My Expatriate Tax Day Horror Story: Expats Can’t E-File! Hah! – 2011 UPDATE


Internal-Revenue-Service--28477

Writing about Libya so much can be depressing (although if you haven’t read this yet, you really need to). So here is a bit of humor for a change. In 2.5 years of blooging, this re-posted entry below has proven to be one of my most read links. So on this tax day, when you are suffering from repeated robo-rejections from the hideous, dysfunctional, infuriating IRS e-submission system, I sympathize. The ‘error codes’ absolutely make my blood boil. They’re a perfect instance of eveything we hate in government – haughty, soulless, uninformative, disinterested, time-consuming - it’s like a federal, e-version of going to the DMV. Here is a brief 2011 update (I still couldn’t e-file myself):

a. I think I know how the IRS will fill the massive US budget hole – taxing foreign spouses! Hah! What a great gimmick! Yes, Uncle Sam is so rapacious and desperate for cash now that my wife, with no US address, income, citizenship, property, or assets of any kind, still needs to file a 1040. Can you imagine being a foreigner and reading the 1040, much less the guidebook for it, and understanding your obligations when you sign it? That’s just laughably surreal. Most Americans can’t make heads or tails of it. Good lord….Ridiculous.

b. Despite falling under the foreign earned income tax exclusion and having no US accounts, income, etc., I still couldn’t figure out the form tangle and had to fall back yet again on a tax-preparer, even though I am not supposed to even pay US taxes(!). Such a simple process failure just screams tax reform, which both Obama and Ryan thankfully seem to support. Paying $200 a third party in order to not pay the first party has ‘disintermediation’ wirtten all over it.

——–    REPOSTED FROM TAX DAY 2010  —————

Most people loathe the Internal Revenue Service (IRS) for the wrong reason. We all need to pay taxes. Taxes are, as the IRS’ building declares, the price of civilization. And that’s true. If you like roads, bridges, ports, military security…basically any public good you can think of, then we need the IRS.

The real reasons you should resent the IRS are actually reasons to loathe Congress. Recall that Congress makes the tax law. Those reasons are:

1. Philosophical: Democratic theory demands that laws be understandable and hence ‘follow-able’ by the general public. You know the speed limit, because you see the road signs and you passed a driving test that insures you can read the road signs. Even if you break minor laws – jay-walking, e.g. – you still know that you are cheating and that you are culpable. The problem with the IRS/tax code is that it is NOT understandable. In fact the tax code is so indecipherable that a staggering 89%  of Americans must hire a third party to do it for them. So the tax code fails a basic democracy test: can the general populace know and follow the law as ‘regular Joe’ citizens? Clearly not.

2. Pragmatic: The IRS is absolutely awful at the implementation of the tax code. The forms are long, abstruse, and unreadable. Look at the length of just the directions book for the basic 1040 form. 175 pages! Wth is gonna read all that lawyer-y, jargon-y c—? Well, no one of course. So 9 out of 10 of us pay a transaction fee to have someone else obey the law on our behalf.

Ah, but you say, ‘Kelly, you don’t live in the US, you have no fancy stock portfolio, and you have a low paying academic job (hah!), so doing your taxes can’t be that hard for you.’ *Sigh* You’d think so, but even expats must get a tax attorney. I don’t know one American in Korea who does his taxes himself. Imagine that: how awful is the tax code when I still can’t do my taxes myself, despite a foreign residence and no US income at all?!

Below is the cut-and-paste of the IRS’ soulless-robotic rejection of my effort at e-filing. Note ‘error codes’ – a nice faceless government term sure to enrage the tea-partiers even more – 0022 and 0016. Hah! How can I provide a US state and zip, when I don’t live in the US! LOL.

Think about that. The most obvious constituency to efile  – expatriates – can’t, because the IRS computer program refuses to accept foreign addresses on the 1040. And yes, even my tax attorney in the US couldn’t make it work. She had to email me the return, which I then had to snail-mail back to the IRS in the US. :))

On top of that, I could not use the EZ forms. I had to use the complete ones…

You gotta love the government. If you ran a business this way, you’d have been eliminated long ago.

Dear Free File Taxpayer: #2

The IRS has rejected your federal return. This means that your return has not been filed.

Here’s the reason for the rejection:

Error Code 0010: This is a general reject condition relating to the data that is in the Form and Field indicated.

Error Code 0022: The state abbreviation is invalid. The state abbreviation must meet these conditions to be valid: the state abbreviation must be consistent with the standard state abbreviations issued by the Post Office; and the state abbreviation cannot be blank, it must be entered.

Error Code 0016: The ZIP code is invalid. The ZIP code must meet these conditions to be valid: must be within the valid range for that state; cannot end with ’00′ with the exception of 20500 (the White House ZIP code); must be in this format ‘nnnnn-nnnn’ or ‘nnnnn’; and the ZIP code cannot be blank, it must be entered.

Error Code 0457: On Form 2555, the total of max. housing and foreign earned income exclusions (Line 43) from all Forms 2555 must equal housing/foreign earned income exclusion amount on the Other Income Statement (Line 21) multiplied by negative 1 (x-1).

Error Code 0463: On Form 2555 or 2555EZ, Taxpayer foreign street address and city must be completed. Country Code must have an entry with a country code.

Next steps:

Sign into your Free File return at www.freefilefillableforms.com/FFA/FreeFileForms.htm to fix this problem and e-file again, or print the return to file by mail.

You can get more information about handling rejected returns in the FAQs found at https://www.freefilefillableforms.com/FFA/FAQ.htm)

To track your return status, go to https://www.freefilefillableforms.com/FFA/CheckStatus.htm

This email was generated from an automatic system, which is not monitored for responses.

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15 thoughts on “My Expatriate Tax Day Horror Story: Expats Can’t E-File! Hah! – 2011 UPDATE

  1. Do you have to pay Korean taxes? Are you considered a resident, or on a work permit? In the US non-citizens on work permits or those who are residents have to pay US taxes. Just wondering if you have to pay taxes in two countries.

    Can you use Turbo Tax?

    “You gotta love the government. If you ran a business this way, you’d have been eliminated long ago.”

    I went to the Post Office in Alexandria today on my way to work. All I needed was ONE stamp. I went in and the automatic stamp was GONE! I then had to wait in line to buy ONE stamp, with only one postal clerk assisting a long line of customers (including me who had to buy just ONE .44 cent stamp). I asked the clerk where the machine was and was informed that they don’t use it anymore. Or have it. Soon another clerk join the counter. I was seen by the other clerk. After buying my .44 cent stamp, I once again asked why they didn’t have the automatic stamp machine. The new joined clerk informed me that they (I guess the postal system in my area) had gotten rid of it since it was old and they didn’t have parts.

    Now I know why I am a subscriber of Stamps.com. Stamps.com is a private business that does the USPS’s job. I should have just taken the extra time and printed my own stamp in the comfort of my home.

  2. “Error Code 0457: On Form 2555, the total of max. housing and foreign earned income exclusions (Line 43) from all Forms 2555 must equal housing/foreign earned income exclusion amount on the Other Income Statement (Line 21) multiplied by negative 1 (x-1).”

    This is my favorite one.

  3. If you agree with the rule of thumb that 80% of everything is crap (which I do), then 80% of Americans aren’t going to be able to follow simple directions, right off the bat. A 1040 is not simple, obviously, so right there you have a pretty sizeable problem. But I frankly don’t find the 1040 all that difficult to fill out, and – this is sick – I find the 1040 instructions generally pretty well written and straightforward.

    I run into problems personally when I encounter unusual things, such as the K-1 (a form relating to an inheritance) I had to deal with this year. Just as one should never order the least popular item off a restaurant menu, because nobody remembers how to make it and the ingredients are probably rotten or freezer-burned, one should avoid the less common tax forms, because it’s plain the IRS has put less effort into making them easy to follow. The K-1, for example, was utterly baffling to a non-expert. It was clearly written for accountants.

    I read an article recently, stating that the IRS is capable of pre-filling almost everything out on a majority of the 1040s sent to taxpayers for completion, but accountants have lobbied successfully against the proposal. This would represent a huge advance in efficiency and fairness, but special interests have an apparent veto.

    Your situation – working abroad – is highly unusual and so it doesn’t surprise me at all that even a PhD would find it impossible to fill the forms out correctly. Your inability to e-file is inexcusable. However, again – and I can’t believe I’m saying this – I’ve had to call the IRS with questions before, and while the hold times are long (30-45 minutes), I’ve found the representatives helpful and knowledgeable. This is a gigantic bureaucracy that is unable to spread its work out throughout the year, and instead faces a filing rush of biblical proportions – those kinds of things are hard to staff for.

    • That middle paragraph about tax accountants lobbying the Congress to keep the forms unintelligible is grotesque if true.

  4. ” We all need to pay taxes. ”
    Why? To get all the things you listed, taxes are not needed. The current system of money creation starts with the government issuing bonds to the federal reserve, which then the fed issues the money to the government as a loan which needs to be paid back with interest. Banks get to create money to by issuing loans (due to the fractional reserve system).

    We pay taxes to support this insane banking system.

    If the society still wants to use money (which isn’t necessary for the things you listed), then the government should take complete control over the money creation. No more private bank loans and no more fed. By eliminating private entities from being able to create money, the government could just print money for the services it needs. No taxes would need to be leaved to support this system. Inflation would be completely controlled by the government.

    “Taxes are, as the IRS’ building declares, the price of civilization. And that’s true.”
    Its false. The IRS is only necessary to support the banking system setup by bankers for bankers. A system setup for the people by the people (A real civilization) has yet to be created.

  5. I am one American in Korea who has just e-filed my US taxes myself… however maybe it wasn’t that difficult because:
    - I have always prepared my US taxes myself, which have always been the 1040 form -

    I take pride that I am in charge of my own income and taxes. Sure it is frustrating, but I know exactly why/where/how my income gets taxed and why I need to pay what I do.

    It’s really not too complicated, you just need to be very detail-oriented and patient. I too find the 1040 instructions very well-explained and simple.

    • Good for you. That’s awesome actually. I wish I could do it. My taxes seem like such tangle. Here is the check-list as I see it:
      Did you file the the 1040, 2555 and FBAR? That last goes seperately to the Treasury Department and is an incredible hassle. You gotta list all your accounts, address, and interest totals. You need to file a Schedule B on that interest. Also did you have any income in the US at all? Then you probably have to file a Schedule SE on that and pay Medicare and SS taxes on that? Are you married to a Korean? Then you (might) need an ITIN for her through a W-7 that will likely get rejected the first time through, because the IRS guys have no idea what a foreign notary looks like.

      All this, even though you fall under the Foreign Earned Income Tax Exclusion. And god forbid you break that cap…

    • Did you e-file your tax return with the free fillable form? I’ve been trying to efile it but gets the below error code

      0192 – At least one of the following fields must have an amount: Total Income (Form 1040-Line 22)(Form 1040A-Line 15); Adjusted Gross Income (Form 1040-Line 37)(Form 1040A-Line 19); AGI Repeated (Form 1040-Line 38)(Form 1040A-Line 20); Tax (Form 1040-Line 44)(Form 1040A-Line 26); Total Credits (Form 1040-Line 55)(Form 1040A-Line 34); Total Tax (Form 1040-Line 61)(Form 1040A-Line 37); or Total Payments (Form 1040-Line 71)(Form 1040A-Line 40). If filing Form 1040EZ: Adjusted Gross Income (Line 4); Taxable Income (Line 6); Withholding (Line 7); Total Tax (Line 11); Refund (Line 12a); or Amount Owed (Line 13).

      Does anyone encounter this? Does this mean I can’t efile it?

  6. I feel your pain! Though I normally do taxes myself and file electronically myself in the U.S., I feel it is always better to get a local professional when filing taxes overseas – there are simply too many unknowns that one can get tripped up with. If you can find a tax preparer who is a former employee of the tax agency with current connections, even better.

  7. Can I just say what a comfort to uncover someone who genuinely understands what they are discussing online. You certainly realize how to bring a problem to light and make it important. More and more people need to read this and understand this side of the story. It’s surprising you’re not more popular because you definitely possess the gift.

  8. You can not file US taxes through the IRS e-file:
    Can I electronically file using Free File Fillable Forms if my address is in a foreign country?
    No, if the address on Form 1040, Form 1040A or Form 1040EZ is in a foreign country you will not be able to electronically file your return. You may still complete the forms and enter the foreign country in the city field, but you will need to print and file your return by mail. For more information about where you should mail your federal return, go to the “Where to File Paper Tax Returns” page.
    What’s the latest this year on

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  10. Great post, Robert! As frustrating as it sounds, you are correct: US expats must file in the US. I am a CPA (sorry…), and mostly deal with international cases. If you or any other expats out there need help filing US taxes from abroad, please visit my website at http://wwww.expatCPA.net to schedule a free tax consultation via phone, Skype, or email.

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