Happy Tax Day?

Well, I waited until the near-last moment of the COVID-extended filing date, but I finished up my taxes on Friday and tossed them in the mailbox. Godspeed, 1040. I'm getting a lot of money back this year.

Of course, this just means I was gifting Uncle Sam with some interest free float, and I don't ordinarily want to do that. So I'm pretty careful about making sure it doesn't happen. But this year's filing was a strange one for a number of reasons, the Number One being that last year I had to report excess Social Security benefits received. And pay back a hefty sum. But stupidly, in doing my withholding this year, I didn't fully account for having written Social Security a whopper of a check.

How did this happen, you might ask? When I hit the big 7-0 I swapped out my widow's payment for my own, and for a good long time, I was in receipt of two payments a month. Since they're direct deposit, I couldn't just not cash the check. Anyway, it took me months to straighten this out. Honestly, when someone dies, the Social Security stream is turned off in a nanosecond. For the life of me, I can't figure out why this shift from account A to account B was such a hassle. 

Bottom line: all cleared up and, whenever it comes, I'll be happy to get my refund.

Another thing one might ask is 'you actually do your own taxes?'

Why, yes I do. And I do it the old fashioned way, without benefit of Turbo Tax or whatever the state-of-the-art tax preparation app is called. I use Excel and - get this - check all those calculations by hand. 

Sure, sometimes I make an arithmetic error, transposing a number or two, but "they" catch it. And there's something satisfying about filling out those forms, in adding and subtracting and multiplying. 

Admittedly, some of the forms and calculations are just ridiculous. 

My favorite one is the computation for figuring out what percentage of your Social Security is taxable.

I started doing this calc in 2009, when my husband started collecting his Social. 

The formula is absurdly complicated: (pi x hat size)/area code. For a few years, I religiously worked through the arithmetic, only to find that the answer was always 85%. Eventually, I just started using 85%. I assume if this is wrong, "they" will let me know.

There are other forms and calculations that are, if not quite as complicated, similarly - hah - taxing. And don't get me going on the instructions.

My path through, however, is simple. I just take out my last year's return and follow along. Yes, I'm occasionally thrown for a loop - one form changed slightly this year; what was line 9 is now line 8 - but this mostly works. 

And, of course, each year I have to renew my annoyance with the blue state whammy of no longer being able to deduct the full amount of state and local. Even though it's not a ton of money, still I grrrr. 

But mostly my DYI taxes works out. 

Still, the process is sufficiently curlicue and complex that I don't blame most people for throwing their folders full of scribbled on papers and official receipts etc. at a tax preparer.

What I've never done is question why filing your taxes has to be so brain-numbing and complicated. 

Turns out, it doesn't have to be.

Turns out that, way back in 1985, St. Ronald of Reagan "called for a simple tax filing system under which most people would not have to fill out a tax return. Instead, they’d just receive a form from the IRS showing their refund or tax liability."

The idea was proposed again in 2010, and yet again in 2019 (by Elizabeth Warren).

So why aren't we able to use the easy-peasy approach most other countries use?

The answer is simple and infuriating: the power of the tax preparation industry. Much like a public option in health care, a public tax filing option would save many people across the country significant time and money. But it doesn’t get created because powerful corporate interests don’t want to dent their profits.

Just two companies — Intuit (the maker of TurboTax) and H&R Block — dominate the private tax preparation industry, shepherding to the IRS 81% of individual returns filed with tax prep software. This earns these companies billions of dollars annually. And that’s why, for decades now, they’ve colluded with the government to prevent the IRS from sending you a simple form with your tax bill, which you could then either accept or dispute. (Source: mic.com)

You don't say. 

In forging their "corrupt bargain" with the government, the tax

-prep companies do provide "free" tax filing products (free to those with incomes under $72K). But very few of those eligible for free filing programs are actually using them. 

According to extensive reporting by ProPublica, Intuit has spent the intervening years [since the first free filing programs were offered] perfecting a system to nickel-and-dime mostly low-income folks by pushing them into paid products even though they qualify for the free version, and by rolling out programs under the free filing agreement that are hard to navigate and full of tricks. The strategy has worked: In 2020, only about 4% of people eligible for free private filing programs used them, per CNBC.

And so it goes. Fat cats get fatter. Folks get screwed, with poor folks most likely to find themselves the screwees.

Time to simplify this system. Let the government figure out who owes what to whom. Maybe if you itemize your deductions, you'll still need to fill out some forms, but filing sure could be a lot more straightforward than it is now.

I'll probably keep doing my own hand-crafted, artisanal tax flings. But "they" would sure make me happy if "they" did away with that crazy taxable Social Security formula.