Tuesday, June 21, 2011

Render Unto Caesar Part 2

I hate paying taxes.  I truly hate having to do the math to figure out what my income tax burden is going to be, deciding which withholding category to put myself into, and then having a good chunk of my paycheck withheld by the IRS to pay towards my yearly debt to the government.  I absolutely loathe filling out my yearly income tax forms, and hoping that I didn't over- or underestimate what I should have had withheld by too wide a margin.  I try to be within a couple of hundred dollars on either side.  I don't want to write yet another fat check to Uncle Sugar on April 15, but I also don't want to give him a nice interest free loan every year.

Last year, Junior Bear moved out and went to college on day 188 of the Julian calendar.  That's important because he spent just barely over 50% of the year in my home.  So I planned my tax withholdings to have three dependants (Junior, Girlie, and BooBoo.  Little Bear lives with his mother full time, so she writes him off.)  I did a quick analysis of my tax position in January, and I was going to be about $200 in the black come April 15, and that money was going right into the gun savings account.

On or about April 10, I got a call from Junior Bear's mother.  She was in her accountant's office with Junior Bear's tax documents and a power of attorney.  Guess what she was doing?  If you said "She's doing Junior Bear's taxes" you get a cookie and a gold star.  She had convinced my loving son that by filing his own taxes and sticking it to the man (me), he would more quickly become an independent student, and as a happy happenstance, I would get hosed one more time by my loving ex.  After a rather 'emotional' discussion, she pretty much stated that she could show that Junior had spent just enough time outside of my care during those first 188 days of the year that I would not have the right to deduct him from my taxes.  She, and I quote "dared" me to file with him as a dependant, trip an audit, and see who came out the worse.  With me on speaker phone, she instructed her accountant to pull the trigger on e-filing Junior's tax return.

I can honestly say I have never wondered why my life improved after that woman left me.

I reported this to my loving, understanding, and very red-headed Irish wife.  After much wailing and gnashing of teeth, we mutually decided that we would take this as the final kick in the pants of having to deal with ex-wife #1, bite the bullet, and just pay the taxes that were going to be due now that our number of dependants went from three to two.  I also had a very intense heart-to-heart talk with my oldest son about which parent was the one schlepping up to Indiana with groceries every month and which one was doing nothing for him but co-signing on student loans.

A couple of days before April 15, I took out the tax forms again, re-figured everything, and came up with us not getting $200 back as previously figured, but instead owing almost $1100.  Yes, I again thought back to how much better off I am without her.  I swallowed hard, wrote the check, signed the return, and sent it in.  Yes, I did the taxes by hand using paper forms.  Why spend $100+ dollars on an accountant or tax software to do a simple income tax return?

Pride goeth before the fall, a wise man once told me.   I think the classical Greek playwrights would have called this 'hubris'.

Yesterday, I received a nice letter from the IRS.  I had apparently made two errors on my return.  First, I had miscalculated the amount of the interest on our student loans we could deduct, which is easy to do when doing the forms by hand, and probably only added a few dollars to my tax burden.  More seriously, the IRS was disallowing one of our dependants, and had slapped us with an additional $1800.00 in tax burden.


Today, during lunch, I jumped on the phone and called the IRS.  After an hour on hold, a lady I will call Ms. T came on the line.  After making sure that she was indeed speaking to a Mr. Daddy J. Bear of Louisville, Kentucky, we dove into my issues.

Turns out, I fat fingered the Social Security number of Girlie Bear on our tax return, and the Social Security Administration had disavowed any knowledge of such a person.  Ms. T gave me the standard "you should have proofread everything before signing anything" speech, and then corrected my error.  She then went back to the student loan interest issue.  I had written off about $1000 in interest, while the IRS only showed me as being able to write off about $400.  Hey, stress me out, caffeine me up, and hand me a stack of government manuals and forms three inches thick, and I will make an error. 

After entering the correct Social Security number in her system and figuring out how much my error changed my tax burden, she was happy to tell me that my new tax bill was $9.80, not $1800.  And to make the day even better, she told me that since I'd filed on time and paid my tax bill already, they were going to forgive that money.  My hunch is that there's a minimum amount they want to collect because it would cost more to process the check.

Throughout the conversation, Ms. T was professional, friendly, and helpful.  I honestly expected someone a bit more combative to answer the phone.  Just goes to show you can never tell which personality you're going to run into when dealing with the government.

Here's what I took away from this:
  • Taxes suck
  • You gotta pay your taxes
  • There is no such thing as a simple income tax return
  • Money spent on tax software or an accountant is money well spent
  • Not everyone who works for the government is unhelpful or obnoxious
  • Taxes suck


Christina LMT said...

I do my taxes online, for free. But I believe I can do that because my income is so darn low! E-filing is the way to go, if you qualify!

Christina LMT said...

Oh, and YAY for you on not having to spend MORE of your money!

DaddyBear said...

Yeah, next year I'm definitely going to spring for TurboTax or something. And yes, it's a great feeling finding out you don't have to come across with an entire year's ammo and gun budget!

Steelghost said...

I wonder if this could be a good learning experience for Junior. Let him see what the cost to you was for his filing of taxes, and let him tell you how little he got back. The hard part is not turning it into a preaching moment. I'd bet you paid 1800 for the gov't to pay him 600 or less. At eighteen that is hard to see when there's money in your pocket.

Newbius said...

I can only second any advice you will receive to do taxes via TurboTax. If you think it is dicey now, try it with 2 Schedule C businesses, 3 kids in college, and numerous itemized deductions due to charity donations.

It also illustrates the value of the "3 S's" when dealing with troublesome long-term problems. ;)

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