Foo - Federal Income Tax Filing - Grr!

This is ridiculous!

For the first time in 47 years, I had my US Income taxes done by someone else. This was because I had a major capital gain in the sale of some property, retired, and had some very significant medical expenses, etc. I wanted to be sure I got every legitimate deduction I could.

It appears that the well-rated tax preparer (no, not one of the chains) did a great job. But, I just got the return back and have just finished counting the number of pages that had to be completed.

35 (thirty-five) separate returns and worksheets! Thirty-five. And several of these were quite complicated and it would have taken me hours to figure them out.

So, my $300 was well spent, but goodness - 35 pages?

We really need to reform the US Tax Code.

Yeah, I'm not down with this whole 'tax' thing too. I say we just can it.

when I was working in South Africa we used Price Waterhouse or some
other accounting firm to do the taxes. I filled out multipaged q and a sheet about
income, taxes paid (both US and South African) etc. When accounting firm sent
the tax package back to be signed and sent to IRS it was often 50 or more pages!

I kind of like the flat tax equation.
Q) how much did you earn last year ?
A) send in 10% (in a joke you answer "send it in" )

but it only works if it applies to everyone, no deductions, no exemptions and its for business and
individuals.

the horror stories I could tell you.

marty

My uncle once had one that was over 200 pages long....


Anyway, I used to work for the IRS and I can tell you that it is IMPOSSIBLE to administer laws this complex in a consistent and fair manner - but you'd be suprised how close they come.

Almost every country in the world uses a VAT (value added tax) + a flat income tax. It works pretty well for them. And there are better ways to encourage middle-class home ownership (morgtage interest deduction), saving for college (any number of different benefits), working even if you're poor and have kids (earned income credit), etc., etc., etc. than using the tax system.

The tax code can be fair or it can be simple, but it can't be both. The tax code is structured to influence behavior - which most would agree is fine. Certain behaviors should be encouraged - buying a personal residence, putting money into your retirement plan or IRA, putting away money for your children's college tuition, donating money to charitable organizations, etc.

As an example, two single taxpayers each earned $30,000 during the year. One is 22 years old and lives with his parents. The other is 70 years old, blind, lives alone and had $12,000 in medical bills for the year. Should they pay the same amount in taxes for the year? Most people would agree that the 70 year old should be given certain tax preferences.

Much of the complexity in our current tax code stems is due to the fact that people are basically dishonest, especially when it comes to money. What is the purpose of a 1099-Misc, 1099-Div, or 1099-Int? If they didn't exist, people wouldn't report the income! I'm a CPA, and I no longer do tax preparation, but when I used to, I had a lot of clients who tried to flat-out lie on their returns. As a tax preparer, I am very far from conservative - I used to take a lot of liberal deductions that would probably make other CPAs gasp with horror. But many of my clients would tell me to add another few thousand in deductions for no other reason than they didn't want to have to pay so much. Unbelievable...

Make no mistake, I'm not supporting our tax system. There are better ways to encourage certain behaviors. Just trying to explain that it will never be as simple as most people think it can be.

Taxes suck. But as they say, there's nothing more certain than death and taxes.


As an example, two single taxpayers each earned $30,000 during the year. One is 22 years old and lives with his parents. The other is 70 years old, blind, lives alone and had $12,000 in medical bills for the year. Should they pay the same amount in taxes for the year? Most people would agree that the 70 year old should be given certain tax preferences.

Or, we could tax them the same, but help the 70 year old more on the spend side of things. Government spending necessarily involves priorities and decisions. But taxation doesn't have to. All the reasons mentioned for differential taxation could also be solved by subsidies on the spend side. I'm not saying that that's necessarily better. I have little clue on this matter. But I fail to see how it wouldn't be possible to tax equally but still be fair in policies since one can alter the balance by altering how money is spent as well as how it's collected.

Heh I guess I'm Lucky. I work for a tax firm, so I get my taxes done free...

Or, we could tax them the same, but help the 70 year old more on the spend side of things. ... But taxation doesn't have to. All the reasons mentioned for differential taxation could also be solved by subsidies on the spend side. ...Jschen, by "spend side", do you mean a federal tax on purchases? For instance, all purchases would incur a state tax (if any) as well as a federal tax, but eliminate income tax filings?

So, my $300 was well spent, but goodness - 35 pages?

We really need to reform the US Tax Code.

Three years ago, we had a similar situation with a capital gain on a home that included a rental property, and some expenses related to services offered on top of two employment incomes. We had all our records filed and listed, so not much of a pain for us. The bill came up at $600.

Since we have been using TurboTax, and though our returns have not been as complex than that particular year, I have played with it to figure out how it would accomodate this kind of situation and it's quite simple (and far less expensive).

I mean federal spending. Wouldn't equal taxation (on income or on purchases... either has its advantages) combined with government subsidies (but not in the form of tax breaks) accomplish the same thing without overcomplicating the tax code? It makes the federal budget more complicated, but most people would be insulated from the complexity.

Of course, it's easy to propose. Whether it would be easy to execute (even setting aside concerns about how to make the transition) is a totally different issue that I have no clue about.

<< Almost every country in the world uses a VAT (value added tax) + a flat income tax>>

Not true. Most European countries have VAT AND a progressive taxation scale. And, in some cases VAT is around 25%. In the UK, VAT is 17.5% and the max tax rate is 40% which starts at a taxable income of around $40K. One of the few countries which uses a flat income tax is Estonia.
So when Americans whine about high taxes, they should look outside and see how lucky they are.

As for tax returns, I have never seen the need to pay someone, because even a trained monkey could do its taxes with TaxCut or TurboTax.

<< Almost every country in the world uses a VAT (value added tax) + a flat income tax>>

Not true. Most European countries have VAT AND a progressive taxation scale. And, in some cases VAT is around 25%. In the UK, VAT is 17.5% and the max tax rate is 40% which starts at a taxable income of around $40K. One of the few countries which uses a flat income tax is Estonia.
So when Americans whine about high taxes, they should look outside and see how lucky they are.

As for tax returns, I have never seen the need to pay someone, because even a trained monkey could do its taxes with TaxCut or TurboTax.

I am not a trained monkey, but this year for the first time I did not use turbo because I had a lot of areas in which I had little or no expertise, and I have found turbo to be fine for a simple regular tax return, but with poor directions and at times confusing for more complex situations.

I am glad, however, that you have such wisdom and smarts.

Next year I will go to the monkey training course.

And, I would propose that comparing people to "trained monkeys" is not in keeping with the BFN credo, spirit and guidelines.

As for tax returns, I have never seen the need to pay someone, because even a trained monkey could do its taxes with TaxCut or TurboTax.What? The only person who would make such a claim is someone who's taxes are so simple, there is no room for judgement calls. But there are so many areas of the US tax code that the IRS doesn't specify things in black and white. For instance, look up how the IRS determines what is an improvement (for a landlord, this should be added to the property's tax basis), and what is a repair (which is deductible in the year paid). The IRS gives three basic guidelines that are open to interpretation, and sure to cause many disagreements. And this is only one example - I could list hundreds of others.

Good judgement, which is the product of knowledge and experience, are necessary to make a good decision. If you ask most experienced tax preparers, they will probably tell you that TurboTax, when offering guidance, tends to swing very much towards the conservative side. Thus, the taxpayer who uses TurboTax is likely to be overpaying if their taxes tend to be complex. I have personally done taxes for several taxpayers who used TurboTax or TaxCut initially, and after taking some time to discuss their financial matters in more depth, I was able to save them thousands of dollars. Good judgement makes a difference.

Your comment above is a slap in the face to anyone who has ever gone to a tax preparer. It's also a slap in the face to anyone who prepares taxes. It's too bad you feel that way, but you are simply incorrect.

I had to file a 1099 INT for the $10.32 I earned on my savings account. :mad:

The tax code can be fair or it can be simple, but it can't be both.Well, I don't think it can ever be either as well. The tax-code is the most voluminous publication ever created by man, bigger than the Bible, bigger than all of Shakespear's works combined. I bet if you added up every single document ever created outside of the tax-code, it still wouldn't compare.

It also doesn't matter which income-bracket you're in, you probably feel that you're paying more than your "fair" share of taxes. Personally I use a tax-attourney that used to work for the IRS and he does a very good job. Been audited 4-years in a row and have come out squeaky-clean and on top each time. I bet they're gonna try it again this year... HAH!!! :)

When do taxes need to be done by. I lost my W-2 and my I-99s or w/e for last year.

April-15th I believe. Check this out: http://www.irs.gov

There are only two sure things in life, death and taxes...

Thanks to April 15 being on a Saturday, you have until April 17. Unless April 17 is a holiday (true in certain states), in which case you have until April 18.

I thought the thread title said "Federal Income Tax Filing - Grrl!" and was trying to figure out why you were getting sassy about taxes.

Anyway...