A Taxing Process

By far the most complicated part of living in another country is the taxes.  For the US, April 15 is tax day, the day your 2012 taxes are due if you are a US citizen who earned income in the country.  Unfortunately, that includes us because A. we were renting out the condo and B. one of Phil's 2011 pay checks was paid in 2012.

Doing US taxes is not a simple process to begin with.  But then try throwing in some foreign income.  On top of that add a different tax year because the Australia tax year runs July 2011- June 2012.  Then consider that in Australia everyone files individual returns and our return in the US is filed jointly.  Because of all this confusion Ernst and Young took nine months to finish our 2011 return.  It was 163 pages!!!!  This meant we didn't get the return until December last year, 5 months after our June 2012 Oz return was due.

I was told Australian taxes are a lot easier to do so I started trying to do them myself.  With the difference in fiscal years and currency rates I quickly gave up and turned it over to the professionals.  They've been attempting to do them ever since.  Living abroad gives us an automatic extension of two months on our US federal return, but we still have the same deadline as everyone else for our state return and have to pay penalties otherwise.  Of course it's impossible to file a return that requires information from our Australia return when it hasn't even been finished.  And so we keep waiting.

Today we finally got our Australian return back (and the giant bill that comes with it because it's such a pain to figure out), so now we can finally start our US return.  Of course, just as soon as that one is done it will be time to start our next Australian return.  It becomes an endless cycle of tax returns, every six months owing a different government way more money than we want to pay them.  Who knows if our return is right, it's pretty much impossible to figure out how paying taxes on 6 months of income in one currency converts to a different tax rate in a different time period in another currency.

Thoroughly confused?  I am.




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