Sunday, Apr 22, 2018
One of America's Great Newspapers ~ Toledo, Ohio


Things learned while preparing this year s taxes

You won t find it on any calendars, but a two-day holiday is coming up. Federal income taxes are normally due April 15, but that s a Sunday, and Monday the 16th is Emancipation Day in the District of Columbia and a handful of states.

So, procrastinators (like me) have an extra two days, until the 17th, to get their returns done. An extra two days for an educational experience our annual fleeting glimpse of our money and where it went.

We also have the opportunity to contemplate whether we had a good time while the funds disappeared and whether we can do a better job of keeping some of it next year.

Actually, the process of gathering records for tax time is healthy. A taxpayer is confronted with all the evidence of what went right and what went wrong.

Capital gains? We did something right, made some money on an investment, and so now we have to pay the price. That s OK. Capital loss? What were we thinking? Why did we think Dana stock was a good investment in the first place? We ll be smarter next time.

Schedule A is a really good road map to where we ve been and maybe where we re headed. On that form, we get to deduct interest, state and local taxes, charitable deductions, medical costs, and miscellaneous expenses.

Take interest, for example. A few years ago, when interest rates were at four-decade lows, it seemed like a good idea to tap the home-equity account: cheap money for lots of good reasons. But now, when the poor taxpayer looks at what that money costs at today s interest rates, maybe it wasn t such a good idea. Same goes for adjustable-rate mortgages that looked so good three or four years ago.

Tax time gives folks a chance to re-think politics. Let s see, we used to pay 1.5 percent income tax in Toledo, but then we voted for a temporary 0.75 percentage-point boost a quarter-century ago.

Well, that has become permanent totaling 2.25 percent and now it looks like it may not be enough. OK, no problem, as long as we don t think of any future tax increase as temporary.

The tax return also serves as a reminder of human foibles. For decades we ve heard that taxes will be simplified, and yet the tax code is still thousands of pages thick. And there s some pretty esoteric stuff in there, too.

Where did I put that receipt for the whaling vessel? Nowadays, all of us who donate to charities are required to keep better receipts.

No problem, but while looking up the rules, I came across a reference to expenses of whaling captains that gives a $10,000 charitable deduction to those brave souls who carry out sanctioned whaling activities.

It s not as nefarious as it sounds. It s a tax break aimed at perpetuating the ancient Alaskan whaling culture (it s not all that costly, and it keeps a tradition alive for some native Americans). The charitable part is that the whale is shared with the entire community.

OK. Forget the whale boat. Let s look at our other charitable deductions.

The Ohio Attorney General s office reminds us that the state recognizes nearly 20,000 charities, and about 500 of them use professional fund raisers.

The professionals raised $522 million in 2005, and two-thirds of that actually went to the charities.

So far, so good. But, unfortunately, not all charities are the same. The state agency reports that some charities got next to nothing.

In the Toledo area, for example, many school fund-raising schemes netted just 16 cents on the dollar. In a lot of cases, it would be more efficient to hand over money to the charities and forget the fund-raisers.

Tax season is a time to remember what it was like to get a refund. What fun! A distant memory for some of us.

Maybe someday the tax code will be simplified. But, until then, doing tax returns is certainly educational.

Click to comment

Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem?

Temporibus autem quibusdam et aut officiis debitis aut rerum necessitatibus saepe eveniet.

Copyright © 2018 Toledo Blade

To Top

Fetching stories…