Journalists should do their own taxes.
At least those of us who cover, or comment on, government tax policy should. Reporters can read the reports, listen to the experts and churn out reams of copy about changes made by the congressional tax writers on Capitol Hill. But unless you sit down and push your own numbers through a Form 1040, you don`t really get a handle on it.
At least that`s what I keep repeating to myself every year when tax season rolls around.
This is my high-minded rationale for closeting myself in the den on what always turns out to be the sunniest Sunday in March to wrestle with the W-2s, 1099s and all those crumpled, coffee-stained receipts from the Girl Scouts and the United Way.
My wife has another theory: I`m too cheap to lay out the $150 it would cost to have someone else do it. The truth, as any married person can guess, is somewhere in between.
One thing I guarantee: Preparing your own tax return will cause you to grab your wallet whenever you hear the word ”reform.” I have a hunch that most people who turn their taxes over to a personal accountant or H&R Block have no idea what atrocities are being committed by Congress in the name of
”reform,” or that other dreaded IRS euphemism, ”simplification.”
There has been a lot of political rhetoric in Washington about helping the middle class, but people who do their own taxes can tell you that Congress has made it almost impossible for middle-income taxpayers to find shelter.
Here are a few ”reformed” line items on this year`s 1040 that have this do-it-yourselfer growling like a dog:
– Line 4: Enter your ”City, town or post office, state and ZIP code. (If you have a foreign address, see page 11.)”
This line never bothered me until this year, when Money magazine reported that President Bush writes in ”Houston, Texas.” The First Family doesn`t own a house or spend much time in Houston. But Texas doesn`t have a state income tax, whereas Maine, where they do own a house and spend lots of time, levies a 9.89 percent tax on families with taxable incomes of more than $75,000. In 1990, a year in which the Bushes made more than $400,000, this little fiction saved them $25,404 in state income taxes.
– Line 24a: ”Your IRA deduction, from applicable worksheet on page 20 or 21.”
Forget that worksheet if your adjusted gross income is more than $35,000, or $50,000 on a joint return. You don`t qualify. Congress took away your tax- deductible individual retirement account as part of its Tax Reform Act of 1986. The economy is hurting because Americans don`t save enough, and your Social Security benefits probably won`t be enough to live on by the time you retire, but Congress refuses to restore the deductible IRA, saying the Treasury can`t afford it what with the deficit and all. Besides, Congress has its own retirement plan.
– Schedule A, Lines 1-4: ”Medical and dental expenses.”
Chances are you can`t claim this deduction any more because another
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”reform” allows you to deduct only those unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income. So if your family clears $50,000, you need to spend $3,750 out-of-pocket before you can deduct dollar 1. Better you should stay healthy-or get elected to Congress, where there`s a subsidized clinic.
– Schedule A, Lines 9-12: deduction for the ”Interest you paid. Note:
Personal interest is no longer deductible.”
This is the ”reform” a lot of experts say deepened the recession. You wonder whether Congress understood the potential for harm when it yanked the deductibility of interest paid on car loans, student loans, credit cards and charge accounts. Lots of middle-class Americans quit buying on time; for many, that meant not buying at all. Now Congress wants to stimulate consumer spending by giving us a $1-a-day tax cut. Grrrr.
– On the Illinois 1040, Line 20: ”Credit for Illinois property tax from worksheet on back.”
This year there is a new, improved way for Illinoisans to compute the break on our state income taxes for the real estate taxes we pay. Instead of taking a deduction equal to twice the amount of last year`s property tax bill, we take a direct credit on our income taxes equal to 5 percent of property tax. The legislature never said it was raising taxes last summer when it ordered this change, but all things being equal, the change means we`ll be paying $20 more in state income taxes this year.
– Back to the federal form, Line 38b: Tax Computation, Tax Rate Schedules X, Y and Z:
Because of the above ”reforms,” you might not be able to reduce your federal taxable income to less than $49,300 ($82,150 on a joint return). If you can`t, your wages, salaries and tips will be taxed at the rate of 31 percent-the top rate in the new three-tier system. Congratulations! You are in the same tax bracket as George Bush, Donald Trump, Lee Iacocca and all the other rich and famous Americans who don`t do their own taxes. Not long ago, the super-rich paid 70 percent, then 50 percent. Now they pay 31 percent . . . just like you. This was not billed as a reform, mind you, but a simplification.
If it gets any simpler, I may have to hire somebody after all.