Tax Season and Headaches

Quarter 1 is when tax season kicks into high gear, especially for those of us living abroad. Taxes aren’t a matter that is to be taken lightly as any mistakes can become very costly. For me this years tax season marked the first time I need to file for a business as well which increased the complexity substantially.

Current Situation

Let me give you a little bit of background about my current situation, and then I’ll describe how I resolved it this year. I am a US citizen but I have been living abroad for the past 8 years working and traveling around Asia. The fact that I hold a US passport means I am liable to pay taxes, on any income I earn anywhere in the world, or I could run into potential problems further down the road. To further complicate matters I also started a limited liability company to provide me legal protection for my newly started business. Now this is where it all starts to get very tricky…

When I previously lived in the US I stayed in Connecticut and that is also where I still have a drivers license making me tax liable there. My corporation founded in Delaware also means I need to pay some form of taxes there. Currently, I also have another address in the State of New York. My sister moved there and I use her address as my main mailing address for all my banking and tax related documents. Federal taxes have to be filed either way for both my myself and my business but the main question is the state taxes, where do I have to file and is there anything I missed.

Should I have registered my LLC as a foreign entity in CT?

This was the main question that worries me the most because it carries quite heavy fines with it. It amounts to $165 per month for every month I operated in the State without being registered but this does not include the fine for operating without the appropriate business license. I never looked up the fine numbers for this since it should never apply to me anyways and I don’t want to unnecessary scare myself and risk my quality sleep by finding out. I was also unsure in which States I would have to file what. The issue of having listed multiple addresses over the last year due to my sister moving only further complicated the issue.

Potential Options?

I considered two main options to resolve my tax issues, do it myself and get a PHD in US tax or hire an accountant. Hiring an accountant to handle my taxes for me would have cost me upwards of $650 which isn’t an option when you’re not making enough money to live off your business yet. I settled on doing my own taxes and consulted the help of HR-Block via a phone consultation to answer any remaining questions I have