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Taxation Ventage

Taxes: it’s that time of year again, when every inhabitant of the US, resident and ‘non-resident’, gets The Fear. Yep, it’s tax time. (Warning: this is a long and protracted vent.)

In the US, every worker is required to prepare and file their own taxes, in detail. Nowhere outside of India can do bureaucracy quite like the US, as far as I can tell — even the brits have embraced simplicity to a greater degree — so this is no trivial undertaking; however, they do have a few outs, if you’re eligible.

Naturally, given my luck, I’m not. ;)

Now, I’m no slouch when it comes to form-filling; I’ve had to deal with messy forms many times before. But these are masterpieces. Check out this gem:

The ATNOLD is the sum of the alternative tax net operating loss (ATNOL) carryovers and carrybacks to the tax year, subject to the limitation explained below. Figure your ATNOLD as follows.

Your ATNOL for a loss year is the excess of the deductions allowed for figuring AMTI (excluding the ATNOLD) over the income included in AMTI. Figure this excess with the modifications in section 172(d), taking into account the adjustments in sections 56 and 58 and preferences in section 57 (that is, the section 172(d) modifications must be separately figured for the ATNOL). For example, the limitation of nonbusiness deductions to the amount of nonbusiness income must be separately figured for the ATNOL, using only nonbusiness income and deductions that are included in AMTI.

Your ATNOLD may be limited. To figure the ATNOLD limitation, you must first figure your AMTI without regard to the ATNOLD. To do this, first figure a tentative amount for line 9 by treating line 27 as if it were zero. Next, figure a tentative total of lines 1 through 26 using the tentative line 9 amount and treating line 27 as if it were zero. Your ATNOLD limitation is 90% of this tentative total.

Enter on line 27 the smaller of the ATNOLD or the ATNOLD limitation.

Any ATNOL not used may be carried back 2 years or forward up to 20 years (15 years for loss years beginning before 1998). In some cases, the carryback period is longer than 2 years; see section 172(b) for details. The treatment of ATNOLs does not affect your regular tax NOL.

That pretty much appears as-is; there’s no additional explanation of those acronyms elsewhere, it’s just a big block of jargon. Obviously not intended for human consumption. There’s also this:

Medical and Dental. Enter the smaller of Schedule A (Form 1040), line 4, or 2.5 % of Form 1040, line 37.

That seems well and good, and according to the instructions, the 1040NR is 100% compatible with the 1040. Except Schedule (Form 1040NR), line 4 is:

Gifts to U.S. Charities. Gifts by cash or check.

What do charity donations have to do with medical and dental expenses? WTF? (I suspect the compatibility claim is incorrect.)

Last year, I hit up H&R Block for their help; it saved a lot of hassle, but was pretty expensive, costing over $200. Overblown TV advertising alert: of course there was no great refund, despite what their ads claim. However they did recommend that I donate old clothes to thrift stores, keep the receipts, and claim that back as a tax contribution. I’m serious. Given my wardrobe, that should net about $10.

This year should be a lot simpler, since I’m just a US nonresident working visa holder doing nothing but paying plain old income tax — so I was intending to just fill out the forms myself.

I think I’ll tick that idea off my list and check out the online options.

All I can say is, no wonder quite a few US citizens seem to think that government involvement is something to be minimized if at all possible. There are alternatives though — I’d happily take an Ireland-style ‘nanny state’ which will compute my tax liabilities for me if I so choose. It’s not like I’d be in a position to argue with them anyway, aside from the common case of hiring a tax attorney, if we disagree; so why not let the government do the heavy lifting? ;)

(PS: the good news is it now appears I may qualify as a resident. This means is a viable option… yay!)