| 21 February 2006 Taxman I was multi-tasking on President's Day. It is not one of the official holidays the company recognizes, but we are a scattered lot. Base on our history as being part of the old monolithic Phone Company, we have operating locations all over. Telecommuting is part of the corporate cutlrue, and it is not unusual to hear barking dogs or anguished children in the background on a conference call. The management of the Bus Depot building downtown said they would provide heat to our offices at a nominal hourly charge on the holiday, since the Federal Government was off honoring Presidents Washington and Lincoln. As a matter of cost avoidance, the Boss said we could work from home. That is how I spent the day, communting from the Fourth Floor down to the lower unit at Big Pink, and working on a PowerPoint presentation while participating in conference calls. I wondered if I could actually dare to write off the place as an office on the taxes next year. That is a risky tactic with real potential for attracting an audit. My older boy is a government worker, and he legitimately had the day off. He asked if he could come by and do his taxes. That is one of the last rites of passage for him. I have prepared the family taxes since before he was born. Today, I thought, he is a man. I was an early adopter of tax preparation software. The old days were awful, filling the forms out by hand, calculator and scratchpad, doing the math and writing down numbers. The software has improved, and flags areas where creative deduction might attract the interest of the Infernal Revenue Service. Being a former government worker myself, taxes had always been pretty straightforward. There wasn't much money to haggle over; what came from uncle Sam went to the mortgage, and that gave me the big tax break on the interest. Then the machine checked for errors, printed the forms, and even gave me the option of filing on line. When I retired things got complicated. One year there were three separate revenue streams; full government pay for part of the year, the pension that they failed to withhold State taxes on, and the paycheck from the day job I had to take to pay for alimony and college. Worse, I had lost my house and the interest write-off, and made too much money to qualify for help on the kid's tuition. I learned to estimate my coming tax bill by simply dividing my income in half, and earmarking one of the two piles for Uncle Sugar. It didn't seem fair, somehow, but I try not to think about it most of the year. Still, the software made it all simple enough, even if I had to write a big check in April. So I tend to put off thought of tax preparation until April; nothing good is going to happen, just another unpleasant surprise. My son wanted to get his taxes filed early, and harvest his refund to take a vacation. I sighed. I would like to take a vacation. Maybe I will next year, when his brother graduates from college. I monitored a conference call on a new product as I looked for the tax software. I knew it had come in the mail months ago, and it should have been with the tax receipts and the pile of W-2s and bank statements. But it wasn't there. I closed the Murphy bed, and looked in the bookcase that is normally hidden from view. No soap. I switched the conference call to my mobile phone and went upstairs to toss stacks of papers for the CD containing the software. No luck. I gave up and trudged back downstairs to log onto the Turbo Tax corporate site and paid another forty bucks on-line to download the program. It was a big file and it took ten minutes, even on the cable modem. I took the phone off “mute” to make an insightful comment on the conference call to ensure that they knew I was still alive as the download completed, and hit “mute” again when my son arrived. He marveled at the call, me standing in my bunny slippers and making sales predictions. I kept the phone on mute and made him a grilled cheese sandwich, once leaping from the kitchen toward my desk to hit “unmute” and answer a specific question on the third quarter forecast. In between, I asked him to layout his W-2's, Interest and benefit statements, and opened the software. I waved him into the seat at the keyboard and told him to import last year's data, and get started. I might be losing a deduction this year, but I am likewise losing a pain in the butt. When he worked at college, I had to file two separate state returns for him, and for his brother, and for me, when I claimed partial residency elsewhere to continue to qualify for in-state tuition. This is a year of simplification. My son entered the data from the restaurant where he worked after graduation, and for the college radio station, and the nine months he has actually been bringing home a real paycheck. Then the interest from his savings account, which is larger than mine, and the $1 in dividends from the Coca-Cola share that his grandmother bought him. It is a good thing that the phone was on mute, since when he was done with it, the machine chirped and told him he owed the Treasury $92 dollars. He cursed loudly. “My buddy is going to Las Vegas on his refund! He is claiming his younger brother as a deduction!” I kept the phone on mute, and explained to him about the Alternate Minimum Tax, the curse of the middle class, and how it was possible for parents to essentially lose their exemption for their children due to the unfair provisions of the tax code. Creative accountants have recommended that in some cases it is beneficial to allow the older children to claim their siblings on their returns. The law is too new for anyone to have gone to jail yet. “It is a loop-hole, Son. The minimum tax was intended to sock it to the rich, but with inflation and bracket creep it is hitting a lot of us. It is one of those unintended consequences. Congress, as you may be learning, is composed of scoundrels.” “But this isn't fair,” he said. “I should be going to Vegas.” I shrugged. “You saved some money, and the bank paid you interest. There is no withholding on that, and since you are in the 18% tax bracket, your tax bill is the amount of that interest that you have to send to the Government.” “Geeze,” he said. “That is really stupid. Why don't we have a flat tax?” “It would be regressive. If you had a wife and two babies and a mortgage your could barely afford, you would not be paying any taxes at all.” “That doesn't seem worth it, Dad.” “Tell me about it.” Copyright 2006 Vic Socotra |