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February 03, 2006

The Byzantine World of Taxes

I'd like to share a tale of two countries, and two people caught between them. It's a tale of unintended hilarity, experienced through the vale of tears, concerning taxes.

As many of you know, I got married this past year, tax year 2005. In Canada, since everyone who makes money files for themselves, all this means is that The Sweetness and I have to report each other's income from line 236 on the front page. No big deal. But I am an American, and because I made above the filing minimum in worldwide income, I must file in the US as well. As far as tax problems go, it's of only intermediate difficulty: figure out how much money you made in US dollars, write that amount on line 7, Form 1040, and fill out Form 2555 (I even get to use the -EZ version) so you can write that amount in parenthesis on line 21. Tax owed is 0, tax paid is 0. See you next year.

But this year I had a change in marital status, so I have to file as married rather than single. Mind you, while this difference is monumental in my day-to-day life, its effect on my tax bottom line is nil -- literally. I thumb through the Form 1040 instructions for guidance. Jen is not a US citizen or resident and has no US source income, so she doesn't have to file; she is a "nonresident alien". Nonresident aliens cannot file jointly with US citizens or residents, and I'm still married, so I guess it has to be "married filing separately". So I check box 3. But box 3 has an ominous instruction: "Enter spouse's SSN above and full name here".

Writing her full name takes all the space given, but there's a bigger problem. How does my Canadian wife get a Social Security number? Well, she doesn't. An SSN is a privilege reserved for those who are allowed to work in the US. Hmm, can I just leave it blank? Scouring Usenet shows that, back in 1994, you could just write "NRA" in the "Spouse's social security number" space. Checking the instructions again, my countenance falls:

Nonresident Alien Spouse
If your spouse is a nonresident alien and you file a joint or separate return, your spouse must have either an SSN or an ITIN.

The peculiar "joint or separate" clause notwithstanding, obviously she has to have some kind of number for me to fill in. SSN is out. What the hell is an ITIN? It's an Individual Taxpayer Identification Number. The IRS issues you such a nine-digit number for when somebody needs such a number but they can't get an SSN. (Isn't that convenient!) My wife must file Form W-7 to get one. Along the way she has to attach a tax return. But she doesn't have to file! Okay, I give up. Calling the international division IRS hotline (not toll-free) immediately connects me to a friendly and encyclopedic IRS specialist. Turns out she has to fill out the form, and then we attach my tax return, since it's the one that needs the number. I send it to a special address that's not in the tax booklet. They'll write a number on the line I left blank, forward my now-complete return to Philadelphia, and send her a helpful letter containing her ITIN so we don't have to do all this in tax year 2006.

At last, my journey is complete. But is it? She also has to attach identification, either a passport or a driver's license and voter registration card, etc. Originals will be returned. What if I don't want to send an original? (How would she drive if we sent her license to Pennsylvania?) Well, in that case we can get a certified or notarized copy of the document. But if it's going to be notarized, it must be so authenticated by a US notary public, or... my specialist muses as to whether Canada is party to the Hague Convention on Abolishing the Requirement of Legalisation for Foreign Public Documents. He thinks not. Do I have a US consulate nearby? Thankfully, I do. Well, then, that covers it. But I'll probably have to make an appointment, and come with her as the business concerns the taxes of a US citizen, and bring $50 cash. US dollars, naturally.

So, The Sweetness and I must make an appointment at the consulate, get US$50 at the bank, take a half-day off work, make the copies, have them notarized, fill out form W-7, and attach my return, so a nine-digit number can be added to my return and I can legally claim her exemption. Which I didn't need, because, as I've pointed out, I owe nothing.

Are you laughing yet? Crying? Raging at the dying of the light?

Posted by The Greatness at February 3, 2006 10:42 AM


crikey - and I thought council tax in the uk was annoying!

is this a first for the word 'crikey' on this site? god, I hope so.

Posted by: p. falvey at March 20, 2006 05:23 PM