I’ve been troubled by taxes recently.  We all grumble about high taxes and not having enough left over to live on, so I won’t go there.  But, I’m still trying to understand how and what taxes are taken out.

I suppose I’m lucky that my employer takes out the taxes for me.  It’s the same in the US when you work for a company.  And it looks relatively simple – they take out PAYE and NI.  NI, or National Insurance, is kind of like Social Security and PAYE is all the other taxes.  I don’t recall if they ever asked about my marital status.  Unlike the US, they don’t have “exemptions”, where you claim for yourself and all your dependents, and your taxes vary according to this.  However, they do allow for a certain amount of your pay to be tax-free.

I still cannot get used to being paid monthly.  Of course, it’s been only two months.  And the way they worked out the monthly pay was extremely baffling until I called them and they ran through it with me. They did admit it was a bit strange, but they felt it was the fairest way.  So, even if I work more days one month, I may get less pay.  It made it difficult to understand the taxation as well.

I had worked out my taxes using calculators on the internet and the figures there differed from each other as well as my actual taxes.  I’m not sure whether to be pleased or worried because it’s more in one and less in the other, NI and PAYE that is.

The other part of taxes that has me worried is filing.  In the US, you’re supposed to file, because sometimes you owe money and sometimes you’re due a refund, for various reasons.  Over here, it seems that most people aren’t required to file because their taxes should already be taken out correctly.  It’s only if you receive income from more than one source, if you have business-related expenses that you want to claim, or if you are self-employed that you have to file.

To make it more confusing, the deadline for filing by paper was at the beginning of October.  If you didn’t file it then, you will have to do it online and the deadline for that is the end of January.  I don’t understand why there is a 4-month discrepancy on that.  And that being the case, when is the actual tax year?  In the US, the tax year is the calendar year – January to January.  You receive your W-2s (tax statements) after January and you can file from that point until April 15th.

Then there’s the question of Child Tax Credits.  I believe I qualify for this, but do I claim for it by filing taxes?  Is this similar to “exemptions” for dependents in the US?

I may sound ignorant about the tax system, but if the Chancellor needs tax advice, then I shouldn’t feel so bad.

It’s a good thing that I haven’t worked long enough or earned enough to pay double taxes this year.  My US income tax form will be relatively blank.  It may be a different story next year, but by then, I hope to have learned enough about the UK taxes so that I won’t be cheated of my income. 

I never intended for this blog to be a rant.  But, sometimes, circumstances beyond my control have me going out of my mind, and if I can’t vent it, I take out the stress on my family.  And right now, I’m in panic mode.

I have two weeks until I start work.  I have not actually received the contract to sign (may be a result of the postal strikes), but the verbal agreement is still binding.  (Just received it by post after I wrote this.)

We have not yet moved to a new house.  Our lease expires the first week of October.  I told the agent that it was highly unlikely that we would be renewing.  At the time, I had just received my registration and started applying for jobs.  Of course, that was in an email.  No response.  This was at a time when the agent was trying to renegotiate the terms of the lease to decrease the amount we were paying for electricity.  We had complained that our electric bill was too high.  In all that mess, we finally got the landlord to admit that the meter at his house measured not only our house, but several other buildings.  And it was that meter that was read by the electric company.  We have not paid our last bill because there is a dispute about how much we are responsible.  Obviously, he owes us some money and the electric company is siding with us on this.  Given his record on promises, we are not about to turn over money, waiting forever to be reimbursed.  Besides this, the house is in disrepair and he has done nothing.  I thought, they really believed we would renew?  The agent said they would discuss issues with the landlord and come up with some solution.  After not hearing from them for a month, I emailed them to find out what was going on, only to be told that the agent we have been dealing with was leaving (fired? quit? who knows.).  She forwarded everything to two colleagues.

Next thing we hear is that we have to give 30-days written notice.  So, I responded with the above.  Seeing that my language might not have been strong enough, I said we were not renewing (not “highly unlikely”, but “no, we are not renewing”).  I asked if they wanted an actual written letter rather than an email.  Still no response.  Emailed again yesterday.  Still no response.  Are they dragging it out to force us to stay an extra month?

In the meantime, we do have to move.  Not just because the house is falling apart around us, but because I need to be closer to work.  We have been duped into paying out more than we needed to in this past year, so we have run down our savings to almost nothing.  We have not resorted to government benefits.  Yet because we have not worked in the past 6 months, some of these letting agents refused to rent to us unless we put up 6-months rent as a deposit.  What?!!  If someone was coming off unemployment and they didn’t have that amount saved up, how can they ever get a leg up?  Luckily, not all agents are like that, but you do have to be very careful.  One agent actually took the deposit off someone, ran a check, then declined them because they didn’t make enough money.  They use some formula, like you have to make three times the rent to qualify.  Why weren’t they upfront with the person to begin with?  And, of course, there is no appeal with these guys, and the money is nonrefundable.

My situation is that I can’t sign any leases until I get my contract all sorted out.  Also, I do not want to be paying rent on two properties at the same time.  Lastly, we will need to transfer money from our US account into our UK account in order to make all this happen.  Our US bank said we could initiate the transfer from this end, but the banks on this end said that was impossible.  It seems like we keep hitting one brick wall after another.  I will be so relieved when all this is settled, if ever.

Britain was once branded as “a nation of shopkeepers”.  Unfortunately, that image has slowly disintegrated, and very recently, the destruction of the small shop has become so commonplace.

As an American, I do find it convenient to shop for everything in one place. But the quaintness of the small family-owned shops is so essentially British that I hate to see that institution dying.

When we made up our minds to move here, we thought we’d like to support these small shops. Unfortunately, with the recession, it has been difficult.  We live in an out-of-the-way spot, where there are no small shops, so it’s easiest to go to the nearest grocery store for everything.  Also, it’s the big shops that can offer special deals, and when money is tight, it’s the driving force.

But, there are other shops that are closing down due to competition, not from major retail chains, but from charity shops.  And this makes it even sadder.  I have seen four small bookshops close recently in towns nearby.  I love books, but I especially love the old, used ones.  And two of those bookshops sold used books.  Unfortunately, the charity shops have taken business away from these stores, making it harder for them to compete against the big names, like WH Smith or Waterstone’s.

Though I shouldn’t rant on charity shops, I can’t help it.  These charity stores are unlike the thrift stores in the US.  Of course, they do whatever it takes to make money for their charities, but I can’t help wondering how much of their money actually goes to benefit the charity, and how much goes to pay the executives, etc.  In addition, some of their pricing is more like a discount boutique.  They even strive to look like one.

There is a charity bookshop that we shop at.  We support it because the pricing is very good – not inflated like the charity boutiques.  Also, they don’t appear to trash anything.  The boutiques only like to display books that look new.  Then there are charity stores that aim to look like antique stores, so their pricing also reflects that.

So, yes, I bemoan the fate of the family-run bookshops that face competition from two sides.  I have noticed also that some of the clothing shops are ready to go the same route.  It won’t be long before the little baker’s and butcher’s will face that fate (though they can’t blame charity stores for their demise).

We have a timeshare in Orlando that we have been trying to sell for over a year now.  Of course, the recession doesn’t help, but timeshares are notorious for not retaining their value.  More people are trying to sell them than there are buyers.  Makes you wonder, then, how some resorts manage to rope people into their resorts when private sellers can’t get rid of their property fast enough.

I’m sure other Britons have the same issues with timeshares, whether in the UK or internationally.  Timeshares are not “bad”, they’re just not for us.  We have a wonderful 2bed/2bath condo that can accommodate 8, is extremely spacious, overlooks a lake and Disney beyond.  We can see the fireworks display from our balcony.  The kids loved it.  In fact, Buppa doesn’t want to give it up.  But, we didn’t use it last year – partly because we were moving.  And partly because we’d rather not sit around a swimming pool all day, or go out to the beach.

Now, the last time we used it, we went to a wonderful dinner show and horseback riding.  But we’d rather that the resort can offer those things to us for free.  We had to drive into or out of town for these events.  Of course, at that time, the resort was starting up with plans to build a waterpark for the free use of the owners (whereas, guests had to pay an entry fee).

We’ve (the adult portion) learned that we’d rather spend our holiday camping out or doing outdoorsy stuff.  We also didn’t like the heat and humidity – very appealing to some, but not good for me.  Had we been of a different disposition, we might consider holding onto the timeshare.  Everyone in my family has a timeshare somewhere.  But it is just not part of our lifestyle, so we’d like to sell it and get some money back.

I just wish there was an easy way to sell it without getting ripped off and scammed left, right and center.  So, if anyone is interested in a timeshare, please let me know before you accept any deals directly from the resorts.  (Oh, by the way, the week is perfect for holidays whether you’re in the US or UK – August.)

Tax time again. Just got my W-2s, so I’ll have to get down to filing that return. Unfortunately, I’ve already run into some obstacles. The first is that we now have an international address and that may cause problems. And until we resolve those issues, we cannot file.

Yes, even though we’ve moved out of the country, we still have to file taxes. Our reason is obvious, though. We are expecting a refund. However, even if we weren’t, they recommend that we do. This is to ensure that we will be able to claim deductions in the future. Apparently, expatriates are not aware of that. However, their website does state that those expatriates who want to make up for the past should download the last 3 years of tax forms and start filing. There are no deadlines and they will not be fined. In addition, the filing deadline each year for those living abroad is automatically extended until June 16th. Nevertheless, if you owe money, it needs to be sent by April 15th. If you cannot file by June 16th, you must submit a request for extension by that date, in order to extend the deadline until October 15th. They will accept whatever date is postmarked on the envelope as the filing date.

Expatriates need to also be aware that if they live and work outside the US, their income may be liable to taxation from both the US and the foreign country. The current level of income that is excluded from US taxation is now at $85,700. Anything above that would be liable for US taxes. However, when you file, you may be able to claim foreign tax credit – that is, you may be able to deduct the taxes that you paid towards the foreign government. For more information, you should contact a tax advisor at the US embassy.

I think the real killer in this taxing business is the exchange rate. It is not based on the current exchange at all, but on the rate in 2007. For example, the UK exchange rate is currently at $2.0018 per pound sterling. That means, if I earned 40K in the UK it equals a little over 80K in the US, rather than closer to 60K, at the current exchange rate. Only a few more grand and I would be liable to double taxation. Fortunately, or unfortunately, I am currently unemployed.

Some people may be confused about which forms to fill out for filing their taxes. The simple rule is to assume your status in the US prior to living abroad. That is, if you are a US citizen or if you had been a resident alien, you should file Form 1040. If you were and are a US nonresident alien, then you use Form 1040NR. Nonresident status only applies to those who were not given full residential rights, such as temporary students.

Finally, if you choose to file your taxes on paper (we have not done this in years), you may either turn it into the US Embassy in London, Paris, or Frankfurt (depending on where you live), or you may send it to Austin, Texas. And, if you have any questions, the US Embassy may be able to answer them. Or, if you were as lucky as I was, you will get a message stating they are understaffed and you may not have your call answered. They will instead direct you to call their Philadelphia office. I wonder what their walk-in service would be like.