Yes, I Will Actually Commend Our Tax Bureaucrats

Every year it seems I screw up some aspect of either my Fed or California tax return. I mess up on some aspect of the form that got changed from the year before, or despite double and triple checking the math, fail to identify some piece that will save me money.

Yeah, you read that right, I most often err in favor to the government. This has never bothered me, since it’s never that much money (I guess) and I figure it’d be my ticket out of jail if I ever worried that my plea of “dumbass” was met with skepticism in some tax court.

And yes, I’m too cheap to hire someone or use software since I still fill in downloaded forms and snail mail hard copies of my taxes. I don’t trust the e-file system and they don’t have free software for Macs, far as I know. I prefer the old paper system and there’s no reason to change it. And get off my lawn.

So this year, turns out I messed up the math on adjusting my deductions to California since they made the form a lot more complicated, although for a good reason. With the state & local tax deduction capped at 10K, they added a load of boxes and lines and instructions that, if properly navigated, maintain property tax deductions over 10K from the California state income tax. I don’t pay more than 10K in property tax with my humble abode, and I wound up subtracting some figure I should not have. California tax instructions are up there with the new math in terms of confusion. I messed up, they caught it, and it wound up shrinking my state refund by a few hundred bucks.

They simply refigured my math, accepted that I am a dumbass, adjusted the amount and direct deposited the proper one.

With the Feds, my mistake was more educational. Seems I messed up in figuring out the tax on capital gains and qualified dividends. And the reason why was that I actually had a good year in that department, as I got more aggressive in some stock and option trading, and made some good picks. All the self-study I did combining some of my old stock picking systems with the newer internet realities of trading various instruments way more easily than back in the ’90s when I first started doing this crap, learning about candlestick charts and such, so on and so forth…. well, it actually paid off. So, yay me. Anyway, I filled in all the lines on all the forms, thought I filled our everything right, and simply added the amount into my income. My mistake was not filling out some Schedule D worksheet that I’d never had to fill out before, one I wrongly assumed was for the folks who clear some SERIOUS dough in this department. Evidently not… it can even be for slobs like me. And some gains are taxed at a slightly lower rate than my effective tax percentage, evidently. I’ll keep that in mind for when I inevitably make MILLIONS in the market.

Long story short – the IRS refigured my math, accepted that I am a dumbass, adjusted the amount – this time UP a few hundred dollars (YAY) and direct deposited the proper number. Their letter, appropriately dated April 1, is on the way.

So, as an update to my earlier post I wrote some weeks back when I filed the taxes – turns out the new tax law meant I got a tax cut of about $250 or so versus the same numbers under the old rules. I’ll certainly take it.

But I gotta say… I’m always happily surprised and pleased when the taxing monolith bureaucracy actually pays attention to my small-change working slob returns and catches errors like this. Part of me wonders why they don’t just do my taxes for me, but another part of me marvels at how unlike say, the DMV they are. And the couple of times in the past when I phoned the IRS to go over some discrepancy… well, yeah, I was on hold for a long time, but the people I talked to were amazingly nice and patient with me as long as I was the same with them. And I’m guessing that since most of the people calling in breathe fire at them, I can attest that a little self-effacing humility and politeness goes miles and miles. I can only imagine what it’s like being on the other end of that phone dealing with an endless supply of people who haven’t stopped to think that the clerk on the IRS help line had NOTHING to do with writing our stupid arcane tax code.

Maybe they should also be in charge of spending the money. Maybe that’d fix the budget. Or is that just crazy talk from a guy who can’t follow form instructions? Can’t help myself… I’m just a REBEL!!!!