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(The New Republic)   If they taxed all the people who were too stupid to know that the internet makes doing your taxes easy, we could erase the deficit   (newrepublic.com) divider line 83
    More: Asinine, deficits, income taxes  
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2325 clicks; posted to Politics » on 14 Apr 2014 at 4:36 PM (27 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-04-14 08:46:23 PM  
This year, I did my taxes for the first time online, mostly because I didn't have the forms I thought I did. I didn't care for it. I really did not like entering all the W2 information, and I really did not like not seeing the calculations. It actually took a little longer than filling out the forms and doing the calculations myself. If there was a way to access my W2 online and use it to auto-fill the forms, and if there were something that made the tax calculations more transparent, I would tilt toward doing it online. I plan to use forms again next year.
 
2014-04-14 08:47:02 PM  

jst3p: Wessoman: Fubini: sleeping8008: Or really, anytime someone else like your employer or accountant doesn't do the majority of the work for you. Preparing four course meals for a family is a snap, especially when you hire a professional chef to do all the work.

Or really, any time you can follow well documented, explicit, simple instructions.

My worst tax year was the one where my wife was given a 1099 for a substitute teaching position. It was god awful- took all of four hours or so to do the paperwork.

The hard part isn't the tax forms, or understanding the tax forms, it's 1) understanding the nuances of the tax forms and 2) not having documentation you should have kept around anyway. It all boils down to understanding what can be claimed as a deduction, if it gets too hard you can always just say f**k it and keep better records for the deduction next year.

Some deductions are just stupid. My wife could theoretically claim the educator's deduction, up to $250, but doing so would require keeping receipts as justification. The amount you save (25% on $250, in her case) is hardly worth the bother from a year-end point of view, and given the odds of those receipts surviving for seven years in the event of an audit it isn't worth the hassle.

The Educator deduction isn't stupid, but it is a stern reminder that most teachers have to pay out of pocket for certain classroom materials that school districts should pay for. Trust me, auditors are really looking at Schedules C, D and E shennanigans. If you are self employed and running a Schedule C and E, you best keep all your reciepts, and that IS a pain.

Worst deduction of all: Mortgage interest. Because if you are a rich fark who owns a lot of property, just write it all off. Honestly, I think the Mortgage interest deduction should only apply if that is your primary residence.

As far as I know it is limited to two homes.


I thought even that was limited to your previous residence (if you are still paying for it) and your current residence.  I don't even think a "vacation" home qualifies as you must reside there 6 months or more a year.
 
2014-04-14 08:47:43 PM  

clowncar on fire: Not every deduction is a loophole.


My deductions are not loopholes. Your deductions are.
 
2014-04-14 09:13:12 PM  

DeaH: This year, I did my taxes for the first time online, mostly because I didn't have the forms I thought I did. I didn't care for it. I really did not like entering all the W2 information, and I really did not like not seeing the calculations. It actually took a little longer than filling out the forms and doing the calculations myself. If there was a way to access my W2 online and use it to auto-fill the forms, and if there were something that made the tax calculations more transparent, I would tilt toward doing it online. I plan to use forms again next year.


Tax Act.  You walk through each line.  You also have the forms you can refer to or fill out directly without the prompts.  The forms you print out look just like the ones you get at the Post Office, only neater.  Also, if you keep your login and tax id, you can populate all of last year's tax info (all those addresses and tax id # from places of employment, financers, home addresses and so on) that make up a bulk of the time when filling out those forms.  They can also walk you through various deductions that you may not even know your were qualified for (who'da thunk adding insulation to the attic or replacing windows or paying moving expenses was worth a deduction).  You can also check various scenarios such as joint and individual filing for the best return.  Separate worksheets and schedules- unlike professional tax preparers-- are free for the filing.  You don't have to send in additional schedules and forms when you file on line and its free.  All information is transferable to your state return although that usual costs.  All information is easily transferred over to your FAFSA application as well at no additional cost.

I'm sure there are a myriad of tax programs out there that may be considered more user friendly or tailored toward self employed individuals.  I've used them for the past 6-7 tax years, haven't had any major problem yet.  Unless you're working on a 1040ez and have no exotic deductions, online tax services would be the way to go.
 
2014-04-14 09:15:46 PM  
Some info on the Pease Limitation. If you're wealthy, find out how to avoid this and make some serious $$$.

http://www.forbes.com/sites/greatspeculations/2013/01/09/pease-limit at ion-puts-a-lid-on-itemized-deductions-for-wealthy-folks/
 
2014-04-14 09:31:51 PM  

UberDave: Yeah...it's easy until your god damn tablet won't load the Schedule-A PDF!!


/smashes something


Don't use a toy to do work, you won't have that problem.
 
2014-04-14 09:33:53 PM  
Im in my thirties and my dad does my taxes.

Of course he is an accountant.
 
2014-04-14 09:49:22 PM  

Without Fail: serial_crusher: Taxes are hard for people with a lot of things to tax. They're less hard for the average American.

Actually, taxes are easy for everyone.
Finding loopholes is hard.


That's what I spend 7 hours out of the 8 hours I spend doing my taxes every year finding.

/always results in getting money back
 
2014-04-14 09:50:28 PM  

DeaH: This year, I did my taxes for the first time online, mostly because I didn't have the forms I thought I did. I didn't care for it. I really did not like entering all the W2 information, and I really did not like not seeing the calculations. It actually took a little longer than filling out the forms and doing the calculations myself. If there was a way to access my W2 online and use it to auto-fill the forms, and if there were something that made the tax calculations more transparent, I would tilt toward doing it online. I plan to use forms again next year.


Dad?
 
2014-04-14 10:07:39 PM  
I haven't done it for a few years, but I used to work with the VITA program doing tax returns for low income people - most of whom are eligible for EITC.

The vast majority of these people can do a 1040a or EZ but they were so worried about screwing it up that they'd spend $50-$75 on HR Block.

HR Block, btw, would give them a 12 page document. You cannot do a 1040EZ via HR Block.
 
2014-04-14 10:17:43 PM  
Figuring out the amount of taxes you pay and thus the amount you either owe or get refunded has never been complicated.  It takes maybe 30 seconds.  Just find your taxable income and go to the tax tables.  The complexity is figuring out your taxable income.  That's why proposals such as a flat tax do nothing to simplify the process.  Simplifying would mean getting rid of most deductions and people don't want that.
 
2014-04-14 10:33:42 PM  

runwiz: Figuring out the amount of taxes you pay and thus the amount you either owe or get refunded has never been complicated.  It takes maybe 30 seconds.  Just find your taxable income and go to the tax tables.  The complexity is figuring out your taxable income.  That's why proposals such as a flat tax do nothing to simplify the process.  Simplifying would mean getting rid of most deductions and people don't want that.


I'd gladly trade in all my deductions for a lower overall simple tax rate.

I don't want a flat tax because it's regressive, but I'm all for a simple bracket system with no deductions.

I'm also weird though, because I've always opted for the standard deduction. Every year I run the numbers on the deductions to see if I should itemize, but it's never been worth it. No mortgage interest is the big thing.
 
2014-04-14 11:18:55 PM  

Fubini: I'm also weird though, because I've always opted for the standard deduction. Every year I run the numbers on the deductions to see if I should itemize, but it's never been worth it. No mortgage interest is the big thing.


That's because, oddly enough, the standard deduction is worth it for the standard number of people in that same situation.

The only people who want major tax reform are the people who are rich enough to try to take advantage of every loophole and failing.
 
2014-04-15 12:03:03 AM  
Only seven percent fill out tax forms by hand

I'm special!
 
2014-04-15 12:25:25 AM  
I'm getting a kick out of this.

I actually can't efile because of untaxable disability insurance that I have to file because w2.

Because my wages are 0 and untaxable, no efile for me.

Mind you, waited till las day, so lets find a tiny violin.
 
2014-04-15 01:01:33 AM  
I used Block for mine.  It was great until I started doing my state (I have to file in the state I work in and the state I live in).  The computer kept coming up with a huge number that I knew was wrong.  I finally just filed one state and fed and then used the state's tax site and I could do it all online there for free.  Saved me 40 bucks and although it took a few minutes longer, it wasn't that hard.  I can see my wife having a nervous breakdown doing them.  I think I'll guide her through and let her do them next year.
 
2014-04-15 01:44:44 AM  
Hmm. Well, as someone who prepares taxes as one of my jobs, I'd say that if you are doing your own taxes, there's a decent chance you are doing them wrong. Also, if you take them to HR Block, there's a good chance you are doing them wrong.

Earlier today, I was annoyed about our tax programs inability to do something I wanted it to do and as a result ended up discovering that one of our clients was, due to a recent change in the law, due about a $9000 refund for their tax years that have the statute of limitations run tomorrow. I guarantee if that person did their own taxes, they would not have noticed this, and lost out on that money.

Also, for the person worried about the teacher deduction, they assume all teachers pay at least that much, and the IRS's ability to audit a filed tax return is 3, not 7, years from the date of filing or due date, whichever is later.
 
2014-04-15 02:03:56 AM  

DeaH: This year, I did my taxes for the first time online, mostly because I didn't have the forms I thought I did. I didn't care for it. I really did not like entering all the W2 information, and I really did not like not seeing the calculations. It actually took a little longer than filling out the forms and doing the calculations myself. If there was a way to access my W2 online and use it to auto-fill the forms, and if there were something that made the tax calculations more transparent, I would tilt toward doing it online. I plan to use forms again next year.


Depending on if your employer makes W2s available electronically (mine does), TurboTax can import them automatically.  I never cared about seeing the math - I trust a computer to compute better than I can.

I spent almost no time entering my income - most of what took me time was just claiming all my deductions and credits, and that's mainly because I had a whole lot of deductions - about $25k worth.
 
2014-04-15 03:10:52 AM  
If you are doing your own taxes through a $20 piece of crap software, you probably are paying the IRS a lot of extra money if you actually made money.  If you are poor, you are probably not getting enough of a refund.  You also most likely did your taxes wrong (but hey, 1% chance of being audited isn't too much of a risk).

The only way you should use TurboTax is if:

1) your documentation consists of nothing but a W-2 or 1099

or

2) You actually know what you are doing.

If you own any sort of business, you definitely shouldn't be doing your own taxes.
 
2014-04-15 05:03:42 AM  
Good thing there's not a Smug Tax.
 
2014-04-15 07:34:01 AM  

Stailure: I think most people get confused by the sheer number of line items on the front and back of the 1040.  I mean seriously how many returns actually have a figure in the "certain business expenses of reservists, performing artists, and fee based government officials" box.

Oh, and also when income is high enough that the credits/deductions start getting phased out and AMT becomes an issue.

/tax preparer.


FWIW, I've spent time in every single one of the tax brackets, and this squares with my experience.

Are you single, no children, making only wage income, and taking the standard deduction?  No problem - that 1040EZ should take you less time to fill out than it takes to heat up a can of soup.

Claiming dependents?  Only marginally slower, and so long as you're not taking any unusual deductions or credits, you can bang it out on a 1040A over an evening.

Self-Employed?  Now it gets tricky.  I hope you kept all your receipts, because now you've got "audit me, savagely and repeatedly!" painted on your file in big, bold letters.

Same applies for those of you who are living/working overseas - the US government's attitude towards expatriate American citizens can be summed up by the phrase "Punish the serfs for daring to leave the manor."

When it gets really complicated is, like you said, when you get to the point when your deductions start getting phased out, or when you're taking a substantial portion of your income from things that aren't wages or the like.  Figuring out whether the AMT applies might as well require a sacrificial goat and three high priestesses of Ba'al to augur out an answer from its intestines.
 
2014-04-15 08:31:13 AM  

Wellon Dowd: Payroll withholding is the most brilliantly evil idea devised by the mind of man.


Why?

You can't make idiotic statements like this and expect everyone to nod their heads in agreement at how profound you are.
 
2014-04-15 08:35:11 AM  

jaerik: For the vast majority of Americans, there is no need to file a tax return at all because there are no itemizations or deductions that the IRS doesn't already have from your employers, banks, insurance, investments, etc.  You're just telling it everything that it already knows.

We could do like some countries in Europe and Asia do, and let you just sign to accept what the IRS already has (or amend it if you wish), but the GOP (and Intuit) has blocked it for decades saying that if they made taxes less painful/expensive, it wouldn't be as good a political football.


Plus, Turbotax and H&R Block would lose billions in sales if the average joe didn't pay them $50 to fill out a one page form.
 
2014-04-15 08:48:40 AM  
Having had income in 5 states, a move, a home sale, a home purchase, an investment liquidation, city and county taxes on top of federal,
I'm getting quite the kick....

That it cost $20 to mail 3 paper ones (where $ was owed) certified/return receipt was an extra kick to the nuts.
 
2014-04-15 09:44:11 AM  

Great_Milenko: Plus, Turbotax and H&R Block would lose billions in sales if the average joe didn't pay them $50 to fill out a one page form.


I think H&R spent all their money on commercials this year. I have hard time believing that even if 10 million people used that service it could possibly offset the cost of that barrage of TV ads.
 
2014-04-15 10:09:04 AM  

monoski: I think H&R spent all their money on commercials this year. I have hard time believing that even if 10 million people used that service it could possibly offset the cost of that barrage of TV ads.


This is why I will never buy any GIECO product.
 
2014-04-15 10:24:31 AM  
http://www.fairtax.org


Have fun arguing, but FWIW, there is no excuse for the Tax Code to be needlessly complicated.
 
2014-04-15 10:29:51 AM  
The tax code is ridiculously complicated although most of the code does not apply to most individual tax payers.  The tax code does need to be simplified and filing for business needs to be greatly simplified.  I cant imagine how many small business fail because they cant keep up with all the many and varied taxes that must be filed.
 
2014-04-15 11:04:43 AM  
Spotticus:

The only way you should use TurboTax is if:

All of your relevant accounting and tax-rule-scrutinizing is done by other organizations, and it's just inputting the documents, and then you *should* use TurboTax or something similar.  There is no reason to waste trees, postage, or your brain power on simple math.

Luckily, that covers most people that don't own a business or are self-employed.
 
2014-04-15 03:56:13 PM  
The largest chunk of my income, through W-2's, was by far the easiest to file. Then it's all, a dubious non-filed 1099-MISC that results in the need to file a Schedule C and Schedule SE (because lets face it, arguing that a w2 should have been filed will just rattle a bunch of people and take about 12 hours or so to fill out the forms especially for a low amount of income), a K-1 my wife can't seem to get, a Schedule D that's a major pain to do without tax software (as opposed to all the other forms), a Form 1098-T that translates into filing for a specific lifelong learning tax credit, assuming you can figure out to use it and not the other three options that are obtusely explained in forms... Easy to follow instructions about the size of a large college textbook... All the complicated stuff for about a total of $5000.
 
2014-04-15 05:50:34 PM  

ongbok: You ever notice that there are a disturbingly high number of people in this country that will intentionally try to make everything they do as complicated as they can? These people are especially represented when it comes to doing their taxes. It is just amazing how many people make the process of just doing your taxes yourself or finding someone to do them for you an ordeal.


The government could actually just do your taxes for you like they do in lots of other countries, but Grover Norquist and TurboTax, among others, lobby against it.  If you disagree with what the pre-approved form says, instead of signing it, you are still free to submit your own form, but for most people who just have a job and few assets, there is very little room for error.
 
2014-04-15 06:28:59 PM  

Gary-L: Have fun arguing, but FWIW, there is no excuse for the Tax Code to be needlessly complicated.


A progressive income tax is just as simple as a flat tax, with the added bonus of being better for the economy.  Deductions are where all the complicated stuff comes into play, and also where income (like capital gains) has special rules and lower rates that don't apply to the income that people who actually work earn.  The federal government could even fill out the forms for you, but anti-tax crusaders want the process to be painful.  The more the people at the bottom have to spend, the more money flows through local businesses.  Making one rate for everything as a sales tax based on consumption (instead of taxing capital gains like normal income for some reason), shifts the tax burden further onto lower-income earners, like you, you rube, and hurts local economies.
 
2014-04-15 07:05:56 PM  

Gary-L: http://www.fairtax.org


Have fun arguing, but FWIW, there is no excuse for the Tax Code to be needlessly complicated.


I'm upper middle class (low 6 figure income, single, homeowner).  Last year, I paid about 18% of my gross income to the feds between income and payroll tax.   Under the "Fair Tax", I would have paid 6.3% of my gross income.

If this is supposedly revenue neutral, who is paying more so that I can pay less?  How is that system fair to them?
 
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