Not many people enjoy doing their taxes at the best of times. But spare a thought for those expats who need to do two tax returns!
Here are some tips for making the process less painful:
1. Double-check dependents. Make sure the Social Security numbers and names on your return match with those on file at the Social Security Administration. Even newborns must have a number this year. If you (or one of your dependents) changed your name, notify Social Security.
2. Check those W-2s. Do the numbers on your W-2 (or 1099) forms make sense to you? If not, check them against your records. If you find an error, ask the issuer to give you a corrected form. If you never received a W-2, call the IRS at (800) 829-1040. You’ll need to fill out your own substitute W-2 form if the IRS cannot get one from your employer.
3. Review your work. A math mistake, especially simple addition or subtraction, is the most common error on tax returns. If you do your return by hand, recheck your calculations with a calculator or ask someone else to check them for you. If you do your return by computer, look over a printout to check for data entry errors, especially if your tax turns out to be much larger or smaller than you were expecting.
4. Neatness counts. Make sure your return is legible and that all required forms and schedules are attached in an orderly manner.
5. Explain the suspicious. Attach a separate sheet explaining anything unusual on your return. You may be able to avoid an audit if your explanation is reasonable.
6. It’s not too late for an IRA. You have until April 15 to make a 1998 contribution of up to $2,000 for each worker or spouse of a worker. If you are eligible, opening a new Roth IRA may be your best option.
7. Stamps cost more. Be sure to put the correct postage on your return: That’s 33 cents for the first ounce and 22 cents for each additional ounce.
8. Keep your receipts. Hang on to all receipts and records related to your tax return for at least three years in case you are audited. You will need proof to back up your deductions for travel, entertainment and other unreimbursed business expenses, charitable contributions and medical expenses.
9. Adjust withholding. If you get a big refund, it means you’ve made an interest-free loan to Uncle Sam. Reduce your withholding for
10. Look to next year. If your itemised deductions are modest, consider itemising every other year and taking the standard deduction in alternate years. Time deductible expenses such as charitable contributions and real estate taxes so they fall during the year you plan to itemise.
We’ve partnered with several international tax accountants to provide tax services for expats living in Australia.