I have never had to pay taxes. In fact, I don’t even have a Russian tax identification number since I am never in the country long enough to go through all the bureaucracy. Recently, the Office of International Students and Scholars at Yale kindly informed me I had to file a tax return to the US government. Since they provide every international student with the tax software, I was anticipating a fairly easy process.
The process was not as painless as I hoped, but I have survived (although answering endless questions on whether I was secretly married in 2007 or had a citizenship I was hiding from the IRS was not really pleasant). At the end there was a nice surprise: I qualified for a fat tax refund.
I got curious and went to the IRS website to investigate. It turns out the US has a number of bilateral tax treaties with various countries. According to the IRS, “residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. income taxes on certain items of income they receive from sources within the United States.[1] <#_ftn1>” According to the software, I qualify for a tax refund because of the tax treaties with Russia. A 27-page long document provided by the IRS explains the treaty; it was signed in 1992 by President Bush. I went through the entire document and learned that this tax refund means I have to pay tax in Russia.
Now, I really want to be an honest Russian taxpayer. My question is, how do I become one?
All employed Russians are supposed to have an Individual Taxpayer Number (ITN), which is akin to a SSN. Getting one is a fairly tedious procedure. One cannot get one at the embassy, it has to be done in Russia. Provided I waste lots of my summer time and do it, what happens next?
A Russian friend of mine was in a similar situation last year. She received a nice scholarship from her college, filed her tax return, received her tax refund and then decided to pay tax in Russia. When she
went to the Russian IRS, they laughed at her. Just proving she had an income required much paperwork, all translated into Russian and certified by a notary, which is fairly expensive. Providing she had gone through all this trouble, she probably would not be able to actually pay the tax. Russians do not write checks, and transferring money from her American account (the only one she has) to the Russian IRS account is insanely expensive. And the best part of it is: the IRS officers told her not to bother. Apparently, unless she reports it herself, no one in Russia will ever know if she received any money from the private college in the US. And since her income is not in the 7 digits bracket, they
“don’t really care.”
I will do my best to pay taxes in Russia. I am just not sure I will be able to.