If you live and work in the United States, you probably haven't thought about taxes since the middle of April. But for us, Tax Week came later. Because Porter worked overseas for part of the year, his company insisted on doing our taxes for us. Or rather, outsourcing our taxes. This happened once before, domestically, and Porter caught several mistakes before the taxes were finally filed.
This time, we're hoping they did it right.
My heart goes out to our Swiss-American family: filing U.S. taxes with overseas income is unbelievably complex. Porter actually likes the kind of work it takes to file our taxes, but this time he took a look at the 67-page stack of papers and decided to trust the hireling accountants for the foreign part. To be clear, I'm talking about the U.S. paperwork required for reporting foreign income—nothing that had to be sent to foreign governments.
Anyway, the company was slow in getting the job done, so only recently were our taxes filed: not only for the federal government, but also for two different states. Neither one of the states was our own, by the way—blessed Florida has no income tax. States which do, however, make sure they get their cut of anything you earn while working within their borders. Which is one reason why professional basketball players need tax accountants.
Not that I expect my readers to care about our taxes much—I write because the story goes on, and gets better.
The same week in which we finally filed our taxes, we received in the mail the Dreaded Notice from the IRS: We don’t think you were honest about your 2009 taxes, and require complete documentation of all the charitable contributions you claim to have made during that year.
Did I mention that Porter is really good about accounting and tax stuff? We barely had time to be annoyed with the government before he had all the documentation laid out for me to scan and copy; it went out in the next day’s mail.
But the really fun part was that in the process of gathering the documentation, Porter discovered that he had, indeed, made a mistake in the 2009 taxes. We were actually entitled to a significantly higher deduction than we took, and expect a substantial check from the IRS once we file an amended return.
Thanks, IRS!
That's brilliant!
"We don't think you were honest"?!? We all start presumed guilty?
And again, a point in favor of the Swiss taxation system: if you want to make a deduction, you need to furnish documentation, or your claim gets thrown out. End of story, and no accusing upstanding citizens of dishonesty.
To be fair, they didn't use the word "dishonest." But that's the assumption whenever the IRS wants to audit you. It's not their intent to find mistakes in your favor; they only audit when they suspect they might get something out of it. Even if it's not much money, it has the same effect as a lock on your door—it helps keep honest people honest.
I'd much rather furnish documentation once every 30 years than all the time. And I'd rather the IRS not waste time and money sorting through everyone's charitable receipts.
It is bad, though, that they've changed the rules so that cash giving is discouraged. That really is an assumption that people are dishonest, and would take up to the maximum cash deduction even if they gave nothing.
I think the IRS checks things to be correct, not just in their favor. This year was the first time they told me I had underpaid. I think I've gotten maybe 3 or 4 letters in my life saying they thought I had paid too much.
And even this time, when I called to say I owed less, the lady calculated it all out and said, "it will take 4-6 weeks for us to send the refund (with interest)", and I said that i thought I owed them money, but would gladly take a refund, and she went back and checked and showed me where I was wrong.
I wonder if it is like at a bank, where mom said it was far worse to have more money than you were supposed to than to have less. they would spend hours figuring out why the cash drawers weren't reconciling for small numbers of cents.
Did they expect you to put this complete documentation in a single legal-size envelope? That's what they sent me when they audited me for contributions 4 years ago.
The charities in Switzerland will send out confirmations of yearly donations, so it's not so hard to get the necessary documentation. I think that is limited to wire transfer donations, though: I don't think cash donations can be claimed.
And yes, I don't think the IRS is trying to con taxes out of people. Jon's probably right that receiving too much isn't good, because if it gets noticed, the IRS will need to refund that money. If they receive too little, they can ask for the top-up plus interest owed.
My experience is that the IRS expects standard average American taxpayers and is ill-equipped to deal with people who donate above average, live simply, or have bank accounts with an IBAN number, just to name a few examples.
IBAN numbers are hard for any bank. I got a second bank account so I could have a bank that knew what to do with them, and even then, the deposit often fails. though I think this time it was on the sender's end. i tried to tell them to not put my name on the deposit, but they didn't believe me.
I should get you to show me what an IBAN sender expects to see and show you what my bank says and see if we can figure out the right information to tell them.
Why not? I'll try to remember next time I sign in to my online banking account.
