Tax Time

Here in Zurich, autumn has arrived – and with it a very thick letter from our tax accountant.

“Tax time?” Nazy asked.

“Tax time!” I rasped – aghast.

American readers, aware that “tax day” is April 15, probably assume that I’m referring to Swiss taxes. That assumption would be wrong. According to PricewaterhouseCoopers (PwC), I have “very complicated” taxes. Therefore they always file for extensions. Nazy watched as a I perused the documents.

“My back’s to the wall. I may die.” I exclaimed – fear unmasked.

“I'll skip the mall. Please don’t cry.” Nazy complained – much too fast.

The American portion of our (astronomical) tax bill has increased by 600% in the past two years. Now it accounts for almost 40% of our total taxes. We are taxed twice! The only other country that treats its citizens this disgustingly is the Central African Republic.

PwC claims that anything I do to reduce my Swiss taxes will increaSe my American taxes. PwC is also risk averse – they actually filled out New York tax forms so that I could pay taxes for the time I spent in NYC business trips in 2007. Although I know they have a tough job – the strength of the Swiss Franc (or the weakness of the US$) not only makes it look like my salary has jumped(a constant salary in Francs would appear to increase by 65% in dollars from 2002 to 2007) it has also reduced the value of the foreign income exclusion. Naturally I complained:

“I have a huge amount of unusable tax credits.”

“Yes, but when you sell that house, you can apply the credit…”

“..which will increase my Swiss Taxes…”

“… provided the Alternative Minimum Income Tax doesn’t kick-in..”

“… as it always does. What can I proactively do to reduce my overall tax bill?”

“Many Americans are renouncing their citizenship.”

“Oh that’s a great idea. My family is in the USA and..”

“But, of course, you’d have to pay American taxes for 10 years after you gave up your citizenship.”