The EASY Button
Why personal tax preparation is getting easier
I’m sure you remember the TV ads for Staples stores where the customer solved her problem by smacking a big red button on the counter that said simply “EASY.” If you go to Staples stores you will see these buttons for sale as a gimmick. If you buy one and take it home, it may start some conversations, or you might even use it as a target for your frustrations, but I guarantee it will do nothing to make your life easier. Sorry.
Easy is what we all want, isn’t it? How often do people you know say things like “I don’t want to bother with it.” Or, “It’s too complicated for me. I’ll hire it done.” Many dedicated do-it-yourselfers continue to change their own oil, switch spark-plugs and sharpen the blades on their lawn mowers. Yet more and more people now hire a mechanic, have a lawn service, even have a company pick their groceries and deliver them to their door. It’s EASY.
Well, you might guess where this is going, since what I do is taxes. Taxes can be complicated. You hear that all the time on the news and in conversation. People want a Fair Tax or a Flat Tax or a tax return which can be simply filed with a postcard. I’m here to tell you that I think that would be great. Really, I think that.
I also know that will not happen, and if it did, people would be unwilling to accept the results. Flat tax means everybody pays the same percent. And a post card tax return would look like this:
What was your income? $54,000
Pay 10% 5,400
Yes it could be that simple. “But wait,” you might say, “what about my donations to the church, or my kid’s college tuition?” Even if that isn’t your concern, what about the idea that a family with kids to support just for room, board and medical care shouldn’t have to pay as much tax as a retired couple with no kids and plenty of savings? Couple that with the fact that we’ve operated under the graduated system so long, maybe some sort of transition is called for.
There are always unconsidered consequences. I’ve read the books and I can point out the difficulties with each sort of drastic reform.
However, the current tax program is changing. Slowly, year by year the system changes by increasing the personal exemption and the standard deduction. For 2016 each individual’s personal exemption is $4,050 and the standard deduction for single or married individuals is $6,300 each. So, a family of four with a married couple at it’s head has the first $41,400 of income excluded (with some exceptions).
The net result is that for most of us (certainly 80%) a simple tax return is the normal situation. You can get that done for free online, or even buy TurboTax and do it yourself. In fact, I have encouraged folks to do just that.
The problems arise (those 20% of problematic returns) when you make a financial decision without including the tax consequences in your deliberations. Often, just asking the question can lead to more than a simple answer. Maybe a discussion about other ways to accomplish what you want to do. Perhaps an answer will ease your mind, or make you change it completely. But unless you ask, you’re getting a pig in a poke.
Look, I don’t think that taxes should take over your life. Quite the contrary, I think you should need to pay as little attention to tax matters as possible. In order to do this without surprises or “gotchas” you need to have a source of information about taxes. A source that is not tied to the media.
I try to provide that source with these blogs, tweets and Facebook posts that I put out regularly. Plus, if you see something that you wonder about in those knowledge nuggets, call or email and ask. The answer to a question is a no-charge service. If that answer makes you want to get some help, then we will talk about fees. And, if your taxes get so complicated that it begins to make sense to you have someone else do them for you, then I hope you will know who to call.
Got a question on your mind right now? Post it below. I’ll answer it. The answer might help someone else as well.