly recommends giving them a try. They are fast, accurate, and give better advice than any company The Frau has worked with in her almost 8+ years abroad.
Anyone else have taxing troubles or want to recommend a great person or company?