This year, I, a 22 (soon to be 23) year old, filled out paper tax forms, wrote a check, and mailed everything to the US Internal Revenue Service and the Illinois Treasury Department from Chunghwa POST, Taiwan (R.O.C.). This uncharacteristically grumpy procedure (I don’t know any Gen Zs who mail paper tax forms and write checks) was in response to tax preparation software fees and complications due to my foreign income.
Don’t get me wrong, I’m generally pro-tax. In the words of my friend Adele (not the singer), “I’m willing to pay for education and healthcare [and other social benefits covered by taxes].” However, my unique mix of spending half of 2024 as a college student and the other half making a salary in New Taiwan Dollars, a weak currency, left me below the United States poverty line, despite making enough for a comfortable life in Taiwan. Given my financial situation, I believe that I should not have to pay taxes.
The good news is that I did not have to pay any federal income tax. I simply folded up my signed return and mailed it in to let the record show that I am not trying to commit tax evasion. However, the state of Illinois was a different story. Did you know that if you make over $2,775 in any state but are a resident of Illinois, you are subject to the state-wide flat income tax rate of 4.95%? I didn’t until TurboTax (more on them in a minute) informed me that I owed the state approximately $350, to which I said, “that can’t be right, I didn’t make any money in the state of Illinois this year!” Turns out, it was.
So, $350 is about 5% of my income. If you’d like to do the math, you’ll figure out approximately how much money I made in 2024, which is fine with me. The thing is, when you’re making a local salary in Taiwan dollars, which, when converted to American dollars, is below the poverty line, $350 is a lot of money. 5% of your income feels a lot different when you make less than $15k USD per year than if you make $100k per year. Now, this is not meant to be a “woe is me, I have to pay taxes” situation. I’ll pay them. I did pay them. But, it makes me consider tax situations for low-income and lower-middle-class Americans. If you’re already barely surviving financially, living paycheck-to-paycheck, where does the money come from to pay flat-rate state taxes? Money put towards taxes could be the difference between food on the table, clothes for your kids, or building savings to provide you or your family with some financial stability.
I was alarmed that, upon further research, fourteen US states have flat income tax rates, and most states that have income taxes have very low exemption allowances, meaning that most people who earned any income have to pay taxes in their state. Graduated income tax (tax brackets) are considered to be more progressive than flat tax rates. People with lower incomes pay little-no taxes, and as your income increases, you pay more taxes. No system is perfect; being on the edge of tax brackets can be precarious, causing some people to owe more taxes despite having a slightly higher marginal income than their counterparts. We can debate the merits of tax systems all day, but my point is that it is unreasonable to expect someone below the federal poverty line to pay approximately 5% of their income in state taxes. Please, make the millionaires and billionaires cover their bill.
The amount of money I owe the great state of Illinois is not the reason I printed my tax forms and wrote a check. For my entire history of filing taxes (approximately 6 years), I have used TurboTax to file my taxes for free. I like their service, have always gotten a timely refund, and most importantly, was able to do it all for free since, as a high school and college student, I didn’t have complicated assets.
This year, however, upon answering “yes” to the question, “did you earn income overseas” was bombarded with a paywall demanding $70 USD to file my “complicated” tax returns and an additional $69 to file with the state of Illinois. With a grand total of approximately $140 owed to TurboTax (I checked other e-file options and ran into the same problem) plus my approximately $350 owed to the state of Illinois, I was about to shell out nearly $500 USD to complete my United States taxes, to which I said, “no” and promptly logged out of TurboTax with a new resolve to navigate the IRS and Illinois Department of Treasury myself. As Hasan Minhaj says, “TurboTax sucks ass.”
So, I downloaded my 1040, 1040 Schedule 1, 1040 Schedule B, Form 2555, IL-1040, and IL EITC forms with their respective instructions and got to work. I already had ballpark estimates of what I owed from TurboTax (who conveniently did the math for me before I abandoned them) and was generally able to follow the (very complicated) instructions. After a little over an hour, I’d completed the forms to the best of my ability. I then proceeded to write my check and mail two envelopes to the United States.
NO TAX FRAUD IN THIS HOUSEHOLD
I didn't owe the US any money so this one's less important (federal)
Great! I avoided TurboTax! And other tax websites! Hooray. I feel quite proud that I was able to navigate the system but also sobered. I had to sit and painstakingly sift through complicated instructions that, fortunately, I have the literacy level to digest relatively easily. I had access to a laptop and a printer to download and print the forms. I had the time to explore a tax credit that lowered the amount I had to pay, and despite what TurboTax says, I have pretty simple finances that made filling out the forms relatively straightforward. I had the money in the bank to pay the taxes.
People who can afford to hire an accountant or pay for tax software should. These tools are the easiest way to navigate a very complicated tax system, but people who don’t have the means to pay for these resources and can’t navigate the system on their own shouldn’t have to suffer or make financial compromises just to pay their taxes. We need a better system, absent predatory tax preparation companies, to simplify the calculation, payment, and refunding of American state and federal taxes. Oh, and I’d like to not be taxed on income that I didn’t make in the state of Illinois or the United States. That would be really nice. “Don’t tax me on out of state income, please” doesn’t quite have the same ring to it as “no taxation without representation.”
And now, I have to buckle up to pay more taxes at the annoyingly high non-tax home foreigner rate to Taiwan, Republic of China next month. Hooray :(
There are, of course, many more pressing issues in American politics at the moment than Illinois state taxes. Really wacky tariffs, revoking visas and deporting international students for participating in pro-Palestine protests (this student is a St. Olaf alumni), major cuts at the department of education, research funding cuts, threats and funding cuts directed at higher education institutions, and the SAVE act (a proposed voter registration law that would make it very difficult for people, especially married women who have changed their names, to vote) are just a few of many alarming problems in the United States that have caught my attention as of late. These issues are real, scary, complex, and infuriating. Not to be simplistic, but sometimes it feels good to just complain about good ‘ol taxes in the midst of watching my country seemingly fall apart from afar.
Taxed by the taxing taxes,
-Miriam