The I.R.S. has estimated that I can do my taxes in about 3 ½ hours, which is crazy. It took me longer than that just to buy the alcohol I needed to get me through the data entry process. It’s the same as when I used to have my CPA do my personal taxes, except that now there’s no issue when I search through the stack of receipts at midnight, in my underwear, which is something that used to drive my CPA nuts. No wonder he stopped working out of his house. In the movie version of my life, these forms are kept hermetically sealed in neat files, locked for security and ordered chronologically. In real life, I use a garbage sack with a twist tie.
The I.R.S. assigns letters and numbers to different tax forms. I graduated from the 1040EZ many years ago – about the time my braces came off, as I recall. Like many others, I use the schedule A because the government subsidizes the huge mortgage payment we took on when we bought a new house last year. Schedule A is also used to deduct charitable contributions, such as tithing. I find it somewhat humorous that the Administration is trying to reduce the tax break for donating to charity, but lawmakers of all persuasions are digging in to protect the right of Americans to buy more house than they need, which I consider to be more of a privilege and less of a “right.”
My tax return is a four letter form. Schedule D, for realized gains, is next. Isn’t it irritating that the government feels entitled to gain from our investment prowess, but that’s just the cost of living and investing in America. And, to be honest, since some of those gains are merely the result of inflation, and since the rate of inflation is likely to skyrocket as a result of current government policies, I guess maybe they do have a right to claim some of those gains as their own after all.
I’m fortunate that the letters in my return stop at “K.” The K-1 is used to report income, or lack thereof, from my business. Currently, I get to choose whether my lack of income is taken personally, flowing directly onto my personal income tax, or whether it is taxed corporately, in which case it will once again be taxed to me personally, as a dividend, should I ever decide that I need the money more than my corporation does. Thus, I get to choose whether the money is taxed once, or twice. Naturally, I choose the alternative which costs me the least amount of money. This freedom to choose between being taxed once or twice is receiving the scrutiny of Tim Geithner, my public servant who heads up the U.S. Treasury’s efforts to debase the dollar. To Geithner’s way of thinking, I should always have to pay taxes twice, although personally I would much rather just eliminate his salary, once and for all.
Then there is the “kiddie tax.” That will be the real test for my new software. Can it handle calculating taxes on the kids’ accounts? The examples given by the tax guides generally use the example of a single tax return, for a single child. It never occurred to the writers that some of us are slow learners and have more than one deduction.
I don’t know when I reached the stage in life where completing my tax return revolves around whether my K-1’s come in on time. It came on slowly. And each year it seems like I have more of them. It’s like a frog in the frying pan and this was my year to get boiled.
So I won’t be filing on time. I’ll file my extension, buy another six-pack, and revisit my taxes again in October. When I file, the IRS wants me to e-file. Filing electronically probably saves them data input time, and they don’t have to scan the document before they lose it. I figure that they ought to share some of the pain that I experience each year, so I fill each form out by hand, after the software has determined the correct dollar amounts. Then I crinkle the paper up so it won’t go through a scanner, and mix up the pages so that some agent in Utah has to sort out the 90+ pages that I send them before they can begin entering the data.
They estimated that it will take me 3 ½ hours to complete my return. I’m hoping that it will take them at least that long to sort out and type in my return. Maybe in 2012 they’ll send me a nice letter, asking me not to file at all.
Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies .
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