Beth Stephenson
The Edmond Sun
EDMOND
March 26, 2008 12:15 pm
—
The dread of making an error on your taxes that causes the FBI, the CIA, the Department of Homeland Security and the IRS to have a conference on your front lawn complete with megaphones and yellow crime scene tape is enough to make the boldest of us weak-kneed. Whispered stories of dreaded audits haunt our dreams. To call it stressful is like referring to the bombing of London during World War II as “unpleasant.” It doesn’t have to be that way.
If you’re already suffering pre-file angst, I strongly recommend that you go to the store and buy a pack of manila envelopes. Stuff all the forms you need for this year into one and label it 2007. This act of preparation alone will reduce your stress significantly.
Since you have the envelopes right there, mark another envelope “2008.” Keep that one somewhere close to the place you open the mail. In nine months, when the W-2s and the 1099s and the interest statements and the mortgage statements flutter in, you’ll be ready to capture them in one place. How smug you’ll feel from simply having an envelope ready to receive the important tax mail!
My husband has a degree in accounting, is a certified internal auditor and a chartered financial consultant, but a few years ago, he started buying the boxed tax preparation kits and he has never regretted the expense. His favorite one is “Tax Cut.” I have a degree in English, but looking over his shoulder, I am confident that I could do it as easily as he does. Since they guarantee that if you make an error, they’ll pay the fines and do prison time in your behalf, (well, maybe not the last), it’s pretty safe. It only takes about three hours for him to do our federal and state and file for our student children.
My father-in-law was a CPA and he gave us some tax tips that might be useful to you. If an average household receives or owes more than $100 when you file your taxes, you should fill out a new W-4 with your employer and adjust the withholdings. If you are getting big returns, make the adjustment by claiming more exemptions up front and then have the additional cash you’ll receive each month deposited directly in an interest earning account. There’s no sense in Uncle Sam getting the use of your money all year when that simple form can allow you to keep it.
Last year, the dreaded audit happened to us, and it wasn’t so bad. We received a notice saying that the IRS was reviewing our 2005 taxes and they wanted us to send them proof for our charitable contributions. Since my husband keeps all documents much longer than the seven years required, we produced all but one for $200. The proof of donation needs to have the charity’s letterhead and an official signature. It should read something like, “The donor received no goods or services in exchange for this donation.”
A few weeks later, we received a polite letter from the IRS saying that they weren’t worried about the $200, that it was all fine and have a good day. No megaphones, no crime scene tape, no questioning the neighbors.
Nobody likes to pay taxes and it bugs all of us when they are wasted. But when we visit other countries and see their inadequate schools, their pitted, crazy roads, and sometimes rampant crime, the hundreds of comforts we enjoy because of our taxes seem a better bargain. Public schools for all children, judges and all law enforcement officials, roads and highways and highway signs and hundreds of other comforts are paid for with our taxes. Before you complain about America, see how the rest of the world lives.
Though the original U.S. constitution prohibited income tax, Amendment 16, ratified in 1913, allows it. I suspect it’s far easier to file the forms, write the check and feel sorry for yourself for a few weeks than to join Al Capone behind the razor wire for tax evasion. Get it over with now so you’ll suffer tax angst for two weeks less this year.
BETH STEPHENSON is an Edmond resident.
Copyright © 1999-2008 cnhi, inc.