A taxing task
[NOTE: This is a repeat of an old post. But it’s still true for me, because—although each year I decide that next year, next year it will be turbo-tax-time or hire-an-accountant-time for me—by the time the day actually rolls around I find that I have continued to think that this year I finally have it under control and don’t need any of those aids that are really for sissies.
Ha! Once again, this year I was wrong, wrong, ever so wrong. But next year…]
I noticed—in this piece that purports to tell us what jobs are probably not going to go out of style in the near (or even distant) future—that “accountant” led the list.
Well, that’s awfully nice—for accountants. But having been up last night till the wee hours of the morning (and even the not-so-wee hours) doing my taxes, I know that, despite the advantages and the job security, an accountant I’ll never be.
What a headache-inducing, cold-sweat-creating, frustration-inspiring chore! Of course, I was more emotionally involved in last night’s endeavor than an accountant would be for a client because, after all, it was my taxes, and my ever-dwindling store of money, that were being taken away. But I also know that doing taxes is an activity I utterly loathe, and I’m not sure you could pay me enough money to take it up as a profession. And I suspect (actually, I know) that I am hardly alone.
My father was a CPA, and I well remember the drill. My parents would go away in mid-February in an attempt to store up some relaxation for the coming assault. But from the time of their return in late February until that long-awaited date in the middle of April, my father would sit at a small table in our living room every night when he came home from work, filling out large sheets of checkered paper and stacks of tax returns. He did this till bedtime, and then got up in the morning and set out to do it again.
Nowadays this is all computerized. But in my father’s era it was a matter of his own brainpower doing the computations and then entering everything by hand. I don’t think he trusted calculators anyway; he trusted himself.
We children tiptoed around him even more than usual because we knew it was tax time. After the magic Ides of April things improved, but till then you stayed away and stayed quiet.
I think my father enjoyed the neatness of math, and took pride in his reputation as one of the best accountants around. He also was a lawyer, and so he didn’t do this all year, although for a few months it seemed to take over everything.
I think some people have an affinity for seizing the messiness of life and trying to impose order on it through numbers, and some of those people are called accountants. The rest of us can either pay them to do our taxes, or gnash our teeth every April as we do our own—and reflect in awe on those for whom this is an everyday event.
Can you use Quicken (or some substitute)?
Speaking for me, I carefully record my financial comings and goings in Quicken as they occur, taking special care to flag and categorize the tax-related items. Once I have done this faithfully, when tax season rolls around, things are organized and summarized and ready to roll.
It’s still a pain in the you-know-what, but keeping track of this stuff ahead of time eases the torture quite a bit.
We have what I think is a complicated tax situation with income from capital gains and rental property, plus owning farm land. We find that turbo tax works well and is far cheaper than having someone prepare our return. However, a sparse, simplified tax reform is something to include in your letter to Santa.
I like Turbo tax too…in spite of the fact that Turbo Tax Tim used it to cheat on his taxes.
Although I dread doing my Federal income tax (a holdover from when I used to do it manually), I’ve found that I can do mine from start to finish in a morning. I have a fairly complicated return because I’m a stock trader with options and commodities, have interest income on a self financed mortage and have a small Internet business.
neo, I feel your pain.
I have used both the Turbo Tax and H&R Block programs. I find both of them to be unintuitive and difficult to maneuver, especially H&R Block. These programs are aimed at people who get their income mostly from wages, dividends, and interest. My income is from pension, IRA, stock trading, and occasionally MLPs. H&R Block cannot handle the K-1s that result from MLPs.
For the last two years I have returned to doing it the old fashioned way. I find that it’s faster and less frustrating.
I have a system. All year long I file everything that might pertain to the tax return. During the first week in January, I assemble everything in envelopes by categories. In February, after I have received all my 1099s and K-1s, I do all calculations of the income, capital gains, taxes paid and deductions as well as the form 8606 for IRAs. In late February or early March I wrestle with the K-1s. (By far the most difficult forms I have to deal with.) Once I have all the ducks in a row on legal pad sheets, I log onto the IRS site and read any instructions that are pertinent or new and download all the forms that I need. With all that in hand, I fill out the return by hand. I just mailed my return in yesterday by Certified Mail, return receipt requested. It takes me a total of 10 – 15 hours over a period of 3 1/2 months.
I pay estimated taxes and try very hard to not overpay without having to pay an underpayment penalty. I usually owe money but just a couple hundred dollars. I actually enjoy the discipline of doing the work. It also helps me to judge how much estimated tax to pay in the coming year. I’m satisfied that if I pay too much tax it is no one’s fault but my own.
Ted Cruz says he wants to abolish the IRS as we know it. And that Gollum worm IRS Commish mocked him.
I think what Cruz is calling for is a flat tax. A real reform would be completely abolishing the income tax and have it replaced by a national sales tax.
But it will never happen. The pols use the tax code to generate donations, buy votes and social engineer. Just look at all the forms and their titles.
I have one lawyer friend and a big part of his legal practice is a tiny and obscure portion of the tax code. For that reason alone he is a big contributor.
Cornhead, the so-called flat tax or national sales tax has its problems. We have no state income tax in Washington State. The State’s income comes from sales, real estate, and business & labor taxes. These taxes are too easy to do stealth increases of .05% at a time. Over time these increases add up. The real estate tax is particularly onerous. During the housing crash in 2008 the assessed valuation of my house went down, but my taxes went up. I complained. The local tax assessor explained to me that assessed housing value meant nothing. What the State and County required in income was how the mil rate was determined. At least when my income goes down, I will pay less in taxes.
I refuse to buy a new car in this state. The first time buyer pays all the taxes (most areas that is 8-8.5% – $1600 to $1700 on a $20,000 car) upfront. The used car buyer pays no taxes because the first buyer paid them all. When that sort of thing starts applying to all large ticket purchases, such as houses, commercial real estate, etc., what do you think will happen? There will be fewer people willing to buy new. The real estate market will become stagnant or decline.
The best we can hope for is a simpler, flatter income tax with fewer loopholes that is much easier to process.