My Life as a Volunteer Tax Preparer – Week 6

March 13, 2009 by  
Filed under Taxes

This was yet another unique week of experiences for me in the volunteer tax preparer office.

I had 5 appointments plus I picked up a 6th so one of the other volunteers could leave early.  This 6th appointment was the most enlightening to me.  More about that in a moment.

Four of the 6 appointments were with folks who were younger than me, working full-time, and making a decent living.  They didn’t need free tax help.  They were just trying to save some money.  As I’ve said before, the staff at the senior citizens center where our office is does not screen people who make appointments.  We take all comers.

Two of the appointments were a mother and daughter.  The mother was trying to push the envelope on writing off mortgage interest for a house she didn’t own.  Worse, the mortgage interest statement didn’t have her name or Social Security number on it.  I’m no tax genius but that raised red flags for me.  I told her that I would not file the return with that interest reported on it.

One of the appointments had me work on her brother’s tax return, not hers.  She was a court-appointed conservator for her brother, who had suffered a traumatic brain injury.  What a good sister – she had been managing her brother’s affairs (they were both elderly) for many years.

I had a brush with greatness from a bygone musical era.  As I was working on my first return, the appointment working with me made a comment to the taxpayer seated at the other volunteer’s desk.  She told him that he had a lovely deep voice and “surely he was using that voice to sing in church.”  (Although he was well into his 70’s, he did have an amazingly strong deep voice.)  He said thank-you, in fact he did sing in church.  

A few minutes later I was called over to help the other volunteer interpret this man’s Schedule K-1, which is a form used to report partnership income.  I recognized the name of the partnership.  It was a famous gospel singing quartet.  I knew from work in my day job that this group had started in the 1950’s, had done a lot of recording and concert-touring, and now was just trying to hang-on to what they had.   I imagine that this gentleman had sung in thousands of churches over the years.

So now about that last appointment.  I knew right away from his name, appearance, and accent that this gentleman was Arabic.  He was retired from a local government job as a cultural laison to the immigrant Muslim community.  I asked him if he was a U.S. citizen (which we are required to do for everyone).   After he said that he was, he explained that he was the first Iraqi immigrant to arrive in our community after Saddam’s invasion of Kuwait, which is where he was working at the time.  Apparently, he had the paperwork ready for himself, his wife, and his daughter, and left immediately to seek asylum here. After he arrived, the local government quickly put him to work because of his English language ability.

As I was reviewing his paperwork, I noticed that he had close to a dozen different bank interest statements, all from different accounts with at least several thousand dollars in them.  All of the accounts were in his name (or his wife’s).  He was paying tax on several thousand dollars of interest.  He asked me if there was something he could do to avoid paying taxes on that interest in the future because the money was not his.  He explained that his family still in Iraq had sent him the money to deposit because money in Iraq was “not safe.”  He could not open the accounts in their name because they were not citizens or legal residents of the U.S.  Most had never been outside Iraq.  

I said that I didn’t know of a way to avoid paying taxes on interest credited to an account in his name.  I asked him why his family didn’t reimburse him for the taxes.  He said “that was impossible” because his family would “not understand even the request.”  Iraqis, he explained, knew of no such taxes in Iraq and would think that he was trying to cheat them or at least was being disrespectful.  So, he is stuck.

That little episode got him on a roll complaining about Iraqi family culture.  He told me that when his family did visit – even a family of ten at one point – he was expected to house and feed all of them in his home, no questions asked with no visitor contributing to the cost.  Any complaint or show of reluctance would be considered a major violation of family rules.  According to this gentleman, Iraqi family members are free to exploit other family members in matters of hospitality as a matter of course.

He then felt a little guilty about complaining.  That’s when he told me that he could not blame his family for sending him money because they might need it in an emergency, if they had to flee their home country.  He said that the Sunni-Shia sectarian conflicts and fears are still very powerful and unstable.  His family is afraid that they might have to use that money to escape the violence at some point.

When he further explained that his family had sent him money to use to buy his home when he first immigrated to the U.S., I stopped feeling sorry for him.  It became clear that this man’s bank accounts and his home have become a “safe house” of sorts for his extended Iraqi family, just in case.  He concluded by saying that most Americans truly do not appreciate what we have here.

This man is caught between two cultures, which leads to the last part of his story.  He showed me a Form 1099 with substantial income reported on it.  I learned that he has been working as a civilian contractor for the U.S. Marines, helping Marine officers with Arabic language skills and advising them on important differences in working in the Arabic and Muslim communities.  He mentioned again the difficulty that most Americans would have understanding how Iraqi families deal with each other and with non-family members, particularly if they are not of the same religion.  Knowing these differences can save lives.  He was proud that he could help.

Last year he lived for a month on a Navy ship transporting Marines across the ocean, teaching cultural and language skills on board.  The commanding officer appreciated his work so much that he took him then to Australia for a 60 day tour, where he taught similar skills there.  Sounds like a great deal for all concerned. 

This Iraqi-American taxpayer loves his new country.  His return was incomplete when we finished because he was missing documentation on some major deductions and credits.  He was so concerned about missing the filing deadline (because he was getting ready to take another tour with the Marines) that he asked me to print the return without the deductions, so that he could mail the return and pay the extra taxes if necessary before he left.

As you can imagine, this week’s volunteer experience was special for me.  I developed a greater understanding of another culture where our country is deeply involved.  And I was very glad to know that our Marines had this gentleman on their team.

I wonder what I will learn next week?

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6 Responses to “My Life as a Volunteer Tax Preparer – Week 6”
  1. money market trader says:

    Mr TML, maybe you could advise the Iraqi to invest his family’s monies in tax free muni MM accounts. ….btw, i have heard similar stories of europeans using other family’s members homes as safehouses. given the numerous wars there in the 300 yrs, makes sense. americans may resort to their european cousins’ homes for similar services as our govt becomes more tyrannical and blood thirsty for our hard earned $$$.

  2. kitty says:

    “He could not open the accounts in their name because they were not citizens or legal residents of the U.S. Most had never been outside Iraq. ”

    Actually foreign nationals can open bank accounts in the US, and there is indeed a special tax exemption for them for bank interest (see link below). I do know foreigners who have an account in the US. One of them actually visited the US; also got a special id number first – it looked like social security but clearly stated “Not authorized for employment”. She also included her parents – I don’t remember if they also visited or if they could do it by mail. At some point they needed to fill out additional forms with passport numbers, foreign address, purpose of the account. Their relative here has a power of attorney and the US relative’s address is listed as main mailing address.

    As to taxes, there is a special tax exemption for interest on personal bank accounts for foreign nationals provided that the account is personal and not for trade or business. I actually helped to translate the form they needed to fill out, and it spelled the tax exemption quite clearly. I think at some point IRS wanted to take this exemption away, but the banks were afraid that they’ll lose all of these foreign deposits that help US economy.

    You can read about the tax exemption here: – scroll to “Exempt interest”: “Interest paid on deposits with banks, on accounts or deposits with certain financial institutions, or on certain amounts held by insurance companies, are exempt from U.S. tax even though they are U.S. source income.” I had a more official link, but I can’t find it at the moment.

    Out of curiosity I just googled to see if foreign nationals can open an account without coming to a US and found this: — I haven’t read the article in detail but it lists banks that apparently can do it by mail with appropriate documentation.

  3. Kitty: As I understood the problem, the banks would not open the account in the names of the family members without seeing proper identification of who they were. I think it is a Homeland Security documentation issue.

  4. kitty says:

    Ignore the last link – I just looked it over and it’s someone’s personal experience and doesn’t have accurate information. The author doesn’t know about exemption for bank interest and makes everything look more difficult than it actually is.

    This, however, is from US tax law section 871 – Tax on non-resident aliens:—-000-.html

    “(i) Tax not to apply to certain interest and dividends” … 2.A “Interest on deposits, if such interest is not effectively connected with the conduct of a trade or business within the United States.”

    In summary – non-resident aliens can indeed open a bank account in the US and the bank interest isn’t taxable.

  5. kitty says:

    TML – oops, you responded while I was typing and I didn’t see your reply. When you said “most haven’t been outside the Iraq”, I (incorrectly) assumed that some of the relatives could travel.

  6. kitty says:

    BTW – sorry about it.

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