The Unfairness of the Tax Code

Although I couldn’t have cared less about the outcome of last night’s Super Bowl game (the Steelers weren’t in it and I didn’t hate either team that was playing), we did what we, and most of America does every year.  We hunkered down in front of the TV with lots of high-fat content tasty food and watched the Super Bowl commercials.

This morning I debated on whether to eat a slice of leftover Pizza Hut thin and crispy Super Supreme pizza or one of the delicious enchiladas that Oldest Son’s girlfriend had made for Saturday’s dinner.  I decided on the pizza, and planned on some enchiladas for lunch since there was almost a whole small casserole dish left and I was certain some would still be there at noon.

I busied myself with the week’s ironing upstairs, encouraging myself with the promise of a tasty lunch when I was done with that drudgery.  But when I came downstairs, my heart sank when I saw the empty casserole dish on the sink.  Noooooooo!

I knew immediately that Middle Son J had finished up the leftovers.  He always finishes the good leftovers.  I have learned to hide the good stuff (like in the fruit or veggie crisper–where they never look) when he’s around.  He’s usually back at college by now, but the damn blizzard of 2010 has shut everything down.  And emptied my fridge!

This weekend alone, he has not only scarfed up the good leftovers, but he has gone into my candy stash and raided my gummy bears, eaten almost the whole f-ing bag of Hershey kisses, and taken at least one bag of the beef jerky I like to keep as a snack at my desk when I’m back at work.  I can’t say for sure that he eats more than Youngest Son, but Youngest Son never comes home from school.  He’s right down the road but he’s so busy at college, that we only get to see him when his school actually shuts down for breaks.

This weekend while working on J’s taxes, I got to worrying.  The weekend before, I had done our own taxes and had claimed J as a dependent.  After all, he met all the tests when I figured our taxes.  Clearly, he is:

Our child:  check

A full-time student for at least a part of 5 months in 2009:  check

Under the age of 24:  check

U.S citizen/resident:  check (his service in Germany is considered a temporary absence)

Support:  clearly, we spend beau coups bucks on this kid

But then I decided to crunch the numbers a little more carefully with the little chart the IRS has to make sure we actually provided over 1/2 of J’s support.  According to the chart, we can only claim an allocated portion of the household expenses per person.  And we have to divide all these expenses equally between the people that live here.  So…it matters not that J eats 2/3 of the groceries, has the biggest bedroom, or takes more showers than the rest of us.  We are only allowed to figure in 1/5 of the household expenses as our support for him.  It also doesn’t matter that the money he spends for himself is on stupid shit that I would never buy–like tattoos, and super loud truck mufflers.  Those things are counted as what he spent on himself as support.

So far, the outcome is unclear.  I’m going to have to dig up actual receipts on what we and on what he actually spent last year.  It’s too close to take a guesstimate.  But in my heart, and in my empty deprived stomach, I feel like J is well-supported by us.

Taxes Won’t Buy Passion

Every time you turn around, they think up a new tax for us to pay.  Sometimes, the tax is enacted to get us out of a jam–but then, when the crisis is over, the tax is never repealed.  Most of us know that once they’ve found a way to grab more of our money, they’re never gonna give it back.  They’ll just find new things to spend it on, think up new reasons to tax us for the next crisis, and never even try to become more efficient.

In the US, we’re taxed locally, federally, and by our states.  We’re taxed on our incomes, on the things we buy, the services we receive, and often on the real estate we own.  Money is withheld from our paychecks, tacked on to the prices of goods we buy, and subtly included in the totals on our utility bills.  It sucks.  And it doesn’t buy us a lot for what it costs us.  I know.  I’m a super bargain-hunting coupon-clipping shopper.  I know a good deal when I see one.  Believe me when I tell you…we’re getting the shaft.

FEMA handed out millions of dollars allocated to misplaced Hurrican Katrina victims to scammers, while many true victims were left to fend for themselves.  Jaycee Dugard, the young girl kidnapped by a known pedophile and abused for 18 years, was further victimized by the “Keystone Kops” who could have saved her from years of torture had they followed up on leads and done some simple police investigation.  Are these workers lazy?  Inept?  Are they just there for the paycheck, not really having any passion for the jobs they do?  Maybe they’re overextended–but Lord knows, it’s not because we’re not throwing enough cash out there!

Here in my neck of the woods, there is a man with a passion for reuniting stolen children with their custodial parent.  He performs a valuable public service that complements law enforcement and missing children agencies.  And, despite the fact that he does not have taxpayer dollars being thrown his way, he has been successful.  He doesn’t charge for his services, either.  He relies mostly on donations, and volunteers include some of the grateful parents of recovered children.

Although Mark Miller has spent many hours on a lean budget bringing home children from all over the country, and sometimes even outside the country, he is in a court battle to have his charitable organization, American Association for Lost Children, Inc., exempt from property taxes.  This past summer, Commonwealth Court upheld a county ruling that the association should pay property taxes because it did not establish that it “relieved the government of some of its burden.”

Hmmm.  It seems to me he’s performing a huge public service, freeing up time and resources that many law enforcement agencies would have to spend looking for these children.  Even the local District Attorney and Sheriff sent affidavits stating that an organization like this does reduce the government’s burden.  But when the taxman needs that fix, there is no logic involved.  Just keep on sending that money.  They’ll find a way to waste it.

*Article from 10/18/09 issue of Greensburg Tribune-Review provided facts and inspiration for this post.

Problems With the IRS? God Help You

I got the call from my boss last week.  They would like me back at work starting Monday the 16th.  This is about what I expected.  I used to start back up right after the new year, but over the years we’ve learned that there’s really no need for me to be there that early.  The full-time staff can handle the early work load, and even the simplest tax returns don’t start trickling in until mid-February.  This works for me because it gives me time to get my personal tax returns filed.  There’s nothing worse than coming home from a full day of tax prep and then have to sit down at home and work on…more taxes.

I was all excited Saturday evening.  I had finished up our tax return, double-checked everything, and sent it on its merry way through cyberspace.  I was advised that since we were e-filing, I could expect my refund in as little as 8 days.  Cool!  About two hours later, my bubble burst when I was informed that the IRS had rejected our Federal return.  Because our Federal return was rejected, I got another e-mail saying our state return was also rejected.  OMG.  I had never been rejected before–at least not by the IRS.

The error message I received was that the EIN (Federal ID Number) on one of my forms did not match IRS records.  It was on the 1099R form that my employer had sent me on my dissolved 401(k) plan that I had rolled over into an IRA.  Since it was a direct rollover, and totally not taxable, it doesn’t affect my tax liability at all but the IRS still matches documents and likes to see everything included with your return.  Since I had entered the number exactly as it was printed on my 1099 form, I sent an e-mail to my boss asking if this was definitely the right number.  He replied this morning that it was indeed the correct number, and he had the IRS confirmation of it from 2001.  Hmmm.  Surprise, surprise.  Another IRS error.  It’s not the first time we’ve seen this.

Okay.  I could now print another copy of everything and send my returns via snail mail.  This would delay any refund I’m getting by about 3 weeks.  I also will have to make a trip to the Post Office to get the damn things weighed.  The main reason I like to e-file is because our returns are fairly complex (trust me, not because we’re rich–we just need to file a lot of different forms) and they end up looking like mini-pamphlets, barely fitting into a business size envelope.  Also, I paid an extra $10 for my tax program because for some reason, while TurboTax has no problem e-filing my state return every year, the less expensive TaxCut can not handle this function and makes me print and mail my state return.  Go figure.

Since this was not going to be the easy fix I was hoping for (say, like if my office had typed the wrong number and I could just go into my return and put in the correct number and resend), I figured I would call the IRS taxpayer help line and see if there was some way I could still e-file.  Of course I expected to be on hold for a while.  But I didn’t expect to have music blasting into my ear at a deafening level.  It was classical music, but I still had to hold the phone a good 2 feet away from my ear.  It made me want to cry.  I listened to the recording break in a good 20 times or more saying the representatives were helping others and please stay on the line.  After about 15 minutes, a real person got on, asked what my problem was, and said she would transfer me.

All ready to ask my question, I was interrupted by another recording that said due to the high volume of calls and the nature of my inquiry, I would have to call back another day.  Click.  I was just disconnected.  After wasting a good 20 minutes, they just hung up on me.  And I wasn’t even requiring them to think.  I was simply going to ask about some ideas I had to get around this stupid e-file snafu. WTF.

I know I’m taking a big chance here.  People don’t piss off the IRS or other government big shots (remember Joe the Plumber?) without invoking their wrath and possible IRS audits.  Being I’m not some politician with friends in high places, I should probably keep this all to myself.  But I can’t.  And so, as our ever-inefficient government steadily marches further toward communism, expect to see me in some gulag reserved for bloggers complaining about the IRS.  Maybe you can take up my cause.  Just do it anonymously.

Bye Bye Tax Breaks

I got a nice letter from my employer yesterday.  It seems they’ve decided to disband our 401(k) program since I am now the only one left taking advantage of it.  I work for a very small firm, but I didn’t realize that there were only two of us taking advantage of this terrific tax-deferred savings plan.  And now the other employee needs to save all his money in the here and now so that they can buy a bigger house.  And now I have to shop around and figure out where I want to roll this little retirement savings into.

I had been signed up to put the max 15% of my pay into my 401(k) while my employer would match my contributions up to a max of 3%.  If you can afford to do so, it’s best to set aside the maximum amount that you are allowed.  Not only does it build up your retirement savings quicker, the money put aside is not taxed now by the IRS.  Especially if you’re above the income level where you can contribute to a deductible IRA, this is a powerful tax incentive.  I tell all my tax clients to take advantage of it if offered by their employer.  Sometimes it can even lower your AGI to the point that you can take advantage of education credits or other credits that you would ordinarily not be eligible to claim.  It allowed us to claim more of the massive expenses Big Daddy incurs in his job (because “Satan” pays none of his employees’ expenses).  And now I won’t have that.

This came right on the heels of them having to cancel my eyecare insurance.  This was also taken out pre-tax.  My employers were even awesome enough to pay the portion I usually pay (for my other family members) themselves during the months I didn’t work.  Thank God we still have the dental.  Big Daddy uses that one BIG time.

My employer will make up the 3% contribution in the form of a 3% wage increase.  And I’m a good saver on my own.  But I better warn Big Daddy we won’t be getting the tax refunds we’re accustomed to.