Monday, February 21, 2011

The Tax Man Cometh: Getting Old is Hard To Do

Yeah, I paid my 2010 Taxes tonite. Took me about 90 minutes using Turbo-Tax.

I've been using that software for about 4-5 years now, and if you think you should try it then you should know that the Federal Tax Return is "FREE", and the state tax return costs you about $30.

Except, the Federal Tax Return can cost you an extra $30, if you accept the "deluxe" version. But that is not intuitive, the way it's presented, nor is the difference between the "FREE" version and the deluxe version.

I have a very simple tax situation: I don't owe anyone, they don't owe me. I don't own a house, or have deductions of ANY kind (except Standard Deduction). No dependents, property deductions, charitable deductions or medical deductions to speak of (certainly none to the degree which would be worth the effort to claim, summarize or document). If I were doing my tax returns manually, I would be using the 1040EZ form. Instead, Turbo-Tax put me on the 1040A form, and it was more of a nuisance because I had to complete a lot of form pages which necessitated saying "NO" or "Not Applicable" on every item.

I can't complain (although I will); I was tired when I started filling out the forms and responding to the questions, so I accepted the "DELUXE" version of the form, when I really should not have.

I like Turbo-Tax, except that they throw in complexities which the novice or the unwary (such as me) can easily trip over, and cost more money than they are worth.

If you decide to download and use Turbo-Tax, you should be careful that you understand what the alternatives mean to your particular tax situation. If I had any of the deductions listed on form 1040A, I would probably have saved myself money.

As it is, it cost more than I had expected. I can't blame anyone but myself, because by the time I realized I was obliged to pay them an extra $30 for the Deluxe version, I was so tired of the exercise that I thought ... "just pay the money, and get it over with".

Yes, I got a return, in both Federal and .. a surprise to me ... State taxes. This is not due to clever manipulation of the tax laws. It's due to the fact that I worked about 10 months of the year, rather than 12 months. Between my absences from work due to illness, stress, need to tend to SWMBO and not showing up at work at ALL during the month of December (after SWMBO died on 11/28), I not only maxed out my sick leave, my vacation leave, and my personal time ... I had at least 60 days of unpaid leave.

No, that's nobody's fault than my own. I could have worked, in a manner of speaking. But it was my choice not to work.

Ultimately, when I get more than a couple of hundred buck back on my Federal and State income tax combined, it's a sign that I would have more money in the bank at the end of the year if I had been able to work as many hours as I should have.

That hasn't happened for the past couple of years.

There is a tendency to view returned taxes as "found money", or a "windfall", but that's not a legitimate evaluation.

What I like is the years when I make much more money than I did the last year. Paying taxes is a pain, but knowing that I made so much money is, although difficult when April 15 comes around, kind of a milestone. It's good to make more money than you expected. It's bad when you make less, because when you compare the two situations, you end up with less money in the bank.

Some of the return (about 25%) is due to the fact that I turned 65 last year. Monetarily, that's a benefit.

But practically speaking, it means more illness and less work time; the time I spent out of the office, compared to the time when I could have been compensated (by "Sick Leave" and "Vacation Leave" combined) ... the deduction level is not equivalent to the salary that I lost.

Just saying ... getting old is even worse monetarily than the added aches and pains.

Look forward to my "Tax Man Cometh" article next year, when I pay taxes on Social Security AND the part-time job I'm going to have to find, to make ends meet.

I announced to my co-workers last week that I was retiring. They all send me replies of congratulations, as if I was likely to enter into an era of comfort and no-cares.

Very nice of them, but I would rather have worked another four years. My pension may not have been a lot bigger, but the Social Security dividend would have been worth another thousand dollars a month.

I should live so long.

The good news is: my Social Security monthly dividend for working until I am 66, instead of retiring at age 65, was worth an extra $41/month.

The bad news is: I'm pretty sure that there will come a time when that extra $41/month may make the difference between eating tuna versus cat food for dinner.

And isn't THAT a fine state of affairs?

(Sorry for the negativity. It has been a long day. I'm pretty sure I'll feel better in the morning.)

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