I was always confused when watching American TV shows as everyone discussed doing their taxes, they could be a waitress or a cashier but for some reason, they needed to do their own tax – this was odd to me, to say the least. I’m not sure how taxes, particularly income tax, works in every other country, but in the UK it as simple as earnings below A, tax-free, between A and B is a certain percentage, between B and C a higher percentage and so on. It is taken directly from your paycheck and that is it, done. Unless you change jobs or are self-employed etc, as an ordinary employee it is all done for you.
Then we arrived in the US, and as in TV shows everyone was discussing tax season and doing their taxes. The tax paperwork I filled out at the start of my job, was already far more complex than I was used to (as I was used to doing nothing!) and then I learnt that this was just a complete estimate that was taken from my wage and I would actually have to ‘do my taxes’. Where I would find out if this random contribution meant I got a refund or needed to pay more. And it isn’t just income tax that is confusing to me, in the store tax is added at the checkout, so no calculating what you’re buying on the way as it will be a completely different amount. The excuse always given is that tax is different everywhere, sometimes even from town to town…but unless the store is on wheels it is in one place, so the tax shouldn’t be so hard to include in the display price.
Anyway, I digress, it is safe to say that to my British mind this was incredibly perplexing, and my first tax season last year was a mess. As tax season is upon us again here is what I learnt:
After a quick Google and I found out what forms I’d be needing, downloaded them and dove straight in with no clue what I was doing. Queue very mature tantrums, cursing, ripping up of forms and starting over. Instead, take your time, start well in advance, read in detail so that you have everything you need before you begin.
Variety is the Spice of Life
Depending on your length of time in the country so far, where you are from, where you are paid from (home or here), your visa type etc etc your taxes are different. This means seeking advice can be hard as it is very specific to you and your circumstances. So, be sure to read everything carefully so you know exactly what does and doesn’t apply to you.
Ask For Help
Despite the confusing differences from person to person, there is help out there, you just need to find it. For me and my visa status, I found Stanford Bechtel tax pages a great help, I attended a webinar and followed along with my forms and finally got them completed (this was all aimed at a specific visa type). There is also a lot of tax preparation software online, but again, be sure it covers your specific requirements as some do not!
Sign the Forms!
I was so glad to finally be done with my taxes, that they were in the mailbox almost as soon as they were printed…rookie error! You MUST sign the forms. This is apparently one of the most common mistakes made, which at least made me feel slightly like a native. This was, however, a quick fix, I followed tip 4 from this Forbes post, I typed up a quick cover letter explaining the issue, reprinted, and signed my forms and sent them again.
Finances in a new place can be confusing. My main advice is to start early if you are not used to doing taxes. They really aren’t so difficult if you don’t just jump in with no information or idea what you are doing.
So, that was my disastrous first tax season, and this year I get to contend with self-employment taxes too, so wish me luck. And good luck with yours, do you have any tax horror stories?
If you move to the San Francisco Bay Area for other reasons than working for a major tech company, life can be very expensive. Save money to make it work.