Our Taxing Times

It's Not Easy

I am as independent as they come. I always have been. It was something my father used to joke about all the time. But the keys to being independent are doing your homework and knowing when you can't do it yourself. I could change the oil in my car myself. But I know I wouldn't like doing it and would procrastinate until I was doing real damage to the car. So I pay a professional to do it for me when it needs to be done.
Over the last few tax seasons, I have seen an increase in clients switching to online or box tax software and preparing their own taxes. That is part of the process of this business, you lose clients but you also get new clients to replace them. And sometimes they come back because they decide the money is worth not having to do it themselves.
The real problem in the process are the taxpayers who don't want to do the homework necessary to do the job correctly. It isn't just taxes. You see the same issue in bookkeeping, playing the stock market, starting a business or taking a vacation. They learn enough to be dangerous. When they run into a problem, they ignore it or patch over it. They don't prevent or solve the issue. How many business die because the owners don't really understand payroll, labor laws, health laws or something easily preventable? How many vacations are a disappointment because the trip planner didn't check on attraction times or what the weather is usually? How many taxpayers have received a heart stopping letter from the IRS because they didn't fully understand what the software was asking?
Just because there is a computer program or app that will help you complete a task, doesn't release you from making sure you understand the choices you make with that program.

Index for Inflation for All

Thanks to Prof. James Maule for his insightful post about the latest salvo in the ongoing Capital Gains/Losses war. Senators Hatch and Lincoln want to increase the amount of Capital Losses that can be used to offset other income from $3000 a year to $10,000 and index that amount to inflation. Prof. Maule points out that capital losses are not the only tax item still not tied to inflation yet there is no mention of changing anything but capital losses.

Taxability of Social Security has long been my pet peeve. Not that it could be taxable but that in over 20 years of tax preparation the threshold amounts have not changed. As I previously posted here, more seniors are getting caught paying taxes on their social security. Several states, Kansas and Oklahoma for example, have stopped including taxable social security benefits in state tax calculations for at least lower income taxpayers. While that does help, a better solution would be to fix the issue on a Federal level. 

In the previous post, linked above, I suggested this was an issue that the taxpayer's advocate should be looking at including in their report. My question now is why is this not also part of senior advocate groups such as AARP?