It is that season once again. That season that most of us dread. Tax Season. Taxes are a basic part of life. Governments work off of taxes. It pays for schools, it pays for police, and infrastructure. Yet, we still fear and dread that eventual day of doing our taxes. So why do we fear doing our taxes?
Ben Franklin once said “ Nothing is certain except Death and Taxes” He really has a point here. Death is certain, and in most of the world there will be taxes.
Taxes is a part of the sales of items. There are even taxes to leave a country. I paid $20 to get out of the Philippines. It was quite strange, but I had to pay the tax.
As we see there will always be a way for the government to collect taxes from us. It is time to stop fearing taxes, and start being able to take control of that fear.
Some Simplicity of Country taxes:
Most people would prefer to not pay taxes. It is something people would prefer not to pay. Maybe it is because the tax laws are complex. It could be that we do not believe our money is being spent the way we want it or any other reason.
If taxes were easier to do would people then be more likely to pay them?
In Taiwan, my taxes are quite easy. Tax Season is the month of May. So we go to the tax office to do our taxes. It is about a one-page form that people will help you fill out. It takes about 15 minutes, and then you are done with those taxes.
Now that all sounds simple, but my job is quite simple. I am just one employee, and I am not a business owner with more complicated taxes.
As you may see, the tax is quite straightforward. We have one standard deduction, and there is also a salary deduction. So things are simple.
That is not how it is in the rest of the world. Taxes could be simplier. Governments could make taxes easier and more neutral for others as well.
Simplifying the Complexities in Tax Code:
Around the world, there are many different tax complexities. A well developed tax code is easy for companies and individuals to comply with which can promote a better economic development throughout the country.
As countries think about taxes, they really need to think about how this affects the economic development of their country. With more complexity comes more hours spent on taxes, which means more money spent, and less time spent on development.
As the rules become more complex, the neutrality of taxes across the board start to favor large businesses and wealthier individuals as they can take advantage of tax loopholes more easily.
This is something countries are looking at. The simpler the tax code the better it is for all to increase in their economic development.
Estonia is a country that has ranked 1st in best tax code seven years in a row in the OECD. Their taxes are quite simple.
A 20% corporate tax rate on corporate income that is not applied to the distributed profit. They have a flat 20% tax rate on individual income and not on personal dividends, and property tax is taxed on the value of the land and not the value of the real estate on the land.
These simplicities make taxes easier. Why fear doing taxes when they can be this easy.
USA Taxes can be quite complicated
A lot of grief really comes out of the U.S. taxes. The 1040 is a shorter form, but when you have investments, deductions, and all sorts of other forms things get a little complicated.
Rules are being changed every year, and that is a lot of knowledge to keep up. Even with 2020 taxes, if you never received your stimulus from December you must fill out line 30 in order to get that money.
This happened to me. So I put my missing money into Line 30 in order to receive my $600.
The taxes can be so complicated that oftentimes we like to opt-out of doing them and basically bring all of our 1099s, W2s, and other forms to the CPA. The CPA can then charge certain amounts per form, and make a good amount of money off these three months of tax season.
The anxiety and stress created by taxes makes us lose money. We are in a situation where we just don't know what to do, and we panic, and resort to sending our taxes to a professional.
CPAs are not all bad. They help us with finding loopholes, saving money, and even helping us with our businesses.
If taxes were less complex maybe there would not be a reliance on so many CPAs.
I have been doing my taxes for who knows when. Thinking back in time, I have probably been doing my taxes for the last 15 years. Oftentimes, I refer back to what is easy using Tax Software.
In this 21st Century, Tax software has become the rage. Think about it, you can upload your documents, fill out the forms, and boom taxes are done. You are in the clear.
The cool thing is that this can all be done electronically. You can E-File, and in a few weeks you will receive a refund. That is if you will get one.
I have done some research on a few of my favorite Tax Software to help you do your taxes better.
My Top 6:
- Credit Karma Tax
- H&R Block
These are a few of my favorite tax software out there. Tax Software can truly range in price, situations, help, and even DIY.
I did this year’s taxes with H&R Block. They recently came out with an Expat package to help with questions, forms, and make my taxes simpler.
The fear of doing taxes was in my head. Last year, TurboTax was quite rough since it required me to put a TIN for my wife (who is an Ausssie) in order to print, then I had to white out her TIN. The forms then could be mailed off. It was such a hassle.
Seriously, if you want my opinion. TurboTax is the highest priced tax software, and I couldn’t even E-File. That is something that doesn’t make me too happy. Plus my taxes made it to the IRS in mid August. How crazy is that?
I think tax software can truly help people in making better decisions. You just need to pick the right one for you.
Ways to make taxes easier:
1. Financial knowledge
Financial knowedge is a way to make taxes easier. Truly being knowledgeable of how to save on taxes, pay less, and do it by yourself can really save some time and grief.
I learned a lot from Jeremy at GoCrurryCracker from his article Never Pay Taxes Again
We know our money better than anyone. It is time to take control of your money and stop losing it to fees and taxes.
Learning about tax code can really help you in saving money. I did not know that much about different forms until I really sat down to learn.
2. Saving Money
Being able to save money is a goal. Why not take a few minutes a day to learn something new that can save you money.
Learning how to save money through tax deferred accounts, like 401ks, IRAs, and HSAs is one way to save money and save on taxes.
This is why financial knowledge is so important. Money lessons are often not taught in school, and therefore we need to learn them on our own.
As governments change the rules, we need to be on top of things in order to save more money.
In the fall, I worte an article of how a family of three making $100,ooo can pay $0 in taxes. It is all about saving money in the tax deferred accounts. Learning to save is a huge bonus.
Taxes are good
People oftentimes dislike paying taxes. Are taxes good? Absolutely!!
I am about to get a little flack from the crowd for saying that, but truly let’s think about what taxes pay for.
- National Parks
- The Metro systems
Taxes Pay for:
- The Military
These are just a few things taxes do for our society. Yes there are things that each individual feels that taxes should not be used for. We all have our own opinions. Some feel there should be no taxes at all.
Even if you look in the bible Jesus says “give to Caesar what belongs to Caesar, and give to God what belongs to God.”
That is so simple. The government needs taxes to help keep people safe, educated, healthy, and have good infrastructure.
I understand that some have a distain for government. My intention is to show how taxes are useful.
Why Do We Fear Doing Taxes?
What is with this fear anyway? Is it the dread of doing them? Could it be our opinions that make us hate it? Is it a cultural thing? Or maybe do we make it so difficult that stress builds up?
These are all questions I ask myself as well.
Let’s think about what taxes do for us. Then let’s think about ways to make it simpler.
Many other countries make taxes simpler that will greatly affect all, but the U.S. makes things difficult, and complex. The U.S. is not the most complex in the world.
There are many other countries that are more complex. So take what knowledge you can obtain about doing your taxes. Learn about them, and make improvements in order to save you money.
My friend Katie from Gigbossmoney, likes to do her own taxes because through her experience it is the easier way to do it. Here is a couple of stories she shares about taxes. Why I Do My Own Taxes.
If we can just think, we are able to take control of our fears. Fear will not hold us captive any longer. We can now dominate these taxes.
If they were simple, let’s dominate them. If they are complex like organic chemistry, let’s dominate it.
It is time to stop the fear, and start thinking about how you can improve and make taxes simpler.
” Spend less than you make, stay out of debt, and invest the rest”
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.