The Tax Man Cometh... 4/15/2009

The tax man cometh...

Depending on when you get your newspaper, you're either scrambling to finish your taxes while checking to see which post office is open late, or you've already sent your taxes and are waiting by the mailbox for your refund. They say that death and taxes are inevitable, and depending on how your return comes out, it may be tough to decide which you prefer.

I used to love tax season. Yes, you read that right: I used to love tax season. In my twenties, I'd file my E-Z form and then wait for my big fat check so my friend Susan and I could go somewhere tropical. The IRS was my own personal vacation fund. I'd claim zero deductions so my employer would remove the maximum from each paycheck, yielding me a big refund every spring. It never occurred to me to claim "1" and earn the interest for myself, instead of letting the Federal Government hold onto it for a year. Never much of a saver, I would have probably blown it on Cape Codders and tacky clothes from Tellos.

In my thirties, I was married (filing jointly) to a freelancer (schedule C). This was uncharted waters for me, actually paying the IRS more money. Though my husband wrote off every legitimate business expense, we'd still end up owing money. Plus, he insisted we file quarterly to avoid penalties, so we'd end up paying the IRS every three months. It's like having your wisdom teeth purposely removed one at a time instead of yanking them all out at once. By all means, let's prolong the misery.

My husband has always been super careful about taxes since his...ahem...indiscretion with the IRS during college. He worked as a bartender for a restaurant in Ithaca, NY and because he was paid off the books, never filed a return for those wages. Eventually the restaurant was audited and that lead the IRS, several years later, to my husband's door (they're like elephants...they never forget). It's no fun when the IRS asks you to come in for a chat, and not even that handy Steve Martin excuse ("I forgot") could save him. When they revealed the amount he owed (with interest and penalties of course) he practically passed out. Cheerfully they asked if he would be paying by cash or check and that's when he discovered that the IRS is always willing to work out a payment plan.

Just when my husband took a full time job (yay, W-2!) I started my Pampered Chef business (sigh, schedule C).This time it was my turn to track expenses, write down mileage and fudge my write-offs. Add to this a home purchase (mortgage deduction!) and a couple of children (deduction! deduction!) and our taxes became increasingly more complicated.

It was around this time that my husband discovered the not-always-so-wonderful-world-of-Turbo Tax. On the one hand, it was an inexpensive way to do our taxes, and the software never chastised us for waiting till the last minute to file. I'd peer over his shoulder as he crunched the figures, holding my breath to see if the red numbers would change to green (indicating a refund). When it was clear that we owed, I would start hyperventilating, wondering where the money would come from, at which point my husband would say, "Well, it we contribute $2000 to our IRA then we could reduce what we owe by about $70." Uh, right honey, if we had an extra two grand lying around for no specified purpose, I probably wouldn't be breathing into a paper bag right now. So let's skip the IRA contribution, shall we?

Turbo Tax seemed to work out just fine, until we started receiving those friendly "notice to assess" letters from our buds at the IRS. Apparently, we must have entered something wrong or calculated incorrectly. Usually the amount was minimal, but when we received a notice this year for the unfathomable sum of $2,300 (from tax year 2005... elephants, remember?) we decided it was time to kick Turbo Tax to the curb and go back to having our taxes prepared by a living, breathing human being.

Enter Kelli...goddess of accounting. Kelli intervened on our behalf with the IRS and cut our assessment in half. Kelli sent us a tax organizer that we could actually understand. Though we still had to collect and calculate receipts, Kelli met with us and immediately found several areas where she could increase our deductions. Best of all, Kelli had our taxes finished within a week and actually got us money back!

Is it enough for a tropical vacation? Not really, but at least it'll pay for a round of Cape Codders.