Taxes and Tribulations

It’s Tax Season, or at least it is in a wide sense.  The first few months of every year are about the time that most of us pay our taxes, and most of us do so just that one time.  According to the latest data from the IRS – which I will now make up because I got bored while researching and my fake answer will be more fun anyway – more than 50% of Americans file their tax return at the last minute*.  While a fair amount of us are still total shitbags (or have legitimate reasons or whatever) and file late, a large number of us actually file early.  In fact, due to the rise of eFiling (stupid name) along with web and desktop-based self preparation applications, the number of us who file early has been steadily increasing each year.  Mundane as it may seem, I find it kind of cool.  It’s one of the few things I can look at in our society and think, “Yeah, you know what?  It’s not all going to shit.”  I look at it as a strange bit of technological, political, and protocol…ular advancement that we all just naturally accepted in a way that improves our lives and the nation as a whole.  As with most of our great communication, transportation, and infrastructure, we take it for granted.  That it can be taken for granted so easily is almost a sign on to itself that it is so awesome. Pair the early filing facts up with the variance of reasons for late filing and the picture starts to become more clear – whether or not we like it, the vast majority of us are pretty on the ball when it comes to paying our dues.  That’s kind of neither here nor there.  It’s just kind of something I find interesting.

I filed early this year, as I have for as many years as I can remember.  I filed in the second week of February, which is actually a little later than usual.  If I were a little more on my game, I would have started my return around New Years.  Obviously, I didn’t have my W-2s or any other end-of-year annualized paperwork, but I did have a fair amount of other information all ready.  Donations, losses, real estate information, and random deductions were already piled up and ready for me to compile and start tabulating.  I normally get my taxes started either the day I receive my W-2 for my primary source of income or slightly before.  This year I held off because I was waiting on some additional information.  That’s actually a bit of a slacker’s lie, though.  I could have input all of my information and just waited for the last piece and adjusted before filing.  I’m not sure if any of this makes sense or if I’m being too vague, so sorry about that.  The point is, you can get started on your return even before you have your W-2 and I recommend it.  I would also recommend an early filing to pretty much anyone – especially if you are expecting a return.  Even if you’re just going to bank the return (as many of us probably should), it’s worth more to you in your bank now than it is in Uncle Sam’s while you procrastinate.  Trust me.  Compound interest is a force to be reckoned with.

For those who know (or at least expect) that they are going to owe, I suggest three courses of action.

Course One: Do your taxes as early as possible but don’t actually file them until the last minute.  The idea is to get your taxes done so that they’re out of the way and, much more importantly, actually know exactly how much money you’re going to owe.  That way if the amount you owe is going to make a significant (or otherwise shitty) impact on your bank account, you have the time to figure out how you’re going to deal with it.  Plus, you can continue to collect the interest on that money in your bank account until you hand it over to the State.

Course Two: Pay quarterly.  I know what you’re thinking, “Fuckoff asshole”, and you’re right.  I’m an asshole for suggesting this now, ’cause it’s too late for you to it this year.  But maybe your current shitty experience is enough for you to start considering this possibility a bit more seriously.  I know that we all like to put shit off until we have to, but the most successful people that I know practice this method of tax filing.  I’ve never done it myself because I’ve never owed… that’s my own laziness, I suppose.  I can’t speak to how it works or even really why it’s best, but I do know that paying off bits of a giant bill over time is less painful than paying off the whole giant thing right now.

Course Three: Wait.  This idea comes from a friend who seems to have to pay every year.  His situation really super-mega doesn’t make any sense.  He is married and filing jointly, owns property, pays all of his dues on time, isn’t rich, doesn’t have any strange properties of holdings, and so on that, historically speaking, all but guarantee a return.  It’s possible that he’s somehow making a mistake in filing or forgetting some key paperwork, but he’s had professionals look at his returns.  Even those pros would end up confirming that he did, in fact, owe.  Worst of all, they not only didn’t save him anything, but now he had the added expense of paying for professional tax review.

Typically, he uses one of the tax software joints – TurboTax, I think.  Maybe Quicken, but I don’t think so.  I use a web app – H&R Block’s online self prep wizardy thingy.  They all have the advantage of a well guided tour through your taxes at your own pace.  You don’t have to rely on another person, pay an assload upfront, or risk on-the-spot upsells.  On the other hand, they both have similar disadvantages.  You’re still paying money for something that you could do for free, you still get upsells (though not nearly as bad, from my experience), and you’re still on your own.  But unlike the web app solution, you can significantly decrease the cost of desktop software by simply waiting.  Most of the in-box, retail software really only works for one year.  Even those that can be kept for the next year will require updates, most of which are going to have an additional fee.  Those that don’t charge an upgrade fee often charge a processing fee when you eFile through the program (though give the option to File on your own).  In any event, this usually means that, as a minimum, the branding, box art, and in-program user interface will all have the current year on them.  That makes it pretty hard to sell those programs after the current tax season ends, so those programs tend to have some pretty dramatic price drops as the national filing deadline approaches.  Thing is, you can’t do this very effectively if you’re just going to be some lazy bitch about it.  You need to make sure that you collect up all of your tax information and then wait for the software to drop in price.  That’s what he’s doing, and it seems like a pretty good idea to me.

Preparing my taxes on my own can be a pretty big pain and increasingly complicated each year.  This is why I started using the web app in the first place.  By the time I was actually required to file (I think 19?), eFiling had already become a thing.  In case you didn’t know, filing itself is, always has been, and always will be free, regardless of whether you file by mail, electronically, or by any other method.  It’s the preparations and handling that you’re paying for.  When I started filing, my taxes were pretty easy.  I had one source of income, no property, no charity work or donations, no itemized deductions, blah blah blah.  In essence, I filled out a 1040EZ and, I think, submitted it by phone.  Pretty crazy, right?  But it was super easy.  It was basically like filling out lines on a survey and getting paid for it.  There was barely any math.  I just jotted down my W-2 information, found my standard deduction for “abject poverty”, and did the simplest of math for my return.  So simple.  A few years later and my returns started to include multiple incomes and additional deductions.  I was away from most physical tax prep locations and actively serving in the military.  I remember receiving an email about preparing my own taxes online and thinking, “This is perfect.”  As complicated as the return was to me, it was probably still a 1040EZ or at least a fairly simple 1040blahblah so H&R block did the prep and filing for free.  Pretty rad.  I’ve stuck with them ever since.  I have had to pay for the prep and filing at least half of the time I’ve been with them, though often at a discount.  As time has progressed and my life has changed, filling out my return has become considerably more complicated.  I actually tried to do it by hand last year and that proved too much of a task for me in the time I had allotted.  It just wasn’t worth it to me to save a few bucks.  My time also has value, and the several evenings it would have taken me to really learn the forms, deductions, and loopholes weren’t worth it to me.  I would have ended up filing with standard deductions and having to pay out the ass.  I went back to the web app and completed my filing in about an hour.  My return was substantial.  This year I had to pay full price for the web app and service, but it came out to slightly less than the cost of the desktop apps when new.  I finished my return in less than two hours, some of which was lazily done at work.

I have some actual complaints to log about our tax system, but that should really be a post all of its own.  Here’s a preview: Tax brackets suck, being poor/middle class and having to pay that much sucks, fuck the 1%, blah blah suckadick blah.  All in all, I’m cool with (maybe borderline happy with) the concept of doing my part for the country that I’m a part of, but I sometimes feel like I give more than my fair share.  I also feel like plenty of people get plenty of fucked by our country, and those people really shouldn’t have to pay into a system that fucks them so hard.

Oh, right!  I should mention that I’m getting a return this year.  It’s pretty big, or at least it’s pretty big for me.  It is probably the second biggest that I have ever received.  The biggest was huge (the year I bought my condo – lots of tax breaks for that joint).

tl;dr – I do my own taxes but not really because I use a web app/software and why the fuck don’t you?  Advice: Get it done early, deduct everything you can, file electronically, file tactically.  Also, I’m getting a nice return.  Suck it.

I was actually thinking of using this return to make some good investments and some upgrades in my home, but it seems that I may be losing some of it to a shitty problem that I’m really not so sure is actually mine.  Ain’t that some bullshit?  Maybe I’ll go over that in Wednesday’s post.  Maybe not.

*Actually, it looks like ever since the advent of eFiling, most Americans actually file before April.  Interesting, right?