I'm a little upset right now, so please bear with me. I don't
get upset very often - you can always tell because smoke starts
coming right out of the top of my bald head! - but I'm here to
tell ya', this one really has me both laughing and crying at the
same time!
Recently the IRS came out with this press release:
IRS Increases Interest/Dividend Threshold Source: Associated
Press Publication date: 2002-09-26
WASHINGTON (AP) - More than 15 million taxpayers will be able to
skip filing a separate IRS form for interest and dividend income
next year under a move announced by the tax agency Thursday.
Beginning with 2002 returns due next April, most taxpayers won't
have to file the separate schedule with their 1040 forms if
their interest and dividend income is $1,500 or less. That
replaces the current threshold of $400, which has been in place
since 1974.
Taxpayers who file 1040 forms use Schedule B to list interest
and dividend payments. Under the new rules, millions of
taxpayers will simply report their interest and dividend income
without filing the separate forms.
Charles Rossotti, the Internal Revenue Service commissioner,
estimated that 15 million taxpayers will be no longer have to
file the extra form.
"We will continue our efforts to reduce the burden on taxpayers
and simplify the tax code," said Pam Olson, acting assistant
Treasury secretary for tax policy. END OF PRESS RELEASE
Now, aren't you just thrilled to hear that the IRS, in it's
infinite wisdom and undying compassion for the American
taxpayer, has decided to make life easier for you by changing
the rules regarding the filing requirements for one tax form
know as Schedule B? Give me a break!
In case you were just dying to know, Schedule B is a form that
you must file with your personal tax return if your total
interest and/or dividend income exceeds $400. Now, you only have
to file Schedule B if your investment income exceeds $1,500.
By the way, no matter how much investment income you have, ALL
taxable investment income must be reported on your tax return.
The issue here is whether or not you have to provide a detailed
itemized listing of your investment income.
Example: Let's say you have $1,000 of interest income. Under the
new rules, you can just put the $1,000 right on Page 1 of Form
1040. And that's it.
But if you have $2,000 of interest income, you have to complete
a separate form (Schedule B) and list each source of that
interest income, i.e. the name of each bank account or other
financial institution and how much interest or dividend income
you earned from each source.
So because of this simple rule change, about 15 million people
will not have to file Schedule B.
And because the IRS has removed this one form from the tax
returns of 15 million people, an IRS official has the nerve to
make this pronouncement:
"We will continue our efforts to reduce the burden on taxpayers
and simplify the tax code."
Can you believe it? This lady, and I mean no disrespect here
toward Ms. Olson - I'm sure she's a hard-working government
employee who does a great job, but this lady, in my humble
opinion, has her head in the sand, as do virtually all
politicians and other government authorities who have created
the ungodly monster know as the Internal Revenue Code.
The IRS changes one little rule that removes one form from only
15% of all returns filed - and this gives the IRS the right to
think that they are reducing the burden on taxpayers??? (Keep in
mind that there are over 100 million tax returns filed every
year. So, if this Schedule B rule change affects 15 million
people, that's a measly 15% of all tax returns filed.)
C'mon - what is wrong with this picture? Do you get my point?
Taking away one lousy form from a small percentage of tax
returns filed - how is that reducing the burden on taxpayers?
It's not! It's a drop in the bucket. It's peanuts. It doesn't
even come close to making an impact on the incredible burden
that taxpayers have each year on April 15.
Furthermore, how does this one little change "simplify the tax
code"? I am appalled that a government official would even use
the phrase "simplify the tax code". We have never had tax
simplification. Never. Never ever! Since 1913, when the tax code
was first implemented, there has been nothing but tax
complications, never tax simplifications.
The rules only get more and more complicated. Tax laws only get
more and more complex. The Tax Code just gets bigger and bigger.
Don't let the politicians' hype fool you. Never for a minute
should you believe the government when they say that they are
trying to "simplify the tax code."
So, what's the average taxpayer to do? If the tax rules just get
more complicated, how are you supposed to make any sense out of
all this mess?
You only have 2 options, as I see it. One I offer tongue-in-
cheek, the other is "words-to-live-by."
OPTION #1: Become a Tax Professional and prepare hundreds of tax
returns every year. That's the only way I know for you to become
sufficiently knowledgeable in the crazy world of U.S. taxation.
Obviously, this is not a viable option for 99.9% of the
population. But you get the point.
OPTION #2: Hook up with a Tax Professional. Find someone else
who does tax returns for a living. Not your "family tax
preparer", you know, Uncle Fred who likes doing returns and so
offers to do yours for free. But an experienced tax person who
does hundreds of returns every year and can help you make sense
out of the most nonsensical collection of rules on the planet.
About the author:
Wayne M. Davies is author of the new eBook, "The Tax Reduction
Toolkit: 29 Little-Known Legal Loopholes That Will Reduce Your
Taxes By Thousands (For Small Business Owners and Self-Employed
People Only!) Don't file another tax return until you visit:
http://www.YouSaveOnTaxes.com/toolkit.html
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