I Finished My Taxes…Three Times!

By this time in previous years, I’ve filed my taxes and received my refund weeks ago. This year was a bit different because I wanted to continue filing electronically. You know, “21st century style.”  But, fulfilling the “no good deed goes unpunished” curse, my decision ended up with my having to complete my taxes three different times.

Last year, I filed electronically for the first time. The IRS website had links to various sites where I could complete and file my taxes for free if my adjusted gross income was below a certain amount, which it was.

Filing electronically the first time was a pain. Blank forms, such W-2, would come up and I’d have to fill in all the blanks, including employer name, address, etc.  Since the info is reported to IRS, I wondered why I couldn’t just fill in the important “financial’ information, which wouldn’t take much time.

After slogging through it all, I discovered that the program produced a lower refund than had calculated in my paper draft. Comparing the program’s calculation to mine revealed that I was not given the “saver’s”  tax credit for contributing to an IRA, although the program did give me the deduction on the “front.”  And because I was filing for free, there was no customer support since…well, I was technically not a customer.

I don’t recall how much time I spent trying to figure the problem out but I finally did.  Although the program either pops up forms as needed (or completes them for you) based on answers to questions and information you provide, I eventually stumbled upon a listing of various forms. And the very first “form” was: “Addtional question for IRA deduction.”

First of all, there is no such IRS form.  Second, that question easily could, and should, have been included on the IRA page rather than as a stand alone “form.” After I completed and added the “form” to my return, the program gave me the “saver’s” credit and now the refund was what I expected.

This year, I decided that I’d file electronically again.  So I went back to the site I used last year.  Logged in with my previous password and was pleasantly surprised to find that the program “remembered” me from last year.  When I entered in an employer ID used last year, it filled in the name, address, etc. so all I had to do was enter in the financial amounts and codes.  I’m starting to enjoy electronic filing!

When I was done, the refund amount agreed with my paper draft. Then, a funny thing happened on the way to filing… I was asked to pay about $30 to file. WTF? It’s supposed to be free!

After looking around on the site, I learn that it’s free only if I arrived from the IRS link. The fact that I’m a returning user with the proper AGI for free filing is irrelevant. They could, and should, have put a warning on the log-in page that if you’re a returning “free” user not arriving from the IRS link there’ll be a charge. I think they intentionally did not do that to trap previous users into having to pay.  Nor could I come back in through the IRS link and file free.

Well, I wasn’t about to reward them for this entrapment. There were other free sites.

I had received something from AARP about free filing and decided to check out that site. The provider turned out to be H & R Block, which is one of the most recognized tax preparation companies.  Certainly they’d do a good job…

As with last year, I had to enter all the names, addresses, etc. because I was “new.” And this year there was more to enter because I had retired and my retirement income technically comes from a different “source” and is also on a different form (1099-R). And since I had also worked part of the year, I had to complete a W-2 as well.

Plus, I had invested in the stock market and both dividends and capital gains to report on a form I’d never filled out before. The learning curve on that form was a good hour because of the qualifiers: “report amount on line w, unless x *and* y apply, in which case report on line z *but* if a, b and c apply, then you *may* be able to report on line d instead.”  Riiight….!

Some of the amounts were ridiculous compared to the time to complete the form.  A capital gains distribution of $7 from one fund and a foreign tax paid of $4 from another fund and for which I could receive a $4 credit.

The IRS already allows you to round amounts up or down rather than use cents. They should also allow you to disregard any amount under $10.  (And in fact, after I asked one of my banks why I didn’t receive an interest statement I was told that interest under $25 is not reported.)

But I finally completed everything.  Only to encounter last year’s problem again: no “saver’s credit” for my IRA deduction.  And no customer support.  Nor I never was able to figure out why I wasn’t reciving the credit.  Since it was worth $200 of my total refund of about $475 I wasn’t about to give it up.  (A Google search revealed that H & R Block had issues in previous years with various calculations.)

There was still one hope for me.  There was another free site from the IRS  “free filing” links I could use.  (For some reason, many sites do not provide free filing for Florida residents, possibly because we have no state income tax and the providers hope folks with state income tax will pay for that in exchange for “free” federal tax filing.)

After filling out all information for a third time, I was pleased to see that the calculated refund agreed with my paper draft. The saver’s tax credit was applied without any problem. I clicked “submit” and my taxes were on the way to the IRS. Hooray!

Friday, I checked the staus of my refund at the IRS website. The refund was scheduled for direct deposit to my bank account that day. Yee-ha!

I don’t mind paying a reasonable amount of taxes. But I find it…interesting… that in 2012 my refund was almost $2,000 and yet for last year my refund is only $475 even though my income is lower.

And for 2014, when I will have an even lower income than last year, I will not receive any refund at all because I’ll have lost my two tax shelters – deferred compensation and IRA.  I’ve already projected my 2014 taxes and it looks like I will pay $700 more than in 2013.  I’m understanding why the “lower” income folks feel the tax system is stacked against them when higher income folks can end up paying less taxes because of the tax shelters.

I’ve always favored a “simplified” tax and so I support a “flat” tax rate with no deductions or shelters.  I understand that when the federal income tax was first introduced, it could be calculated on a post card.  But then deduction after deduction was piled on and now the tax code is so convoluted it has spawned an industry of specialized lawyers and accountants.

Americans overseas have it worse.  Which is why some 3,000 Americans living overseas, many of them retirees, renounced their citizenship last year. Something I took special note of since I’m considering moving overseas.

Until we have a rational tax code, may all your capital gains be long term and your dividends qualified!


6 responses to “I Finished My Taxes…Three Times!

  1. It came as a big shock to me three years ago when the amount of my refund was not enough to pay my property taxes, because the gov’t had reduced the amount of withholding. The theory being that the more people had in their pockets throughout the year it would stimulate the economy. That sounds good, except for the fact that in a recession it takes more money just to survive. It isn’t like if you get a few bucks more a month you will go out and spend that on a new TV. You spend it on food and gas.
    The system really is stacked. I’m all for paying taxes, but…

  2. And this year, I actually had to pay $60 for the first time in my life, ever. It was depressing.

    • There’s a lot of truth that if you have a large refund, then you gave the government an interest free loan and if you owe a small amount (small enough to avoid penalty) then you got the interest free loan.

      My problem is that I could not project just how much I’d contribute to IRA / deferred comp since those decisions were based on how the market was looking. So I could not project how much deduction I’d end up with.

      Now, I don’t have to be concerned about that since I have no more shelters! Although, I may be able to deduct health insurance since next year that will be over $12,000 for annual premiums (as opposed to $2100 when I was working) and then whatever co-pays we have. That may be more than the standard deduction.

      I guess the only thing I miss about not working is not having those tax shelters…!

  3. LOL yeah I spent hours and hours self filing for the first 2 years of retirement, and getting it wrong twice. So now I spend about 30 minutes getting everything to my preparer who charges me $150 and gets it right. Plus I like having someone else s name on the prepared by line.
    I believe in a flat tax too with serious penalties to ANYONE who intentionally defrauds, regardless of which end of the earning continuum they fall on. But like you say the industries that are supported by the current tax code will never allow that gravy train to go away.

    fn…….if I told you how much taxes we paid during our peak earning period you would understand why I hate the IRS so much.

    • Did you find the errors or was it the IRS? I figure that my returns are relatively uncomplicated and so should not be audited even if I screw something up. I doubt that I’d owe too much more from an error.

  4. They found the errors and you are correct the penalty and interest don’t amount to much but it is still not a comfortable position.Since I think the government wastes 50% or more of taxes I get emotional about giving them money.

    I would love to be the auditor for the President whose mission it is to uncover and publicize government waste……..you know the Mike Wallace of Government accountability.

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