Skip to comments.You're Nuts If You Do Your Own Taxes
Posted on 04/15/2013 7:20:19 AM PDT by SeekAndFind
You prepare your own taxes?!?
Are you insane?
I ran into a friend at the local coffee place recently. She made the mistake of mentioning that her husband prepares their household taxes, by himself. What? Is he insane?
I know, seriously, I keep telling him not to. Dear friend, dont do this to yourself.
I would no more do my own personal taxes than I would hand-sew my wifes wedding dress, do her hair and makeup just before the ceremony, and then administer the vows for the both of us. Because I might, just might, make a mistake along the way.
I would rather rebuild the household toilet, sewage and drainage system and connect it to the city system, while everyone was living there, than do my own personal taxes. I mean, what could go wrong?
I would no more prepare the infamous fugu sashimi for my friends and relatives than attempt my own taxes.
Who writes the tax code?
The income tax code consists of hundreds of specialty provisions written by and for relatively narrow interests who know how to maximize their advantages. Trying to navigate this even half-way intelligently makes no sense for a non-specialist.
Now, Im no Steve Forbes, but I too long for the day when taxes are so simple we can all prepare them ourselves, for free, in a couple of minutes.
I dont expect comprehensive overhaul of the tax code, however, will be Obamas legacy it doesnt seem his style, and hes got nobody on the other side of the aisle who would risk giving him that legacy opportunity but, boy do we need it.
Until that tax simplification and overhaul however, Im not doing my own taxes.
(Excerpt) Read more at businessinsider.com ...
For those who have a Private Foundation, Can anyone understand the following?
For purposes of this title, the term private foundation means a domestic or foreign organization described in section 501(c)(3) other than
(1) an organization described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)); (2) an organization which
(A) normally receives more than one-third of its support in each taxable year from any combination of
(i) gifts, grants, contributions, or membership fees, and (ii) gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity which is not an unrelated trade or business (within the meaning of section 513), not including such receipts from any person, or from any bureau or similar agency of a governmental unit (as described in section 170(c)(1)), in any taxable year to the extent such receipts exceed the greater of $5,000 or 1 percent of the organizations support in such taxable year,
from persons other than disqualified persons (as defined in section 4946) with respect to the organization, from governmental units described in section 170(c)(1), or from organizations described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)), and (B) normally receives not more than one-third of its support in each taxable year from the sum of
(i) gross investment income (as defined in subsection (e)) and (ii) the excess (if any) of the amount of the unrelated business taxable income (as defined in section 512) over the amount of the tax imposed by section 511;
(3) an organization which
(A) is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified organizations described in paragraph (1) or (2), (B) is
(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2), (ii) supervised or controlled in connection with one or more such organizations, or (iii) operated in connection with one or more such organizations, and
(C) is not controlled directly or indirectly by one or more disqualified persons (as defined in section 4946) other than foundation managers and other than one or more organizations described in paragraph (1) or (2); and
(4) an organization which is organized and operated exclusively for testing for public safety.
WTF? I’ve done my own taxes for over 10 years. Why the fear? If you’re just a standard work-a-day citizen with a 401(k), a mortgage, and some investments, doing your own taxes is simple and cheap. Most tax preparation websites offer audit protection in the cost of your prep fees.
Not sure why the fearmongering, unless I missed the /sarc tag in the post.
Interesting entry in our tax code about pre-paid rents:
The term constant rental amount means, with respect to any section 467 rental agreement, the amount which, if paid as of the close of each lease period under the agreement, would result in an aggregate present value equal to the present value of the aggregate payments required under the agreement.
That means it’s Bush’s fault and you’re a racist.
Oh and gay marriage too and small penis so shut up.
Just because Timmy Geithner is too stupid to use TurboTax doesn’t mean the rest of us aren’t bright enough to use it.
My returns are fairly complex. I’ve been doing them for years. TurboTax is an excellent product.
I’ll bet this was ghost-written by someone who makes a buck off of doing other peoples’ taxes.
For those of us who do not have large assets or large liabilities, preparing our own taxes is highly practical. We used to go to H&R Block, until I noticed that all the “expert” was dong was keying our info into the standard H&R Block tax prep software and reading back the screen prompts. So now I buy the software for a fracton of the cost of an appointment with the “expert” and do the prep myself.
The only thing that makes sense is that they are deliberately confusing elderly widows so that they can steal their IRA via a 50% tax penalty.
Most of us have simple lives and simple taxes. I can do my federal tax forms in a half hour.
I did 1040EZ for years when I was a single man with no children, one employer and no major deductions. It worked out great for me. Your miles may vary.
The last two tax years have been a mixed bag - got a $2500 refund last year. Had to pay $2700 this year. Both times I went to a professional because I didn’t want to trust in my own understanding of complicated issues.
I started this year’s tax calculated to pay $4500 in future Obamaphones but got it whittled down a couple of ways - chiefly by taking some of the funds I have and contributing to my IRA to get me down from the 25% tax rate to 15%. They also suggested that I itemize the ridiculous COBRA expenses I had while I was unemployed. But *I* was the one who inquired about a hardship exemption on one tax penalty. They called their tax attorney who said - yes - I qualified for one, although it only saved me $500, that was still better than nothing.
I still see nothing wrong with doing the taxes myself if I am a single one-income earner who doesn’t itemize.
Nothing would be clearer ~ you can’t use prepaid rental agreements to escape payment of taxes on interest.
The refund or additional amount you pay isn't an indicator of how well your taxes were done.
How many pages is the Tax Code? And how many can interpret it correctly?
My mom got a notice with her year end statement from her bank (where she has the IRAs), saying she needs to take $XXX.XX before the end of this year. Perhaps you have the info already, but missed it. I never even opened the envelope till today when I was doing her taxes. Mine was born in 1942.
They are requiring the elderly with 401s or IRAs to expose their income to taxation. The idea is their personal expenses are less ~ fewer trips to Acapulco for example ~ they have higher medical expenses, many of which are covered by Medicare ~ and they aren’t going to live all that much longer so it’s time to spend like a drunken sailor.
I’ve done my own taxes all my life and see no reason to change...especially now with Turbo Tax. Just because Tim Geitner isn’t bright enough to use this excellent service doesn’t mean the rest of us aren’t.
Minimum required distributions have been a part of IRA’s and 401K’s since the beginning in the early 80s. Here is an article in Smart Money that tells about it.
Take your time, do some research and help your mother. It isn’t scary, once you arm yourself with knowledge. Get all her tax returns, end of year statements and put it down on a spreadsheet.
Here is a calculator that may help.
The system is this ~ your income less your deductions less your tax credits plus your taxes ~ write a check and send it in.
The thing can be laid out in Chinese characters and be easily understood by people with no familiarity with English.
The big costs of the income tax come in the accounting for the income, the deductions, the credits.... etc. Virtually nothing is spent figuring out the tax.
Think about that a moment ~ why would the gub'mnt make it so hard to figure out some things and yet so easy to compute the tax due the gub'mnt!!!!
I wonder if he hires someone to dress him in the morning, balance his checkbook, buy his groceries, etc. I wouldn't try to do taxes without the current software products, but they seem to hit all of the necessary forms.
You don't do your own taxes? How insane!
For those who do their own taxes, I've found J. K. Lasser's "Your Income Tax" a helpful guide for answers to most of the more common issues. But it would be wise a new edition every year to keep up with changes in the tax code, etc.
I agree, done mine for years even when I had a rental and a small business. It is a pain, but I save a bunch of money. When I did make mistakes it has always been in my favor and they sent me more money.
In 2003 I was audited for my 2001 return, which was done by H&R Block. That convinced me I made enough, and my taxes were complicated enough, I was a target for the IRS.
I started taking my taxes to H&R Block in the late 1990s, not because I could not do my own taxes, but essentially for the protection. For the most part, I was telling the H&R Block employee how to prepare my return. IRS agents back off when taxes are professionally done by a reputable party. They know there is likely to be little provable tax cheating.
But that ordeal also taught me if you make enough money, and your taxes are complicated enough to make you a target for the IRS, you make too much money, and your taxes are too complicated for H&R Block.
I now use a local tax and accounting business to do my taxes.
Here is the IRS FAQ on RMD’s.
“...I noticed that all the expert was dong was keying our info into the standard H&R Block tax prep software and reading back the screen prompts.”
For the money they pay for their “experts” they could not hire someone who is an actual expert at reading the computer prompts.
Give me all of your money and I decides where my wife and kids vacation. Crass closed!
RE: your income less your deductions less your tax credits plus your taxes
Define allowable deductions....
Define Tax credits....
If someone has a simple 1040-ez with one source of income, its no big deal. You would be stupid to PAY someone to do it.
I bet this is the type guy that has to call a MAN everytime something brings round the house.
Same here. i did mine thru TaxAct on my lunchbreak. Simple 1040ez.
You forgot that in this day everyone is a stupid moron, a victim, and a drama queen.
Yes, I understand that. I took two semesters of tax law in law school.
As other poster point out, though, I don’t have to understand it. Turbo Tax does. As long as you know what to look for, and keep your records and receipts straight during the year, you just plug & chug. I wouldn’t advise drinking while doing the taxes, but otherwise it’s more time consuming than difficult.
What you are asking is really not that hard, millions of people figure it out every day.
She has to make a mandatory withdrawal in the year she turns 70 1/2. You take the total amount in all IRAS at the close of business of the year prior to that year. You look up her official life expectancy in Appendix C of Pub 590, which turns out to be 27.4 years. You therefore take 1/27.4 and multiply by the closing value of the IRAs the prior year.
Your brokerage house will often provide this for you, but it you have multiple IRAs at different places you have to figure it out yourself.
Actually, the IRS life expectancy tables are heavily rigged in favor or the IRA holder. Your IRS life expectancy at age 70 is 27.4 years, which is much higher than the real expectancy, so you get to draw your money out more slowly than you should.
Beneficiaries have to use more realistic life expectancy tables.
income is easily defined ~ it’s anything and everything you receive from others in a tax year. Send it in and they’ll leave you alone.
Seems to me those programs do a pretty good job of taking into account most things.
“”””If youre just a standard work-a-day citizen with a 401(k), a mortgage, and some investments, doing your own taxes is simple and cheap.””””””
Someone like that would be out of ‘normal’. Most people wouldn’t have 401k or investments. Most people are get-a-paycheck/pay-the-rent/its-gone types of household finances. hey I did it for years...
People like that that still pay $75 for someone to do a 1040 for them are the type people that can’t set a clock on a microwave or hang a picture.
Some people pay “pros” to do their taxes because they are just plain too stupid to do them.
For years I have advocated the following:
1) Everyone should be required to submit their own estimated “withholding” taxes themselves, monthly (just as the Self-Employed do now on a quarterly basis). No more employer-based withholding.
2) Everyone should be required to prepare and file their tax returns themselves.
Within two to three months, the gubmint would be broke, the Congress lynched by an angry mob, and ... the entire tax system comprehensively reformed.
I didn’t even look to see if you were here but PING anyway...
Depends on how complicated your financial life is. I get mine done in under an hour, that’s including software install time. Software helps a lot. I’ve got a friend whose an accountant, he does his own, and many other people’s.
Perhaps some. I suggest that a lot of folks are so damn intimidated by the Gestapo tactics of the IRS and government in general, that they want someone to share the blame if there's an error. Of course, those who make money off tax preparation (CPA's, H&R Block, etc) help perpetuate the intimidation. It's good for their business.
Which, IMHO, is as problematic as the stupidity. The government needs to be afraid of the citizenry, not the other way 'round.
My problem is that my mother lives on the other side of the country and I am the only one she trusts to do her ‘paperwork’. Also, when she gets a letter from the bank, she calls me and, even though I beg her to read it to me word for word, she says literally, “blah, blah, blah” over the important parts. (Example:Blah, blah, blah, withdrawal, blah, blah, blah, minimum something or other, blah, blah, blah, taxes due.)
RE: income is easily defined ~ its anything and everything you receive from others in a tax year.
I have spoken to new immigrants who have money on deposit at home before coming to live and work here (e.g. India, China, Taiwan ).
Some receive money from renting out property in Mumbai, Taipei or Shanghai.
Is that income that the IRS is legally allowed to take?
What if your father died in China and left you with a substantial inheritance, is that income that the IRS is legally allowed to tax?
NOTE: I know of many who DON’T declare them.
Just one complicated question about income for you...
“...time to spend like a drunken sailor.”
As a former drunken sailor I would not advise doing that. The typical drunken sailor is twenty years old, single and can simply go back to the ship or shore station, eat in the galley and live without money until the next payday. Most civilians are not in that position.
And by the way....there is another way to take mandatory distributions. I am supplying the idea hoping that it does not create confusion. If so, forget it.
In general, you want to take the amount the brokerage says to take. MATCH that number, don’t overthink it, and remember to add that money to your Mom’s gross income. End of story.
But if your Mom has a stock account INSIDE her IRA and a “street” account OUTSIDE her IRA....the brokerage can simply move stock shares from INSIDE the IRA to OUTSIDE the IRA. Without selling them. This is a bookkeeping matter on the part of your broker
This assumes she has shares and does not wish to sell them. When and if she does this, she will of course end up owing tax on the “income”, the value of the shs moved from inside the IRA to outside the IRA but because no sale occurred, she will NOT have the cash money (from the sale that never occurred) to pay the taxes. Again, if this is a problem, then forget it, direct your broker to move the cash amount from within the IRA (or, sell enough shares to produce that cash within the IRA) and send her a check.
Don’t overthink this. If the brokerage says you need to take a manda dist from the IRA for $1247.63, just get them to send the check and that’s that. Remember to add it into her income.
The tax law is intentionally complex because congress gives selected groups special privileges that it doesn’t give to others, misleading them into believing that they have an advantage over other groups, thus setting my interests against yours, and assuring that the tax code will never be changed.
Simplification and eliminating the IRS? Never happen.
It “interviews” you and is good for 2106 and employee non-compensated expenses etc.
It will e-file the federal for no charge. A state e-file can cost extra for some reason.
EVERYONE is going to be audited, BTW. It is like finding money in the street for 'em.
I went to an accounting firm once, to do my taxes. When we bought our house, the idiot who sold it to us had put it into a Subchapter S corporation because he was nervous about being sued by trespassers, and the rules for handling it were very complicated. We finally got the thing out.
But I just went just that once to a tax accountant, and then followed the method he showed me until it was resolved.
Our income taxes are pretty complicated, because I take advantage of every little loophole and write-off I can find. I’ll spend a few hours to save a dollar from the IRS. But TurboTax handles it very nicely, and more and more smoothly every year.
RE: Our income taxes are pretty complicated, because I take advantage of every little loophole and write-off I can find.
Here’s a question for you... are you willing to SCRAP all those loopholes, deductions, credits etc. in favor of ONE SIMPLE FLAT TAX or SALES TAX ( e.g., Herman Cain’s 9-9-9 plan )?
I use TaxAct online. Federal and state for $18. I do it with TurboTax online too. You don’t have to pay until you file, and it won’t give you hard copy until you pay. Most years TurboTax and TaxAct agree, so I pay for TaxAct. One year TurboTax had a better way of handling some stock transactions and saved me a lot of money so that year I paid for TurboTax.
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