Monday, January 25, 2010

Excuse me...but I don't speak your language.

I don't know about you...but getting my W-2 form each year seems to be one annual event that just hacks me off. That's because I know what's coming next.

Expecting a refund doesn't seem to eliminate the level of aggravation either. My latest little tax deduction has been on the books for three years, since she came kicking and screaming into the world in November 2007 (thank you IRS Exemption to Residency Test- Child Born During the Year rule). Despite being the apple of my eye, her addition really hasn't countered my misgivings of tax time.

As things go, 2007 was also a pretty unlucky year in the deduction category because a new home purchase tax credit didn't take place until 2008 (The Housing and Economic Stimulous Act of 2008). Of course all the expenses associated with said purchase are deductible (IRS Form 1098 reported on Form 1040 Schedule A). The 2009 version of the First Time Homebuyers Credit includes a provision that doesn't require payback of the credit like the 2008 version:

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.


The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

Pretty straightforward stuff (ahem)...but I wouldn't have qualified under the 2008 or 2009 credit back in 2007 anyway. Besides, I mortgaged enough money when I bought the house. I sure don't want to owe the IRS for a loan too (sorry first-time homebuyers class of '08 between April 9 and December 31).

I don't understand all the Earned Income Tax Credit, Child Tax Credit, Credit for Child and Dependent Care Expenses, Credit for Qualified Retirement Savings Contributions, Education Credits (Hope and Lifetime Learning Credits) or Credit for Qualified Retirement Savings Contributions. Each one has an IRS publication that explains it all in complete detail...if you speak the IRS language. I figure I can help stimulate the economy by pitching a few bucks H&R Blocks way. They don't seem to mind the shoebox method of accounting for receipts and claim they'll stand by any return they prepare...well...stand behind me that is.

I don't mind paying my fair share of taxes, but why is that fair share so darn hard to figure out? I just hate getting my W-2 form...


David said...

We've been Turbo-Tax-ers since it's inception. Leave it to a geek to make simple what is complex. Now if we could just the neophytes in Obama's cabinet to use it.

Good luck in '09!

Anonymous said...

I feel your pain. I read the directions and intend to render unto Caesar. . . it is just nearly impossible to figure how much to render.

Tracy said...

I have so often thought that taxes are so complicated, and I know lots of dumb and flakey people (please forgive my blunt and judgmental attitude), if I'm struggling to figure this whole thing out - how on earth do those people ever get them done?!

When I was single I gave up and just paid someone to do my taxes. Now that I'm married again my husband does them simply because it's practically a hobby of his. He'll spend hrs looking at all kinds of documents, trying to get the most deductions and pay the least amount possible. It's like a game for him. He's so proud when he's done; always explains (in much more excruciating detail than I want but I always appear attentive) that we would have each had to pay so and so but then he found out thus and such and now we're SO MUCH better off!

photogr said...

I really dont sweat taxes. I just know since Obama took over, I will be paying more taxes than I ever have.

The part that really bothers me is the taxes on medicare health care that is comming down the pike and to top if off with less coverage.

I wonder if Austrailia is taking in immigrants from America yet?

Michelle said...

I think I just felt like you did when you read Frugal Shmugal.

I like tax time personally. It means I can be Gazelle Intense for a moment.