Mr. Geithner and His Tax Obligations

Monday, January 26, 2009

In the Jan. 22 Business story "Treasury Pick Misfiled Using Off-the-Shelf Tax Software," a statement attributed to research assistant Fernando Flores was incorrect -- at least for International Monetary Fund and World Bank employees. We do receive W-2 forms, and that is where the problem begins in automated taxpayer programs.

As far as I know, the only U.S. taxpayers who receive W-2 income statements and are also required to file self-employment (SE) taxes are employees of international organizations. Software programs such as TurboTax are not compatible with this unusual arrangement. Normally the SE form is for independent consultants who receive income statements via 1099 forms, not W-2s. TurboTax assumes that an SE is not required.

One can override the standard TurboTax approach and file an SE form, but it is not as easy as suggested in the article. I stopped using TurboTax about a decade ago because it was too much of a hassle on this particular issue. I resumed using it two years ago, but each year I have had to call technical support in order to override correctly. If one does not do it in a particular way, then the information does not get copied into the 1040 accurately.

As for Treasury secretary-designate Timothy F. Geithner, he joined the IMF as a senior manager. He might have been a bit too busy to attend the seminar for incoming U.S. nationals on how to file taxes.




The Jan. 22 article about TurboTax created several misimpressions regarding the employment status and tax obligations of Americans employed by the International Monetary Fund, the World Bank and other international organizations based here.

We do receive W-2 statements. We are employees, not contractors; we receive pensions and employer-subsidized health insurance. In contrast to self-employed persons, we do not file a Schedule C. We are classified as self-employed only for purposes of paying Social Security tax.

Finally, the article noted that Treasury secretary-designate Timothy F. Geithner failed to pay the employee portion of his Social Security taxes while employed at the IMF. That's true, but the full truth is much worse. The IMF reimbursed him in advance every three months for the employer's share of Social Security taxes, which he was obligated to pay in turn to the Internal Revenue Service.

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