A while back, I did some research into dumb things that people have done on their tax returns. I spoke to IRA agents, H&R Block employees, CPAs, Enrolled Agents, and so forth.
The point I was trying to make: how complicated taxes are these days! In fact, I believe I’ve read that today more than half the population use outside help rather than do their own returns. (Me, too.)
Anyway, here are some of the stories I collected:
* A man in Los Angeles deducted the cost of his daughter’s wedding as a casualty loss. When an IRS agent phoned for an explanation, the man replied that his daughter’s new husband had proved to be a total disaster.
* Another man in California complained to the IRS that he kept getting a negative number on his tax return. He explained, “The instructions said to subtract line 8 from line 7, and whenever I subtract 8 from 7, I keep getting minus one.”
* A couple married for 10 years had never filed a joint return—even though their filing separately cost them dearly. As lawyer Martin M. Shenkman reports, the wife refused to divulge her income to her husband. (They have since been divorced.)
*A woman in her 80s used H&R Block to calculate her taxes. Her adjusted gross income was $56,000, and she owed $3,000. The woman told her H&R Block preparer that she would go home and send a check to the government.
“Use the last figure on the last line on page two,” he told her.
The woman made a mistake. She sent the IRS a check for the last line on page one. Her adjusted gross income.
A few weeks later, the IRS notified the woman that it was crediting her $53,000 overpayment to her next year’s tax return. (When the H&R Block agent heard about this, he had the $53,000 overpayment refunded.)
***
To get serious for a minute: Do you know what the top tax rate is on long-term capital gains? Of course you do. A mere 15%.
Next question: Do you think taxes are going up? Because of the war…our deteriorating infrastructure….the balance of payments… the reduction in estate taxes? Of course.
So, don’t you think it’s a good idea – if you’re planning to lighten up on your exposure to stocks as you get older – to do that sooner rather than later? Before the 15% rate walks off into the sunset?
And, as I’ve said before, with the market way down, it’s a good time to sell your losers (in taxable accounts) for the deductible losses, and to use the money you have left to buy other stocks.
The point I was trying to make: how complicated taxes are these days! In fact, I believe I’ve read that today more than half the population use outside help rather than do their own returns. (Me, too.)
Anyway, here are some of the stories I collected:
* A man in Los Angeles deducted the cost of his daughter’s wedding as a casualty loss. When an IRS agent phoned for an explanation, the man replied that his daughter’s new husband had proved to be a total disaster.
* Another man in California complained to the IRS that he kept getting a negative number on his tax return. He explained, “The instructions said to subtract line 8 from line 7, and whenever I subtract 8 from 7, I keep getting minus one.”
* A couple married for 10 years had never filed a joint return—even though their filing separately cost them dearly. As lawyer Martin M. Shenkman reports, the wife refused to divulge her income to her husband. (They have since been divorced.)
*A woman in her 80s used H&R Block to calculate her taxes. Her adjusted gross income was $56,000, and she owed $3,000. The woman told her H&R Block preparer that she would go home and send a check to the government.
“Use the last figure on the last line on page two,” he told her.
The woman made a mistake. She sent the IRS a check for the last line on page one. Her adjusted gross income.
A few weeks later, the IRS notified the woman that it was crediting her $53,000 overpayment to her next year’s tax return. (When the H&R Block agent heard about this, he had the $53,000 overpayment refunded.)
***
To get serious for a minute: Do you know what the top tax rate is on long-term capital gains? Of course you do. A mere 15%.
Next question: Do you think taxes are going up? Because of the war…our deteriorating infrastructure….the balance of payments… the reduction in estate taxes? Of course.
So, don’t you think it’s a good idea – if you’re planning to lighten up on your exposure to stocks as you get older – to do that sooner rather than later? Before the 15% rate walks off into the sunset?
And, as I’ve said before, with the market way down, it’s a good time to sell your losers (in taxable accounts) for the deductible losses, and to use the money you have left to buy other stocks.
