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BBC REPORTS

Taxing times for US tax payers

As the deadline for completing a US tax return approaches, the BBC's North America business correspondent, Greg Wood, finds the burden getting him down.


People have until 15 April, 2009 to complete their 2008 tax return
For the past few weeks I have been waking up with a nagging mental pain, like a dull toothache.

It never really goes away during waking hours - subdued, admittedly, when my mind is occupied with the real job of reporting America's economic and banking crisis - but then re-emerging irritatingly in moments of relaxation.

It is called my US tax return.

It inhabits my computer like some malevolent virus.

I am not alone. Millions of Americans are currently racing to meet the deadline for filing their 2008 returns.

The TV stations are awash with adverts for services with names like "Turbotax", promising to soothe the agony of form filling and save money.

Unyielding net

The US tax return is a work of outstanding complexity.

It asks you questions to which you have long forgotten the answer, questions to which there is really no definitive answer and questions of stunning irrelevance.


As they say here, once the IRS has got you, it never lets you go

It seems to have been compiled by a cunning, but ultimately stupid, specialist in the art of torture.

Anyone who works in the States for more than six months has to fill in a tax return. So, even though I am still paying UK taxes, I have become enmeshed in the unyielding net of the Internal Revenue Service (IRS).

As they say here, once the IRS has got you, it never lets you go.

That is how they did for Al Capone in the end. Not the St Valentine's Day massacre. It was tax evasion that sent him to Alcatraz.

And judging by the slightly haunted looks on the faces of many New Yorkers I pass in the street, they still fear meeting the same fate as old Scarface.

Bureaucracy victim

Like many people here, I am using a computer software package to supply the information demanded by the IRS.


Even with the help of a computer, completing a tax return can be difficult
I scan the screen apprehensively.

"What do you want to do?" it prompts me.

Strangely, my preferred option - "Lie down in a darkened room until it all goes away" - does not appear to be listed.

I decide on the first option which is entitled: "Update my Calendar". This should be fairly straightforward.

The IRS wants to know where I was and what I was doing on every day last year, state by state and country by country.

So where exactly was I - say - on 10, January 2008?


The system is obviously designed to catch me out and then punish me

I know I took a holiday in January, but I cannot remember the dates, without looking at the family diary, which is - helpfully - back in the UK. This is going to take some time.

As well as stating where I was, I have to classify each day as either "work", "non-work" or "holiday".

Easy enough when you work 9am to 5pm, Monday to Friday. But sometimes I work weekends and sometimes I am off during the week.

And what about a weekend in the middle of a vacation? Does that classify as "non-work" or "holiday". Does it matter?

I am now in the classic mindset of the victim of bureaucracy.

The system is obviously designed to catch me out and then punish me. For what? Normal human forgetfulness?

I log out and revert to the typical journalist's mindset. The deadline is three weeks away. That is ages.

Baffling questions

But the nagging feeling will not go away.

There are four more sections to complete, including a personal profile, before I even get to the part where I have to declare my income.

I log back in and try the personal profile.



Of all the things I miss about home, I never thought I would feel nostalgic about Her Majesty's Revenue and Customs

This - to my horror - consists of 29 different sections, some of which contain dozens of questions about minute and obscure details of my financial life.

For example, how much did I spend last year on household repairs for my non-US residence?

I try to remember when the man came round to fix the guttering and how much we paid him. The receipt is probably buried at the bottom of a drawer somewhere on the other side of the Atlantic.

Some of the questions are simply baffling or tedious in the extreme.

Taxing paradox

I begin to reminisce about my UK tax return. A few sheets of pretty simple questions.

Of all the things I miss about home, I never thought I would feel nostalgic about Her Majesty's Revenue and Customs.

And I also muse on one of the many paradoxes of this country. It fought for its independence from the British Crown to escape the burden of unfair taxes. Now it has one of the most complicated tax codes in the world.

The new Treasury Secretary, Timothy Geithner, said he had made a "careless mistake" in not declaring $34,000 (£23,000) in back taxes.

How could that be? One of the sharpest minds in finance, co-author of the hugely complex and expensive bailout plan for the US banks, and he cannot even fill in a tax form accurately?

I used to have my doubts. But now I am inclined to believe him.
 
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