Hello fellow taxpayers!

If you read my post from last week regarding the ridiculousness of what is the U.S. tax system. I mean, its messed up minus my particular issue, but that's not neither here nor there. Anyway, back to the posting at hand. Our friend Jeff, another American-immigrant really wanted to know how our tax situation was going to be this year. So much so he phoned the IRS himself (apparently they have a small staff at the Embassy) to figure out exactly what were the guidelines/ramifications for foreign earned income. Upon reading Publication 54 (exhilarating let me tell you), I determined that none of us met the residence or physical presence test since we did not live here long enough in the 2005 tax year. Which meant ALL of our foreign earned income what taxable by the U.S.

Jeff was told by the IRS to file an extension until a time when we would meet the physical presence test and THEN file our 2005 return and exclude our income under the threshold. My understanding and experience with tax law, is that all requirements, tests, and regulations fall within a taxable year (for normal people, Jan 1 - Dec 31). If any taxable event does not occur within this time period it is applicable during a different year.

Not physical presence test for U.S. citizens living abroad. This particular test requires you to live in a foreign country for 330 days during any consecutive 12 months. So we are going to file a Form 2350 for an extension until the first of September which will not only prevent us from paying tax this year, but we will get a comfortable return come this fall.

Another interesting point is that Turbo Tax did not catch this particular situation in all its checks and reviews. I entered all our current information, so the program knew we lived overseas AND the dates we relocated. Had I paid for my return using Turbo Tax Deluxe and determined all of this after the fact I would have been a very disgruntled user.

So our tax return will come at a very opportune time this time as a very special event is planned for this fall.

Now, hold on. The title is not a reference to any kind of illegal substance, at least not directly. Any movie buff or film conissuer is famaliar with a particular writer/director calls his movies "joints". When the movie usually says "A Steven Speilberg Film" it will say "A Spike Lee Joint".

This weekend Cheryl (w/Sprout), Stephanie, and I went to a sneak preview of Spike Lee's Inside Man. This is an excellent movie. I am a sucker for hiest/robbery movies. I guess I really like "a thinking man's movie" or maybe I wish I could be as smart as the clever thieves. Anyway, I have never really wanted to see any Spike Lee "joint", however as soon as I heard about Inside Man, it was at the top of my list. It has a great cast starring Denzel Washington and Clive Owen as the intelligence-warring detective and master thief respectively. Plus, veteran actors Jodie Foster, Christopher Plummer, and Willem Dafoe in commanding supporting roles.

Inside Man was very well done. Through out the movie, there are "flash-forwards" to some quick scenes with some of the characters post-robbery, which was a very nice touch I thought. I thought all the actors, even the ones in bit parts were very good. I liked Spike Lee's adding the diversity of New York City to the story. Its nothing vital to the script, but again a very nice bonus. It adds to the realism.

In summary, Inside Man is a fantastic movie and its nice to see Spike Lee direct someone else's script as opposed to his own vision and story. Check it out this weekend at your local cinema.

Ok, so I am not really the taxman. However, a few American that work with Cheryl (who also moved here in the fall) have been asking me through her, about how do file 2005 taxes since we live overseas. Well, we have never had very complicated tax returns because we don't own a house, not self-employed, and don't have any crazy investments. Well my friends, that all changes when you earn income in a foreign country.

Using the trusty services of Turbo Tax online, I tackled our 2005 tax return. Turbo Tax Online has a little "return ticker" in the top-left section of the webpage that shows what your return will be as you complete the return. I was quite pleased as I entered uur U.S. income, then I had to enter the value of our "free" trip to Hawaii thanks to the great show LOST to our local Dallas ABC affiliate. I saw our return value decrease a few hundred dollars.

Not great, but ok as we still were sitting VERY comfortable. Then came the British income. As I entered it in, I was hopeful. After I clicked "Continue", I saw my nice "return ticker" (that showed by return amount in green text I might add) rapidly plummet to a terrifying red text indicated we owed taxes for the first time ever. Ever.

So now I am scouring for any and all possible ways to at least break-even on 2005 taxes. It really sucks that not only do we pay a significant amount of tax in Britain and receive absolutely ZERO benefits, now we get double-taxed by the U.S. as well. Granted, next year this should not be a problem as we can exclude a large amount (if not all) of our foreign income as we have lived overseas for the entire year. Just not a fan of paying tax after getting a nice "bonus" each spring.


Only, if that darn baby would have just popped out last year ;)

Haloscan commenting and trackback have been added to this blog.

As some of you may have noticed, there were some maintenance issues here recently. Hopefully things are running as usual again. We will be back this weekend for an update.

Today's title quote came out of nowhere while I was typing this.

Haloscan commenting and trackback have been added to this blog.

Hello all. Usually the main problem I have with this blog is not having anything to blog about. Last week, however, I had a few things: Jack Johnson concert, Conspiracy of Fools, and the relocation of a college friend to right here in London.

A friend from good ol’ Harding University, Stephanie Moss, also a social work major at the aforementioned institution, moved here last week through the same agency as Cheryl did. They work in different councils (the U.S. equivalent of counties), but it is still a borough of London. Sometimes their stories explain why the UK is importing social workers.

During the week there was not too much excitement, just the usual drudgery that is called employment. This weekend however, we went up to London to walk around and show Stephanie the city. Our first stop was Leceister Square, the cinema & theatre district to try and score some Phantom or Les Mis tickets for the eveing show. That proved highly unsuccessful even thought these shows are always available. After we conceded defeat (we will book in advance) we headed to Portobello Market in Notting Hill. Cheryl & I had been up here previously with our friends Jeff & Andrea (w/ daughter Mia), but that was a Sunday afternoon and the market is really active on Saturdays.

We had a good time walking around looking at all the random items people sell (and buy) at Portobello Market from old turn-of-the-century cameras, to copious amounts of china, to gas masks. Yes, gas masks.

Best of all we were able to finally locate The Travel Bookshop as featured in the film Notting Hill. As I was waiting for my warm Starbucks beverage, I noticed a hand-drawn map on the corkboard detailing where The Travel Bookshop was in relation to the Starbucks I was standing in. Needless to say, we turned around and found it on a side street with ease.

The Travel Bookshop is as it looks in Notting Hill, perhaps a little more crowded with more shelves (and more customers). The main item of interest regarding The Travel Bookshop was the fact that we noticed a glaring contradiction to the movie: selling of books other than travel books. The 2 titles I remember seeing were The Constant Gardener and War & Peace. Now, these are not Winnie the Pooh or the new John Grisham thriller, but they are also not books you would purchase to guide you through a country during your holiday (complete with an amusing story involving a kebab as the title suggests).

We also managed to drop by our local (as in central London) Chili’s for dinner as Cheryl was craving skillet queso, among other things, including Quesadilla Explosion salad, which I was happy to oblige.

You can take the people out of America, but you can’t take the American taste buds out of the people.

So, the purpose of this post is 2-fold.

1. It’s a book review
B. It is announcing a personal achievement.

Since Christmas Day, I started reading Bono on Bono. I made a good bit of progress in the first couple of days prior to the arrival of The Traveling Chapmans, and during the flights to & from Dublin for New Years. Since that time, for various reasons (a pregnant wife among them) my progress came to a screeching halt during the remainder of January. I have passed the halfway mark and am still committed to completing the book very soon.

However, as everyone in America knows, the trial of former Enron CEOs Kenneth Lay & Jeff Skilling began officially on January 31. While I have a little knowledge about the Enron scandal, I do not know nearly as much as I should considering my profession. Yes, I do have an Accounting degree, but more so I consider myself an auditor, or to be even more precise an internal auditor. Editor’s note: I would like to take this opportunity to thank Enron executives Andrew Fastow Rick Buy, Richard Causey and CEOs Kenneth Lay & Jeff Skilling, along with the executives from MCI WorldCom, Tyco, Adelphia, and Global Crossing plus U.S. Senator Paul Sarbanes and Representative Michael Oxley for the job security you have bestowed upon me.

Wanting to know all the intricacies and gory details of the corporate fraud, I wanted to read Conpriacy of Fools which provides a narrative version of the events from the formation of Enron, its stupendous rise to fame & fortune, and of course its even worse collapse. As the trial began last week, my curiosity was peaked, so without further consideration, I started reading to coincide with the start of a very interesting trial. If I was in the States and had cable, I would fervently be checking CourtTV on the progress of the trial

This book is great. The author Kurt Eichenwald, a reporter for the New York Times, did a fabulous job spending hundreds (the book says 1,000) of hours researching pounds of paperwork including affidavits, SEC reports, & countless interviews and consolidate it all into an exciting and readable narrative.

As I began diving into the story, as soon as a quarter-way through, I was amazed at the number of events that made me raise an eyebrow in curiosity or both in shock at what I just read. In addition, there are several comments by Eichenwald himself regarding the inexplicable conclusions and decisions made by Enron management that have made me literally laugh out loud. (I told my dad, another accountant, he should read the book for a good laugh).

As I read the story, I was waiting for the smoking gun that incriminates Lay & Skilling. In my opinion Andrew Fastow is the mastermind behind Enron’s complete disregard for laws & regulations. The 10-year sentence he received from the government in cooperation with their investigation is far too light considering the impact his decisions made. The faults of Lay & Skilling both are of trust, ignorance, and apathy.

If your CFO, your top accounting/financial guy, describes a complex transaction that benefits the company, you trust he is doing is job, and doing it well.

However, ignorance was prevalent with Enron’s head-honchos and they did not seem to care of the long-term consequences of immediate decisions strictly so the company’s stock price was where it “needed” to be.

Again, I recommend Conpriacy of Fools to anyone that enjoys reading non-fiction, and especially anyone in the accounting or audit profession.

This brings me to another, yet still related point about the stock market & market expectations, which I will save for another day.

Now, I realize that most readers out there could care less about the Enron scandal (or more specifically the convoluted accounting practices involved), but I highly recommend this book as it opens your eyes to what exactly happened within the walls of Enron versus what was mentioned in the media.

As far as the personal achievement part, this is by far the largest book I have read (689 pages not including source notes & references) and I did it in less than a month. I never used to read at all, so I have a sense of accomplishment in that.