It’s that frustrating time of year, again. Yep, tax time.
I purposely try to keep things simple, including my taxes. And usually my return isn’t complicated. In fact, I usually don’t have enough deductions to itemize, therefore taking the standard deduction. But this year, as a result of some unforeseen medical bills, I was thrown into hyper-drive trying to max out my allowable itemized deductions. I mean, once you hit that threshold, you might as well throw in the kitchen sink (which is also a red flag for an audit).
In the spirit of continuing education, I do my own taxes. I use a simple online software program from a reputable tax preparation company. They claim you won’t miss a deduction, and will guide you through a simple step-by-step process to maximize your return, even if you have limited tax accounting skills. Ok, sounds good to me.
I started with the easy stuff; income. I received several income reporting 1099 forms with numbered boxes. The software program walks you through the various forms and guides you to input the corresponding numbered boxes into the tax program. Easy enough.
It seems the government is very focused on providing simple instructions for capturing income, but not easily identifying deductions. Makes sense, the government wants to discourage deductions by making the rules so confusing and laborious; they hope you’ll give up. This obviously works in the government’s favor by insuring they capture income, while discouraging the reduction of any taxes; clever.
Next, on to adjustments. This is where CPA types really make their money. Unfortunately, I’m doing my own taxes. But, according to the list of 12 items, I didn’t qualify for any.
Next, on to itemized deductions. Yep, thanks to high property taxes, unexpected medical bills, charitable contributions, and a trip to Tampa for a job interview, I exceeded the standard deduction.
Next, credits. Out of the 17 credits listed, I qualified for one at $179, something about a foreign tax which was listed on a dividend 1099. I’m not sure what it’s for, or why I’m getting credit, but I’ll take it.
Next, taxes paid. Apparently, there are 16 listed ways to pay taxes into the system, of which I contributed by paying federal withholding.
Just when I was ready to finish, my wife came into the home office (of which I’m not deducting any expenses), and asked if I was deducting the sales tax paid throughout the year? No, I replied, the software program didn’t ask that question. How did you hear about it? The Today Show (btw, I miss Meredith).
Crap! Now this is becoming work. We went online to the IRS website and found the deduction calculator, and the correct line to input on the 1040. I couldn’t find the deduction in the program, so I called the online preparation help line and inquired about the tax deduction. The agent was very friendly, and although it took her a while, she finally found the deduction buried within the questionnaire. I inputted and bingo, my tax burden was reduced by $300 or so. Take that government.
I’ve got to admit, if my wife didn’t catch that deduction on the Today Show, I’d be overpaying $300 into the system. And what other creative deductions exist, that I (and most of America) don’t take? Probably a ton!
I’m sorry, but the existing tax code is ridiculous. I appreciate the accounting industry, but have to think even they would benefit from a simpler tax code. I’m all for paying my fair share, if I could just figure out what that is.
Flat tax, fair tax, simple tax. Whatever you call it, I’m all for it.