Last week we sent in our taxes and another yearly duty was done. We’re getting a bit back this year though not as much as last year. The only predictable thing about doing your taxes in America is the process is always unpredictable.

Have you done your taxes yet or do you wait until the last minute? Do you do your taxes yourself? If so, do you use an online service or a software program to help you? If so, which ones work best? Do you use a CPA?

If so, do you play a flat rate or does your CPA “decide” how much you’ll pay after you know if you’re getting anything back or not? Our CPA always jokingly tells us we owe $3,000.00 before he really figures anything out and then he usually tells us we’re getting a little bit back or paying in a bit — thanks to his hard work and expertise with the tax code.

I appreciate his experience.

I have, however, learned to anticipate my yearly, breathless, $3,000.00 heart attack. Do you file electronically or do you stick with paper? What is your tax paying philosophy? Do you fight for every single deduction?

Or do you just keep your tax paying experience as simple as possible and if you have to pay, you pay, and you don’t worry about squeezing back every little bit. Would you prefer a Flat Tax?

A Flat Tax would let you know exactly what you’ll pay every year. You pay it as you go along and then you’re done. No hassles. No worries. No game playing. No $3,000.00 heart attacks.

36 Comments

  1. I would love a flat tax. Despite half the accountants in the world going out of business…
    I did paper this year – I went online last year, but I refused to pay for it this year – last year it was free. Why would the IRS encourage people to go back to paper. With online and teletax, we did the data entry for them.
    Oh well. Looking forward to my refund!

  2. Hiya Cubby!
    Thanks for the comment and I welcome you here!
    I would enjoy a flat tax as well. I don’t like all the loopholes and game playing we need to do in order to pay our fair share of what we owe to keep our government pumping.
    You can still file online for free if you have a simple return. Go here:
    http://www.irs.gov/efile/index.html
    and click on the “Free File” link and that will get you into the queue to file online for free. The IRS wants us to be electronic and not paper.
    I’m glad you’re getting a refund!

  3. I only knew how much I had to pay my CPA when it was all beaned out. In the years I got more back, my CPA’s fee rose even though it was the tax code that changed and not the talent of my CPA.

  4. Well we need some kind of protection from these rising fees from CPAs and the like. It’s all a game. Tax Code gets complicated and we have to pay someone to figure it. It’s a depressing time of year if your return is complicated.

  5. When I did paper I mailed everything April 14. Electronic kind of encourages you to send it now to get it all over with. That’s probably why the government wants us to be electronic and not with paper.

  6. How would a flat tax work for people like me, working fifty hours this week and getting $800, working thirty hours next week and getting $500? Seems like a lot of weekly work. 😛

  7. Hi Gordon —
    You’d pay 30% of your paycheck to taxes. Either you’d pay it or your employer would pay it for you. You only pay on what you actually make.
    Doesn’t the UK have a flat tax rate of something like 50% of all income?

  8. Hi Gordon —
    You’d pay 30% of your paycheck to taxes. Either you’d pay it or your employer would pay it for you. You only pay on what you actually make.
    Doesn’t the UK have a flat tax rate of something like 50% of all income?

  9. That’s just the thing – I don’t exactly have an employer. I’m ‘self-employed’ and my income depends on how much I work on projects here and there.
    The link I provided seems to indicate that no, it’s not a flat tax.
    If it were a flat tax here would that mean no deductions allowed? I’d be royally fornicated.

  10. That’s just the thing – I don’t exactly have an employer. I’m ‘self-employed’ and my income depends on how much I work on projects here and there.
    The link I provided seems to indicate that no, it’s not a flat tax.
    If it were a flat tax here would that mean no deductions allowed? I’d be royally fornicated.

  11. Thanks for the link, Gordon!
    Right — Flat Tax means no deductions. Since there would be no game playing allowed with what you owe and what you pay, we could probably lower the “30% of what you earn goes to taxes” to something like 17%. Is that more palatable for you?

  12. Thanks for the link, Gordon!
    Right — Flat Tax means no deductions. Since there would be no game playing allowed with what you owe and what you pay, we could probably lower the “30% of what you earn goes to taxes” to something like 17%. Is that more palatable for you?

  13. I’d love a flat tax also. Maybe make it 15% and eliminate a bunch of the deductions that people get right now. I bet the IRS would bring in more money and reduce taxes for most people who have withholding and get W2s.
    We do our own taxes using software. My wife is self-employed, but gets a 1099, so taxes aren’t that hard to figure out. I get a W2. It’s all plug and chug for the most part using all of the information from various forms, such the mortgage interest form from the bank, etc.
    I wonder if we’d ever get a flat tax? I bet there would be great opposition from all of the professionals who make a living figuring out people’s taxes.

  14. I’d love a flat tax also. Maybe make it 15% and eliminate a bunch of the deductions that people get right now. I bet the IRS would bring in more money and reduce taxes for most people who have withholding and get W2s.
    We do our own taxes using software. My wife is self-employed, but gets a 1099, so taxes aren’t that hard to figure out. I get a W2. It’s all plug and chug for the most part using all of the information from various forms, such the mortgage interest form from the bank, etc.
    I wonder if we’d ever get a flat tax? I bet there would be great opposition from all of the professionals who make a living figuring out people’s taxes.

  15. Hi Chris!
    Yes, I think 15% flat would be a great thing! The CPAs can move on to retirement planning for everyone after Social Security goes belly-up.
    😀
    I agree the IRS would bring in much more money with a Flat Tax because there would be no need to hire experts to try to wrangle people and companies out of paying their fair share. Wasn’t there a recent presidential candidate supporting a Flat Tax approach? Was it Pat Buchanan?
    How does your wife get a 1099 if she is self-employed? Is she 1099-ing herself?
    I like plugging and chugging. It makes things so much simpler! Has your software ever found a deduction for you that you did not know existed?
    I don’t think we’ll ever have a Flat Tax. There are too many vested financial interested in the current system. Do CPAs have lobbyists in Washington?

  16. Hi Chris!
    Yes, I think 15% flat would be a great thing! The CPAs can move on to retirement planning for everyone after Social Security goes belly-up.
    😀
    I agree the IRS would bring in much more money with a Flat Tax because there would be no need to hire experts to try to wrangle people and companies out of paying their fair share. Wasn’t there a recent presidential candidate supporting a Flat Tax approach? Was it Pat Buchanan?
    How does your wife get a 1099 if she is self-employed? Is she 1099-ing herself?
    I like plugging and chugging. It makes things so much simpler! Has your software ever found a deduction for you that you did not know existed?
    I don’t think we’ll ever have a Flat Tax. There are too many vested financial interested in the current system. Do CPAs have lobbyists in Washington?

  17. I bet big and small businesses wouldn’t want a flat tax either. The BWM lease wouldn’t be able to be deducted, as well as the lunches at the fancy restaurants, and trips with clients to nice vacation spots. The wealthy can figure out ways to reduce their taxes and still have all of the toys and nice things as a result.
    My wife is a self-employed physical therapist. Most of her work is referred to her by the state. They don’t control her work — they just send her the patients and pay her for the services provided. She also does some work for a local school system on a PRN basis, so she gets a check from them as well. Since these places don’t actually hire her as an employee, they send her 1099s.
    She’s planning to work for a local hospital since there are rumblings about cut backs in the state’s reimbursement rate. She’ll get a W2 for work done there and nice benefits, as well!

  18. I bet big and small businesses wouldn’t want a flat tax either. The BWM lease wouldn’t be able to be deducted, as well as the lunches at the fancy restaurants, and trips with clients to nice vacation spots. The wealthy can figure out ways to reduce their taxes and still have all of the toys and nice things as a result.
    My wife is a self-employed physical therapist. Most of her work is referred to her by the state. They don’t control her work — they just send her the patients and pay her for the services provided. She also does some work for a local school system on a PRN basis, so she gets a check from them as well. Since these places don’t actually hire her as an employee, they send her 1099s.
    She’s planning to work for a local hospital since there are rumblings about cut backs in the state’s reimbursement rate. She’ll get a W2 for work done there and nice benefits, as well!

  19. Chris —
    You’re right. Only the middle income people would like a Flat Tax. High income folks and companies love the deductions they paid to have put in the code and the poor don’t earn enough to get taxed. What we need is a Middle Class Flat Tax where the poor would remain untouched and the wealthy would pay as per usual and the rest of us would know exactly how much we owe each year before earning dollar one.
    😀
    Ah! I understand! You wife lives a bit of the life of the freelancer — great freedom but not much reliable security. The job at the local hospital sounds like a super fit all around, congrats!

  20. Thanks to my poor investments last year in my company, and spending on necessary things like space to run the company and the computer I used, I paid $225 in federal income tax whereas I reported an income of just over $18,000.
    17% of that would be about 3060. Yikes!

  21. Thanks!
    My wife likes the freedom and the money being self-employed provides. The only problem is that it always seems to be feast and famine when dealing with the government. It seems like the early years of any government program are the best. In later years, they want to save money by cutting back services, restructuring, and limiting compensation to pre-set levels.
    My wife heard through the grapevine there is a suggestion to stop referring work out and instead give it to state government employees. Of course, that would mean that one would have to get hired by the state to be a provider, if the plan ever came into being. It would also mean lower wages.
    The proposal would go opposite of the trend toward privatizing everything in the state, so I’m not sure how far it would go.
    If the state did hire its own therapists, my wife predicts that most would switch to hospitals, nursing homes, and sports medicine clinics. That’s why she jumped when she heard about the opening at the hospital before other people sent in their resumes.

  22. Chris —
    I agree the freelancer’s life is either feast or famine! It can definitely be rough. Your wife is smart to make her move now. Get some security and predictability and then she can still freelance on the side if the moment pokes her as something profitable to undertake.

  23. Gordon —
    P.S. — Maybe we could make the Flat Tax program Opt-In or Opt-Out at the start of each year? Keep the thresholds I described and then, if you’re in the wide Middle, you can either choose on January 1 to go Flat or Metered for taxation that year… think of it like the Powerball Lottery where you can choose a lump sum payment for less or a yearly stipend that could pay you more if you life long enough.
    😀

  24. I like both ideas! 🙂 Particularly if I won Powerball. Hee hee. I’d go for lump sum over yearly stipend which I have read ultimately pays off better if you invest it (even conservatively)

  25. I like the opt-in / opt-out at the start of the year for a flat tax program. If you are going to have a lot of business expenses, i.e. starting a new company, it would be good to have the deductions. If you are a worker-bee, it would be better to just opt into the simplicity of the flat tax.
    Would FICA still be separate from the 15% or would 15% be the absolute maximum percentage of income?

  26. Chris!
    I, too, like the yearly opt-in/opt-out plan for a Flat Tax. It gives one a bit of control over your year and the government would still get what they need from you in the end. It returns a bit of power back to the taxpayer.
    15% is 15% so that includes all the doodads, gewgaws and bellywhistles like FICA and the like.
    Oh, and did I mention there’s no state or city tax, either? We got to a Flat VAT system for purchases, licensing, land ownership and public schooling in those domains.