A Whiny American in Joburg Files Her U.S. Taxes
I’ve been staring at this screen on and off for the past two days, trying to figure out how to write a blog post about U.S. taxes. I don’t know how to write it in a way that doesn’t suck, because let’s face it: Taxes suck. No one likes paying them, no one likes thinking about them, and no one likes blogging about them. I’m not even sure anyone will read past this opening paragraph. But let’s see – I’m going to try to make it entertaining for you.
Filing taxes, especially American taxes, is one of the worst parts of living abroad for me. Here’s why:
I don’t live in the United States, and the fact that I have to file a U.S. tax return at all has always seemed ridiculous to me. (I also file taxes in South Africa.)
I’m a freelancer, which means I always owe money on my taxes at the end of the year, no matter how little I earn. (I’m sure all the American freelancers reading this are nodding their heads vigorously.)
Unlike the majority of Americans, I cannot simply download TurboTax and file on my own. Trust me, I’ve tried, and TurboTax does not understand the needs of Americans living abroad. TurboTax is like those dour Homeland Security agents who eye me suspiciously when I pass through immigration at Dulles Airport, clearly not comprehending why any red-blooded American would choose to live in any other country on earth. They just don’t get it and they never will.
Compiling all the information I need to file my taxes is incredibly tedious. I am a terrible procrastinator in every aspect of my life, but taxes are the thing I procrastinate on more than anything else. It’s pathological, really.
Doing taxes is like doing the most boring work assignment you can imagine. Except instead of getting paid upon completion of the assignment, you actually have to pay the U.S. government for your work.
For all the reasons described above I’ve concluded that, for me at least, the only feasible way to file U.S. taxes from abroad without losing my mind is to hire a U.S. expat tax preparer – a company that specializes specifically in tax preparation for Americans living overseas. Expat tax preparation is expensive but it’s the only way for me. I’ve been using expat tax preparers for the past several years but never found a company I felt really comfortable with.
Filing My U.S. Taxes With Bright!Tax
Which brings me to the main purpose of this post. Earlier this year I was approached by an expat tax preparation company, Bright!Tax, who offered to prepare my 2020 taxes free of charge if I would blog about the experience. I was hesitant at first – I didn’t want to put my most private financial data in the hands of just anyone. But I did some online research and Bright!Tax seemed legit. Also the name itself – Bright!Tax – is very cheerful (if grammatically incorrect). So I agreed.
Considering all the whining I’ve just done about how badly U.S. taxes suck, it seems disingenuous of me to describe my Bright!Tax experience as pleasant. But, really and truly, this was by far the least painful expat tax preparation experience I’ve ever had.
Allyson, my Bright!Tax certified public accountant (CPA), was extremely personable and responsive, answering all my questions quickly and clearly. The online tool I used to enter my financial information was simple and user-friendly. And even though I procrastinated terribly in submitting all my materials (because I’m pathological like that), Bright!Tax completed and e-filed my return several weeks before the IRS’s May 17th deadline. (This year’s deadline was extended by a month because of covid.)
Also I owed less money to the federal government this year than in previous years – first because #2020 and I earned less money than usual, but also because Bright!Tax seemed to take more care in figuring out which of my expenses were actually deductible than other companies I’ve used in the past. I can’t believe I’m typing this, but paying my taxes this year almost felt…fun.
As I said earlier, tax preparation, and especially expat tax preparation, is not cheap. Bright!Tax charges $459 for a normal U.S. expat tax return, with additional charges for state returns and other extras. But I’ve used several different expat tax preparation companies over the years and this is the going rate. Painful but necessary, and totally worth it when you receive good service in return.
So there you have it: My first, and possibly only, blog post about filing taxes. For anyone who is still reading at this point, thank you for putting up with my insufferable whining. And to my fellow tax-procrastinating Americans: You’ve still got 10 more days to file. Godspeed.
My Bright!Tax tax preparation was complimentary. Opinions expressed are mine.
Okay so you held my attention on your tax issues because - why do you need to submit a Tax Return when you don’t live there? I presume you pay tax here, all too confusing.
Yeah, it’s very confusing! I thought about trying to explain why but it’s just so tedious and complicated and to be honest, I really don’t understand. But, briefly, I think the main reason expats still have to pay taxes is because the government wants us to continue paying into the Social Security and Medicare programs – in the event that we move back to America someday and want to collect our monthly Social Security checks and Medicare health coverage after turning 65. I stand corrected on this reasoning though. I personally find it very annoying.
Taxes are the absolute worst. I claimed FEIE for 2020 and had slightly overpaid my estimated quarterly taxes so got a refund. But now as a single person back in the US, I’ll be paying 22% federal tax on top of the 15.3% self employment tax for 2021 and I am MAD.
Ughhhhhhhhhhh. I don’t even understand what most of this means but it sounds HORRIBLE.
Haha, I barely understand it either, to be honest. I need to get an accountant because I’m certain I’m giving the government too much of my hard-earned money!
Maybe TurboTax isn’t great for freelancers in America, either :(
My spouse loves TurboTax.
I love the fact that he does the taxes.
I do not love the fact that we, like most middle class US Citizens, are and will be paying more and more in taxes every year, thanks to the “Trump Tax Cut: Millionaire Edition!” But it is hilarious to watch many Republicans realize this on social media as they pay their taxes (especially last year).
If I ever move back to America, I think I will love TurboTax too. It will be such a pleasure to save so much money on tax preparation.
Hail Caesar, and taxes. I almost wish I had to submit taxes to Uncle Sam, this sounded like such fun. But no, really, the secret is finding a friendly tax consultant who speaks human.
Well, I have convinced a South African to almost wish he could pay U.S. taxes. My job here is done.
David - you made me laugh out loud! Filing tax returns is pretty horrible everywhere unless you only have a single source of income.
True.
So… TAX! I also hate it and I have to do 3 a year in SA: Provisional x 2 and then the ‘proper’ one. It’s just not fair (whine, whine). And I have to file in the UK as well (and their forms are much worse than SARS). Have been known to procrastinate until 24 hours before all 4 deadlines. But then I found TaxTim for SA and for the UK I now grit what’s left of my teeth and pay an accountant ‘cos trying to do the HMRC return made me cry real tears….. So you Yanks have all my sympathy cos I know that the IRS can be very grim with their forms!
Ha! It’s weirdly comforting to know we’re not the only ones who suffer this way. I’m sorry for you too though :)
I made it to about the 5th paragraph and then skimmed and then I could no more… sorry.
Always enjoy your articles (I read all the others entirely without fail, I promise!).
Keep it up :-)
Hahaha, thanks so much for giving it your best effort Marco. I appreciate the support! ????
In New Zealand most people don’t have to file a tax return, it is done automatically for them. I lived in the USA for a while and you have a particularly obnoxious tax regime, including the requirement to file if living out of the country. I guess one could almost feel sorry for people born in the US…except its the people in the country who make the rules and regulations…
Omg I want to move to New Zealand!
Banging this out on my phone as today, after 1,600 Kms, we head into the Kruger National Park for a long camping visit. Lucky us!
Firstly, TurboTax works fine for self employed non US residents. If you earn about less then $35k outside the US, you pay zero tax on this. You pay on your US income, with self employment tax (equivalent to SS tax) being a big component.
TurboTax costs $150 for Federal, $20 for a State return. The bitter pill is that part of your payment is used to lobby (bribe) the politicians to ignore calls to simplify the tax code so you don’t need to use TurboTax!
On Social Security. If you qualify (paid in for about a minimum of 5 years), you can collect it anywhere in the world. If you live in SA, you apply through the London office. Efficient and painless as well. We never considered getting SS, it just seemed like another tax. But live long enough (you can claim from 62 to 67) and that monthly US$ check makes a big difference in SA!
Wow. You have blown my mind about TurboTax lobbying the government to keep the tax code complicated. That makes perfect sense but is also soooooo annoying (and so American, haha). I also never knew you can collect SS outside the country! Thank you for your informative comment :)