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.

[abb]

Some people pay “pros” to do their taxes because they are just plain too stupid to do them.

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.

[sportutegrl]

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.)

[SeekAndFind]

RE: income is easily defined ~ it’s 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...

[RipSawyer]

“...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.

[Attention Surplus Disorder]

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.

[I want the USA back]

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.

[Huebolt]

H&R Block software includes a state return, all for about $19 if you shop around. They'll be there if one is audited, too. I've used it and Turbo and prefer it to Turbo.

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.

[Cicero]

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.

[SeekAndFind]

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 )?

[E. Pluribus Unum]

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.

[Mountain Bike Vomit Carnage]

I have a CPA who turned a nasty ‘YOU OWE THE IRS $84,000 AND WE ARE GOING TO TAKE AWAY EVERYTHING YOU OWN’ into a $1,245 payment.

[andyk]

To hell with a society that thinks I must pay a private individual so that I may render unto Caesar.

[Rusty0604]

That article was written on behalf of all the accountants that would be unemployed if the tax code were simple. Full disclosure: I am an accountant; not a tax accountant; and I do my own taxes.

[mc5cents]

“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.”

Reading that, some of the lines from an old Harry Belafonte song "The Man Piaba" come to mind:

Well it was clear as mud, but it covered the ground, and the confusion make me head go 'round.

You could say that for about 99.9% of the U.S. Tax Code. It is an abomination to mankind and to God.
And I mean that.

[SgtHooper]

LOL! Only if you have been doing it all along. If this is the first time, you may get audited and they’ll take your wifey and kids.

[Harmless Teddy Bear]

If you have private foundation you should have someone do your taxes. You probably have someone who's job it is to make sure you follow all the tax codes anyway.

If you have a sole proprietor business and the usual other stuff. You usually don't need someone to do your taxes.

[drinktheobamakoolaid]

Two words Turbo Tax. Maybe it’s just one word TurboTax. I’ll have to call my CPA. I’ll get back to you...(Sarc)

[taildragger]

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 )?

Oh you mean so our kids and grand-kids have a fighting chance against Singapore, Taiwan, the Czech Republic with it's 19% Flat Tax, etc etc etc ( for countries with them)....

Yes in a heartbeat

And I would also be for retraining K-Street Lobbyist out of work by this move to careers such as welders and truck-drivers of the Milk-Shake-Wagons that clean out the Port-a-Poddies @ Fracking Job Sites...

[Harmless Teddy Bear]

This link might help.
You need to know how much was in her IRA’s as of the end of the tax year.
http://www.estateattorney.com/elderlaw-articles/iras-mandatoryirawithdrawals.html

[Lancey Howard]

Taxes used to be so easy - - when you got mail from the IRS you just wrote, “Deceased - return to sender” on the envelope and dropped it in a mailbox somewhere. Voila! ...Taxes done! But nowadays? Whew...