A meltdown at the tax office

[taxguykarl]

But the news was good....

Crunch time at the tax office (8 days to go as of this writing) and the fun is already beginning. A resident of a retirement trailer park came in for a second opinion--she did her own return and found herself owing about $1500 in federal and state taxes.

I looked over her returns and noticed that she missed the Making Work Pay Credit on her federal return and her state return included retirement account distributions among taxable income (presently exempt in Illinois--yes even early withdrawals, but there is a bill to change that).

When I corrected her federal she owed less than $100 there--there were other credits for which she was eligible. On her state return, she got a refund over $500.

When I gave her the results and showed her errors, she broke down into tears. "You mean I've been doing it wrong all these years?" I mentioned that amended returns for the prior three years are options, after grabbing some napkins from the table with the coffee pot.

After drying her tears with a couple of napkins, she gladly paid, signed the paperwork (the first time she filed electronically) and left. I think I just found a new steady.

That wasn't as scary as the gentlemen who followed her (this happened last year). He forgot to have his federal and state taxes withheld from his unemployment. That was about 1/3 of the couple's income. I went through the paces and was in damage control mode, where questions about deductions and credits. When I got to the end--he did not owe as feared but got a 4-figure refund (good thing his teacher wife was working on her masters).

By now he was breathing heavily and rubbing his chest...and kept rubbing his chest. Was he having pains? He denied it. I was ready to call the paramedics (we are not far from two fire stations and the regional trauma center). He refused. Finally his son picked him up after he signed the paperwork.

This year, all his income had some withholding and he was noticeably slimmer.

[bankworking]

I did my own taxes this year when I was way too tired. Ended up looking to owe $1800 when I expected a small refund. Meant to use the free software for a second look,but got depressed over the issue and went to a professional.

Turns out that while I had filled out the schedule A and determined that I was better off using the standard deduction, I had failed to remember to actually PUT that standard deduction on the tax form. Amazing what a difference lowering your taxable income by more than 10K can do. I also did not put in the Making Work Pay credit. Got my refund after all.

Figure I'll go back to him next year. I like to think that on a review, I'd have caught the standard deduction, but I didn't know about the making work credit, so I figure that credit paid for his fee for next year too.

[taxguykarl]

I did my own taxes this year when I was way too tired. Ended up looking to owe $1800 when I expected a small refund. Meant to use the free software for a second look,but got depressed over the issue and went to a professional.

Rule-of-thumb: If you have a 1099 (other than for interest and dividends), your return is best left to professionals.

Turns out that while I had filled out the schedule A and determined that I was better off using the standard deduction, I had failed to remember to actually PUT that standard deduction on the tax form. Amazing what a difference lowering your taxable income by more than 10K can do. I also did not put in the Making Work Pay credit. Got my refund after all.

Yes, I see that a lot. Once we pay off our non-mortgage debt (about this time next year), we'll start making larger mortgage principal payments--making it no longer pay to itemize, sooner than expected as Congress keeps raising the standard deduction.

Figure I'll go back to him next year. I like to think that on a review, I'd have caught the standard deduction, but I didn't know about the making work credit, so I figure that credit paid for his fee for next year too.

FYI, the making work pay credit lapsed this year. It remains to be seen if Congress will extend it.

[tollbaby]

I used to let my mom do my taxes (she's a seasonal tax preparer). One year, I ended up owing nearly $3000 (I'm a freaking secretary). My aunt is convinced she did something wrong. So my aunt taught me to do my own taxes with purchased software, and I've been getting pretty good refunds. Last year, however, my aunt was traveling, and I had them done at H&R Block. My refunds are HUGE now I know they're not the end-all and be-all, but they're cheap (I'm also a student LOL), they're fast, and they will explain to me what they're doing step-by-step.

I always make sure I have all my documentation ready and in order to make it easier for them, and I've never had a problem (used to get them to do it when I first left home too). I'm more than willing to pay someone else to do my taxes, and if it's the sort of situation where I can watch them do it and ask whatever questions pop into my head, all the better

[Micer]

Lemme just say... I love you tax guys. I stuck to my guns this year on going to a professional instead of doing them myself (I'm scatter-brained as it is with the pregnancy, I wasn't going to trust myself with our finances) We went in expecting to pay a chunk like last year and instead wound up finding out we're getting about 700 back. I think the fellow was amused by both of our jaws hitting the desk at that news, though seriously, that guy's getting our business from now on. XD

Just wish I could have had last years return with me (hard drive that contained it performed a murder/suicide last summer - it took the slave drive with it) and we're still trying to figure out if we can somehow finagle getting back into it to pull out the information.

[wagegoth]

The Making Work Pay Credit is awesome! I told a friend about it, and she was able to cut the amount she owed down to $100. She was so happy.

I use software, which is pretty easy, but my stuff isn't that difficult. I can't imagine sitting down with paper and a calculator and doing it.

[Andara Bledin]

Last year, however, my aunt was traveling, and I had them done at H&R Block.

My mother and aunt both worked for H&R Block years back, in different capacities. Based on the stories they'd tell at the time, I will never have my taxes done by them. Not least of which, because my mother and aunt are tax preparers.

^-.-^

[taxguykarl]

Lemme just say... I love you tax guys.

Thank you. We're always glad to be of service to non-sucky customers like you.

Just wish I could have had last years return with me (hard drive that contained it performed a murder/suicide last summer - it took the slave drive with it) and we're still trying to figure out if we can somehow finagle getting back into it to pull out the information.

If push comes to shove, you can always order a copy from the IRS. Returns from the last 3 years can be amended. The downside is that amended returns are paper (no electronic filing permitted) and take a couple months to process and get your money to you.