The State Department, the Newlyweds, and the IRS

I am happy to announce that we have survived yet another necessary-thing-to-do-in-life-but-made-a-million-times-more-complicated-by-being-in-the-foreign-service event. We have filed our 2013 tax return.

In the past, filing my tax return was about as simple as it gets. In fact, I’m pretty sure I could still be using the form 1040EZ that I used when I was just out of college and making no money, but I read something several years ago that led me to believe that I might feel more like a grown-up if I used the regular form 1040. Thanks to modern technology and Turbo Tax’s step-by-step process, it almost felt like a game to complete my tax return. I’d never itemized my deductions or had to consider anything complicated, like the Earned Income Tax Credit (whatever that is) or listing any boats or foreign bank accounts. Just my W2, maybe a 1099 from my savings account, and the standard deduction. Pretty simple.

This year, the simplicity of completing my 1040 was gone. Getting married and moving out of Iowa complicated matters more than I imagined they would, because those events essentially made me stateless. Though we live in Matamoros, I am not considered a resident of Mexico, since we are here on behalf of the US government. I still have my Iowa driver’s license, but I am not a resident of Iowa. My mail gets sent to Texas, as that is the DPO (Diplomatic Post Office) address that the State Department gives us; however, I am not a resident of Texas. My husband is a resident of Washington; however, I have never lived there. Trying to figure out which state to claim as my residence for tax purposes was more than a little confusing. After much discussion and a consultation with a tax professional, the answer was simple. I am a resident of Washington. For no other reason than because my husband is a resident of Washington and I am married to him. I guess that makes sense (sort of?), so I went along with it.

Since I’d earned my income in Iowa before I left my job there to move to Mexico, I of course had to file an Iowa state income tax return. No big deal, and easy enough. But then came the wild card. I had participated in a grant review for a federal agency last November. I did the work from my home in Matamoros and received a 1099 for the honorarium I was paid. Where, oh where, to file state taxes on that? Iowa? No, I wasn’t living there. Texas? No, I don’t live there either, even though the 1099 was sent there. Washington? I’d been there once… no, twice (there was that time I stupidly hiked Mount St. Helen’s with my purse and no water). But I didn’t do the work there. That doesn’t matter, the tax agent told me. You file the state income tax form for your state of residence since the work was done for the US government. OK, easy enough, I suppose.

I collected this information before even attempting to start working on the 1040. I filled in all of the fields as they popped up on my screen through the Turbo Tax wizard, just as the tax agent had advised me. I listed my status as a partial year resident of Iowa, as a current resident of Washington (where there happens to be no state income tax), and when asked where I receive my mail, I entered the DPO address in Brownsville, TX. After all, I didn’t want to risk having important tax-related correspondence delayed in getting to me because it was routed to our permanent address in Washington. The result? Our 1040 now lists our home address as the DPO address in Brownsville and nowhere to be found on the form is any indication that we are residents of Washington. What a pain!

And did I mention that our car is registered in Virginia, where property taxes are imposed on personal vehicles? And that our notices of tax due (that’s right, plural) were being sent to an address that neither one of us has set foot on in nearly two years? Somehow, they finally located us to let us know that we needed to pay property taxes on our car, six months after they were due. I’m sure you can see where I’m going with this. It ended with a defensive phone call to the Arlington County, Virginia Treasurer’s Office explaining that we are upstanding citizens who always pay our taxes and would have been happy to pay on time had we received the notices, and is there any exemption for State Department employees, considering that our vehicle has not entered the Commonwealth of Virginia in nearly two years because we live in Mexico on official US government business? The answer: You can pay the $644, which includes the late fee, by check or online. Have a nice day.

Thank you for reading!

2 thoughts on “The State Department, the Newlyweds, and the IRS

  1. Oh my, such memories you bring back, all thanks to US tax laws and especially the Commonwealth of Virginia. I feel your pain. (Unlike the pain you write about more often, from extreme running, which I can't even imagine let alone feel for you.) I grew up in Virginia and left there after high school, taxes all paid up from my after-school career in shelf stocking. I became a Texas resident (no state income tax) and never gave the old home place a tax-related thought. Later, while I was living in Taiwan, Virginia called me out for years and years of back taxes. Well, my goodness, I said. It didn't end happily.

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  2. Bruce, that sounds terrible! I am learning more about the confusing Virginia tax requirements as we go on this journey. I am hoping to avoid a situation like yours, but they certainly don't make it easy to follow the rules. It's very, very confusing.

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