Although I completed the pre-work involved back in mid-February, it looked like we were going to owe a few dollars to both the federal and state, so I figured there was no rush and I set aside some time this weekend to complete the process.
It’s not unusual for us to owe some taxes in April, generally we take a look at our withholding mid-year and make adjustments as needed to ensure the government does not get a free loan from us for a period of months. I can’t bring myself to enjoy a “big” refund, it serves to make me pretty mad and increase my blood pressure.
So, just how difficult was your tax season?
Even with the introduction of applications like TurboTax, TaxAct and H&R Block at Home, more and more filers have a tax preparer completing the forms for them. I found this article in USA Today from last April.
This April 15 , about 60% of the tax returns processed by the IRS will be signed by a paid preparer, up from about 45% since the advent of tax preparation programs. In tax year 2006, the last for which detailed records are available, some 82 million returns out of 136 million were done by a paid preparer. During that time, the tax code grew from about 20,000 pages to 70,000 pages.
70,000 pages! I’m speechless. Can you imagine the utter shock the Internal Revenue Service would go through if a Fair Tax or Flat Tax were passed? The way I figure it, as the code gets more complicated, families and small businesses become more afraid of the process, resulting in what can only be described as a loss of liberty.
So, how did my preparation go? Well, right up to the last hour using my application of choice, I was under the impression I would owe a few hundred dollars. But during the review process, I notice a $3,200 item listed in our income overview table labeled “other income” and for the life of me, I could not figure out what it was.
After about one hour of hunting, I found out I checked off a box that indicated we had not participated in a high deductible health plan during 2009. In fact, we did have a high deductible plan, and because of that simple mistake, our income was increased by the $3,200 my employer contributed to our Health Savings Account in 2009.
Whoops. Turns out, it was a significant mistake that would have cost us almost $1,000.
Exit question: Has the federal government made any process easier over the years? Certainly does not seem so, and the burdensome tax code is just part of the crazy bureaucracy within the beltway.