Filing TaxesPosted: January 27, 2014
Every CPA in business and Industry has faced the same questions as soon as someone finds out they are a CPA. The question can take a hundred different forms, but they are all about the same; someone wants to have a question about income taxes answered. I generally try to keep up with the latest tax issue just so I know enough to send them in the right direction. Today, the hot tax topics are around the Affordable Care Act. From the additional 0.9% Medicare tax on wages over certain limits to the 3.8% Medicare tax on investment income (once again over certain limits) to the penalties for not obtaining medical insurance, there sure seems to be a lot of questions and even more misinformation out there.
It seems, however, more people are beginning to understand CPAs do many things other than taxes so more often than not, when I tell people I’m a CPA, they then ask what I do instead of immediately going into their tax question. Once I tell them what I do instead of asking me tax questions, because they realize I don’t do taxes for a living, they do on occasion ask me if I file my own taxes. I am proud to say I do file my own taxes, at least if you can say using tax software to fill out the forms and file them is doing your own taxes. I say that because I recently met a CPA who takes pride in still filing out their tax forms by hand.
While I think that is a little extreme, there are many people, many CPAs, who wouldn’t think of filing their own taxes. I consider my personal taxes just short of too complicated for me to handle. I don’t have passive income, partnership income or complex investments, but I do buy and sell stock every year and I do file a schedule C for the work I do as a referee. Of course that is about as simple a schedule C as you can get. There is no home office deduction because my workspace is the pitch and there is no place in my house dedicated to my work as a referee. Of course, I am very careful to record all of my earnings throughout the year and declare all of them on my taxes. Beyond a simple a matter of integrity, putting my CPA license on the line to save a few hundred dollars in tax by committing fraud and not declaring all of my referee earnings would seem to be about as stupid as it could get.
Being a home owner and charitable contributor, it is worth the effort to itemize my deductions, and of course I have some interest and dividend income. All of that is fairly straight forward. The part that starts to concern me is calculating the credits and deductions for college tuition for my two girls. Come to think of it, without the software help, I don’t know if I would feel comfortable taking on that complex part of the tax code and then the Alternative Minimum Tax is always fun. If that wasn’t mostly automated I would really hate have to manually calculate my taxes twice each year. Talk about unreasonable punishment!
So, do you still file your own return? Or have you given up and turned it over to someone else? If the tax code has become so complex that even CPAs are giving up on filing their own tax returns, then maybe it really is time for some serious simplification of our tax code.