You're Nuts If You Do Your Own Taxes

Business Insider ^ | 04/15/2013 | Michael, Bankers Anonymous

[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, don’t do this to yourself.

I would no more do my own personal taxes than I would hand-sew my wife’s 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.[1] Trying to navigate this even half-way intelligently makes no sense for a non-specialist.

Now, I’m 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 don’t expect comprehensive overhaul of the tax code, however, will be Obama’s legacy – it doesn’t seem his style, and he’s 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, I’m not doing my own taxes.

[SeekAndFind]

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 organization’s 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.

[rarestia]

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.

[SeekAndFind]

Interesting entry in our tax code about pre-paid rents:

It reads:

“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.”

[Mr. K]

That means it’s Bush’s fault and you’re a racist.

Oh and gay marriage too and small penis so shut up.

[Nervous Tick]

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.

[jboot]

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.

[Casie]

Turbo Tax online.
Imported all info from last year.
State and Fed cost me $70 to file and I did it in my PJs.
Email confirmation from IRS 3 hours later.
Screw you, your cold office, your 1 hour wait, and your $200 fee, H&R Block!

[sportutegrl]

Can anyone explain forced withdrawals? My mother, a widow, was born in 1941 and she has two IRAs. The rules state that she must take a deduction in the year after she turns 70 and 1/2? Why is it written so complicated? Why not the year she turns 70, or 71? And why can't I find out exactly how much money she has to withdraw today? I have been all over the internet and no one can give me a straight answer, especially the IRS.

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.

[Errant]

[RadiationRomeo]

Most of us have simple lives and simple taxes. I can do my federal tax forms in a half hour.

[OrangeHoof]

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.

[muawiyah]

Nothing would be clearer ~ you can’t use prepaid rental agreements to escape payment of taxes on interest.

[SampleMan]

The last two tax years have been a mixed bag - got a $2500 refund last year. Had to pay $2700 this year.

The refund or additional amount you pay isn't an indicator of how well your taxes were done.

[Jack Hydrazine]

How many pages is the Tax Code? And how many can interpret it correctly?

[PghBaldy]

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.

[muawiyah]

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.

[pgkdan]

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.

[abb]

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.

http://www.smartmoney.com/taxes/income/understanding-the-ira-withdrawal-rules-11956/

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.

http://www.bankrate.com/calculators/retirement/ira-minimum-distribution-calculator-tool.aspx

[muawiyah]

The tax code is extensive, but if you're trained in the language used to write it there's nothing in there that's all that difficult.

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!!!!