How complicated are personal income taxes outside of the US?

[DayDreaming]

As I'm getting ready to file my taxes, I was wondering how complicated taxes are in other countries. Here in the USA I know so many people who rely on a tax preparer to do their taxes for them, even though they don't appear to have anything too complicated. Myself, I have a pension, investment income, and a small sole-proprietorship income - I do my own taxes but I rely on software - to do them by hand would be a chore.

Just wondering if anyone here could share their experience filing personal income taxes in countries other than the US?

I found this article from 2017 - https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way and here are some highlights:

Americans spend about six billion hours a year collecting the data and filling out the forms. We spend $10 billion to H&R Block and other preparers and, on top of that, $2 billion in tax preparation software, which still takes hours of work.

I was in the Netherlands on March 31, the day before their taxes are due.
I was with an executive who makes $200,000 a year, two mortgages, a lot of investments. He'd have to fill out 12 forms in America. I said, Michael, how do you pay your taxes? He pops a beer. He goes online. The government's filled in every line. If the numbers look right, he clicks OK. It takes five minutes.

in Japan, you get a postcard from the IRS that says, we think you made this much. We withheld this much. We owe you a refund of that much. We will put it in your bank on April 1. It takes one minute, if you think the numbers are right.

 

[Sunset]

Canada is much like the USA. I think everyone files as singles.

Bigger issue for any American, is you would also have to do USA taxes. This means doing the taxes for both countries. Which means either use the Tax Treaty if one exists or pay a lot of extra taxes.

One can avoid doing taxes in other countries by not doing certain investments and by not living there too long, for the the majority of countries.

 

[Alan]

The UK is extremely simple compared to the USA. Most folks never have to file a return, they simply get a letter each year showing their income and taxes and told to report any discrepancies.

Having foreign income from pensions and ETF dividends and cap gains my wife and I have to file self assessment returns but these are very easy to do.

Every person files as an individual, no married option and no dependents.

There are no deductions for mortgage interest.

Payments for up to 4 minor children are paid to the mother or guardian outside of the tax system.

Similarly payments are made outside of the tax system to folks who are carers for dependents, such as folks with disabilities.

Charitable payments to registered charities have the taxes recovered by them. In the USA you may give $100 and claim back $20, in the UK you give $80 and the charity claims $20 from the government.

Just about all subsidies happen outside of the income tax system, whether that be student loans, energy efficient boilers etc.

Capital gains are not differentiated between short and long, and there is a £12,500 tax free allowance on capital gains before the lower tax rate is applied. Similar with dividends, first £2,000 tax free then taxed at a much lower rate.

No such thing as PFICs

 

[braumeister]

The UK is extremely simple compared to the USA. Most folks never have to file a return

Plus, if your home is on the seacoast you never have to pay anything, because it's the Department of Inland Revenue.


(Actually, I think that rule only applies today)

 

[MichaelB]

My son lives in Japan. Like most Japanese employees he doesn’t have to file. The appropriate amount of income tax is withheld.

My son in law is Canadian. He says Canadian income taxes for individuals are simple and easy.

I lived in Venezuela and paid taxes there for a couple of decades. Taxes there were 1 page and the tax form was partially prepared by the employer with all the income and withholding fields already filled. I think the whole amount of time I spent doing Venezuelan taxes for 25 years was less than the time needed to prepare my US tax return for 1 year.

 

[ScoopKona]

At various times in my life I have lived in European countries long enough for this to be an issue.

It was always the US portion that was more difficult. Most developed countries know how much you made, and already taxed you appropriately. There may be other countries which play the "guess what we think you owe and if you get it wrong we will crawl up your posterior with a microscope" game that the IRS plays. But I have not encountered it.

 

[brett]

Live in Canada. Retired. File our own taxes. Individually. Efile using a program. Takes no time at all. It is quite straight forward. Also do my sister and BIL's return and efile for them. Program cost is $15.

For a number of years when working we used an accountant. Cost was reasonable because the fees got written off. The big benefit was setting us up for tax efficiency etc.

We have had a few tax desk audits where the tax folks ask for receipts. Car expenses, charitable, medical etc. Never a problem really.

Next year our finances will change and we will go back to our tax accountant for an updated tax avoidance strategy.

We both have to send in tax installments four times a year.

I do not view the tax system as overly burdensome for an admin perspective. Especially with a good tax program.

 

[Alan]

Plus, if your home is on the seacoast you never have to pay anything, because it's the Department of Inland Revenue.


(Actually, I think that rule only applies today)

Unfortunately they closed that loophole sometime after we left England in 1987 and changed it to HMRC (Her Majesty’s Revenue & Customs)

 

[ncbill]

US expats I've known who've retired to 3rd world countries because they're cheaper usually don't bother with filing there, even if they're supposed to do so...they just file their US taxes.

 

[target2019]

As I'm getting ready to file my taxes, I was wondering how complicated taxes are in other countries. Here in the USA I know so many people who rely on a tax preparer to do their taxes for them, even though they don't appear to have anything too complicated. Myself, I have a pension, investment income, and a small sole-proprietorship income - I do my own taxes but I rely on software - to do them by hand would be a chore.

Just wondering if anyone here could share their experience filing personal income taxes in countries other than the US?

I found this article from 2017 - https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way and here are some highlights:

I've been acquainted with AUS, UK and Germany personal returns. They are very simple and they already have the obvious information (like wages), and they tell you about it. Added to that are any other income sources you may have. For example, if you earn additional private income in UK, you get to deduct some expenses, the net is added to the form, and you owe more tax. You don't finish with dozens of forms and even more worksheets.

After reconciling all of your foreign tax payments, you go to the U.S. form. There is not much to say about that, other than it can get incredibly complicated.

Some countries are on a fiscal schedule, others on same calendar as U.S. So meeting US tax-filing deadline April 15th is not always possible.

 

[Alan]

Some countries are on a fiscal schedule, others on same calendar as U.S. So meeting US tax-filing deadline April 15th is not always possible.

The IRS filing deadline for overseas residents is June 15, so at least they recognize that issue. I usually file in May, after the UK fiscal year ending of April 5th.

 

[oiseux]

I have personal experience in two other countries, but I think the status as a US citizne complicates any filing due to tax treaties. If you were just a normal citizen I think it would be easier. I recall Switzerland was pretty complex, but not as complex as the US return. The French one is somewhere in between, it is online and assistance is widespread (online and in office) but there is a fair amount of knowledge required to report worldwide income, where required.

 

[Mr._Graybeard]

My son lives in Japan. Like most Japanese employees he doesn’t have to file. The appropriate amount of income tax is withheld.

My son in law is Canadian. He says Canadian income taxes for individuals are simple and easy.

I lived in Venezuela and paid taxes there for a couple of decades. Taxes there were 1 page and the tax form was partially prepared by the employer with all the income and withholding fields already filled. I think the whole amount of time I spent doing Venezuelan taxes for 25 years was less than the time needed to prepare my US tax return for 1 year.

My sis lived abroad for a number of years as an exec in different countries, and I believe she enjoyed the same benefit. Of course she was paying US taxes mostly.

 

[Mr._Graybeard]

The IRS filing deadline for overseas residents is June 15, so at least they recognize that issue. I usually file in May, after the UK fiscal year ending of April 5th.

I just finished filing an amended 1040 because of late 1099 addenda. Thank you very much, PIMCO.