Highlights from Tax Season, Part 2

Here are some more interesting observations from the year in taxes:

• Don't get divorced. But if you do, please state in your divorce decree not only who gets custody of the child(ren), but who gets to claim them as dependents each year. And then abide by the decree, and don't try to pull one over on your ex. Leave a copy of the divorce decree with your tax preparer.
• Yesterday I prepared tax returns for a single woman who has owed the state of Michigan $2, $1, and $4 over the last three years.
• Last week I had a man who had won big on slots three times, or three different days, in the same week—total winnings were just over $16,000. I think he likes that casino. Yes, that is taxable income.
  
• Don't take money out of your 401(k)—before age 60—unless someone's life or liberty hangs in the balance of that decision. I know it's tempting. So are lots of other things you aren't supposed to do.
• Did 2007 and 2006 tax returns just this week—for a part-time pastor and his wife. Apparently they need to take another look at Matt. 22:17-21, Mark 12:14-17, and Luke 20:22-25. (To their credit, they brought along their giving statements to their church—they had half the commandment correct.)
• Number of clients who had to report back to law enforcement before the day was out: 2
• Number of H&R Block polo shirts I now own: 2

Highlights from Tax Season, Part 1

In just four days, your IRS tax return is due....and my season at H&R Block comes to an abrupt end. Here are some highlights (and lowlights) of the 350+ tax returns I have prepared this year:

• Oldest Client: 97 years of age. Spry, too.
  
• Youngest Client: 14
  
• Biggest refund I filed for a client: $10,700
• Number of refunds I filed over $8000 (including the one above): 4
• Biggest debt owed the IRS on a return I prepared: About $2400
• Number of women who told me they planned to use their tax refund (or their half of it) to pay for their divorce: 2
• Largest withdrawal from a retirement plan, without having any federal taxes withheld: Over $26,000. (Note: Don't ever do this.) Thankfully, the client was old enough not to have to pay the early withdrawal penalty. Same client couple had over $4,000 in gambling winnings. Hmmm.....
  
• Largest refund filed in the office this year, to my knowledge: $24,000
• Largest debt owed to the IRS on paperwork I witnessed: $8800
• All clients on the same day: One couple had a baby die several days after its birth (in 2007); a woman came in to file a tax return for her mother who died last month; a client came in whose father and brother died last year in a house fire. Another client had lost a son to a car accident several years before. And another client came in to finish and sign her paperwork, started a few days earlier, whose husband (a police officer) committed suicide in 2005.
• Most children claimed as dependents on a return: 6
  

Financial Prudence

Working in the tax return preparation industry allows one to make the acquaintance of total strangers who will both talk about their own financial situations and take your advice...or at least politely listen to it. This is, naturally, quite interesting.

It is disturbing at times to observe what people do with their money. I saw an adult man today who had no earned income for over two years (according to his own admission). He was a bit disappointed that he had no reason to file a federal tax return—and also no reason to expect any refund. Later in the day he returned to pick up his paperwork (I suspect to take it elsewhere where he could get a more desirable return prepared)....in a truck which might provoke divorce talk if I bought it myself!

Another fellow tax preparer remarked that when a couple with over $100K in income last year saw that they were getting a $6K refund, they were so happy that they would be able to pay off one of their credit cards!

But on the other side of the coin, I had a recently married couple come in (this was their first MFJ return). Both are young professionals—without children—and their combined income exceeded $130K. At the conclusion of our time together, the husband grilled me about what he could do to be in a better tax position next year....and listened intently to my advice.

There isn't always a correlation between income and financial sense. Many times the poor are poor because they make poor decisions—and many times those with sizable incomes make poor decisions, too. Some people could survive just fine on a gross income of $40,000 per year [some would even be thankful for it]; others shudder at the thought. God gives to all what He sees fit, and no matter how much or little it is, we are to be faithful with it. He supplies all our needs.

Tax Preparer: Republican or Democrat Job?

This evening a friend referred to what I do at H&R Block as a "Republican" job, because I help people to keep more of their money and pay less in taxes.

In one sense, he is absolutely right.

But I had to remind him that at times, it is a very "Democratic" job, because I help 22-year-old single mothers receive welfare in the form of "tax refunds" they did little or nothing to earn. See the preceding post.

I find the "Republican" elements of my job more enjoyable than the "Democratic" ones. It's still a great job, though, and I enjoy it...most of the time.

H&R Block Update

The following is a true story. There are a lot of crazy stories floating around cyberspace, but I speak this one from very recent experience:

Situation: A single girl, approximately 22 years old with two children, has her tax return prepared. Her wages for the year were in the $12,000-15,000 range. Due to the Earned Income Credit and her two children, and the fact that claiming those two dependents reduced her taxable income to zero, she received an IRS "refund" of approximately $5500.

Furthermore, she is not a U.S. citizen. She is in the United States with a resident green card.

A single girl the same age with no children, with the same wages and the same amount of federal tax withheld from her paychecks, would have received a refund of approximately $300...even if she is a U.S. citizen.

Please consider contacting your U.S. congressman on this one. Your tax dollars are possibly the ones paying these "refunds" to folks.

I Have a New Job!

For now, I have a new job.

Beginning January 3, I will be a professional tax preparer with H&R Block, and will be employed with them through the tax season to April 15. I will be working at the Paw Paw office.

Need help with your taxes this spring? Give me a call!