Wednesday, 4 April 2007

Turns out I'm not so smart after all

This weekend was not going to be about Easter, but about taxes. I have to file tax returns in two countries, being a USAian living and working in Canada. Not usually a big deal, except a) in my USA tax returns I have to do all this stuff with extra forms to exclude my Canadian earned income from income tax, leaving me with a paltry amount of taxable unearned income from my USA bank savings accounts, and b) Canadian tax forms are designed by or for (perhaps both) the deranged.

I never thought I would see something so simple as my taxes turn into the mishigas that it turns into with Canadian tax forms. First you have to calculate your income, which isn't that hard. Then you have to do all these weird deduction/exclusion things (none of which I qualify for, but you have to check them all off anyway), then you have to calculate your tax. You calculate your taxes four times on Canadian tax forms (which assumes you can do math--USA tax forms have tables you look stuff up on, so all you ahve to do mathwise is tell greater than and lesser than). Base tax, which is 22% (or something) of some arbitrary portion of your income (like the first $32,751 or something), then the tax on the rest of your income (which is adjusted to one of three income levels, like 8%, 15% or 22% of whatever your income is beyond whatever the base taxable income was). Then you do it again for the provincial taxes, which a) make use of different 'adjusted gross income' equivalent (AGI is the USA term for it, but it's the taxable portion of your income, once you've excluded everything excludable from it, and possibly deducted your deductable from it). Which comes from whatever your taxable federal income was less something else, like your property taxes or some other credit you have to exclude or something.

Very complicated.

My USA taxes would be very simple, except being a foreign resident, I can't use the EZ. Basically it's three lines on my 1040A--my earned income, my $20 of interest income, and then my foreign earned-income exclusion (requiring a separate 2225-EZ), which amounts to my entire earned income. Which means my total USA taxable income is basically my $20 of interest, and it's not worth anybody's time to calculate, let alone collect, taxes on just $20 of income. So I sign enter a zero on the amount I owe and send it back.

Someday (soon I hope) things will get complicated, because I will have a mortgage, and possibly unearned interest income from investments, and maybe even an RSP (Canadian analog of an IRA), which I'm pretty sure protects my income from Canadian taxes, but gets taxed as earned income later, but I'm not sure what happens in terms of my USA taxes. I assume I can just exclude it, but what about the interest, and what happens when I withdraw it?

But for the moment (i.e. this weekend, which is what this entry is about) the big problem will be locating my USA tax forms. Which arrived in the first week of January, got carefully put away somewhere, and this morning when I finally went to put them in the folder with the rest of my tax stuff, there they weren't. What I've been looking at and keeping very carefully safe and where I knew it was for at least a month turn out to be my 2005 tax forms, not my 2006 forms.

And I was feeling good about being smart. Well, maybe I'm kind of smart. But 'wise' or 'organized' is obviously a completely different matter.

So this weekend is going to be about finding my USA tax forms, rather than actually doing anthing about filing my USA taxes. Unless I find them early, in which case there may still be some useful tax preparation this weekend.

I'm not sanguine. But then, as a person with dysthymia, I'm never really sanguine about anything.

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