Oh, tax time. It is that magical time of year when people are firmly divided into two camps: those who get a return and are excited and those who hate taxes and tax season. I do taxes as a hobby. I know, I need to get a new hobby. I enjoy going through the forms, finding exemptions and credits, lecturing people on how they should not want a big return as it means they are paying out too much in taxes through the year, I absolutely adore all of it. My dad hates tax time. My older sister doesn’t care for it as her husband is self-employed and they always have to pay in. My little sister is okay with tax time but it was sketchy at best for her this year. My little brother never listens to my tax advice and is happy with getting a return.
What I love most about tax time is all the fallacies that people have about taxes. If you go to any webpage, Facebook page, twitter account about tax refunds that are not from a reputable source you will be highly amused. Everyone knows an aunt, a friend of a friend, who works at the IRS and has the skinny. They all know when returns are issued and how to read the codes in a transcript, and the schedule for tax refunds. They know people who don’t work who receive huge refunds. They know of people who sell their kids information so that they can make money. I mean, it boggles the mind.
The reality of the situation is that tax fraud on an individual return are mainly accomplished by hackers who have stolen someone’s identity or are claiming dependents that are not theirs. It is impossible to receive a tax refund if you haven’t worked. The income tax refund is based on, and bear with me people, income earned. I had someone comment that people will fake a 10-99 misc form (independent contractor/self-employed version of a W-2) to be able to get a tax return. A 10-99 would be hard to fake as the IRS has to have a copy sent to them to verify that the employer has sent them to the employee. Plus, there are normally not taxes taken out of a 10-99 so you would actually start out the return owing money to the IRS.
Yes, there are people that get large returns back. These are mostly based on credits such as EIC (Earned Income Credit) and Additional Child Tax Credit. If you are getting a large return back and do not have these credits, than you are overpaying taxes out of your paychecks throughout the year and that is just fiscally dumb. Also, if you file long form as opposed to taking the standard deduction, you have to exceed the standard deduction. This is no easy feat. You can claim work vehicles that you own, home offices, in some cases uniforms and meals along with tools and equipment. The rules and forms to claim these and still exceed the standard deduction are hard to get through and easy to mess up on. I have to explain this to my S.O. every tax season when he forgets that filing long form is only necessary if you have a lot of deductions. We don’t.
So, rant over about tax time. I feel for those of you who have to pay in and am rooting for those of you who don’t. Just don’t tell me about your friend’s aunt who works for the IRS who told you that all returns will be deposited tomorrow. Yeah, that ain’t gonna happen.