Since I am one of the members of the ABA (Association of Blogging Accountants) which Florinda recently made up, I decided to participate in Karen’s weekend assignment #256.
Weekend Assignment #256:
Tax time for individuals in this country starts in late January when the tax forms arrive, and runs through April 15th or so when the tax return is due. Do you file your taxes as soon as possible, at the last minute, or somewhere in between? Is there a particular reason for this?
Before I start I am going to give a little background on my career as a tax accountant.
Corporate Tax Accountant –
In the early 90’s, I worked full-time as an accountant for a small engineering firm while taking accounting courses at the local university in the evenings. The semester I was enrolled in Corporate Income Tax my boss came up with the brilliant idea he could recoup his investment in my education (he was paying half my tuition) if I prepared our company’s corporate income tax return; thus saving the company money on accounting fees. Our outside accounting firm would still review and sign the return. The first year, I propped up my accounting text book next to my computer to use as a reference and created the schedules for the return in excel. It was a lot of work and even though I felt like a fish out of water, the schedules balanced and life was good. The second year, I again prepared the schedules in this manner and again felt I was unqualified to do so, but it went okay. The third year, which was an incredibly stressful time in my life; I was taking the Becker CPA review course in preparation for the exam, I was unable to get those darned schedules to balance. Finally one of the accountants from the accounting firm in attempt to help my out me said, “You know Savvy, why don’t you just let us finish them, we enter the data from your financials into our tax prep software anyway and the returns including the schedules are completed in about 15 minutes.” I couldn’t believe it; after all that work they didn't need or even use my schedules; they were just placating my boss. After this experience, I vowed to never again work with corporate income tax.
Personal Income Tax Accountant -
After I passed the CPA exam, a family member asked if I’d prepare their income tax returns. Because of my inexperience (the only returns I had ever prepared other than in the classroom were my own); I decided to help them out for a nominal fee. I used TurboTax; the return was simple and went well. The second year, I went with TaxCutbecause it was cheaper. From the get go this return didn’t go well. First, it was more complicated; they had purchased mutual funds in their kids names which had incurred huge capital gains that year plus one of them had worked as a consultant on the side (of course they didn't track their mileage or save their business expense receipts). The extra income disallowed credits they were used to receiving, in an attempt to minimize their taxes I played around with separate returns for their kids and ended up losing half their data in TaxCut and had to reenter it. Then while printing the returns my old ink jet printer which literally printed the forms all afternoon ran out of ink. Concluding, I was upside down in both time and money on this return I advised the couple to consult a professional tax preparer in the future thus ending my career as a personal income tax accountant.
My current exposure to personal income tax-
In my current position, working as a Finance Manager in industry; the only exposure I have to income tax is the "Income Tax Update" I take each year as part of my continuing education. This doesn't stop me from being asked personal income tax questions on a regular basis. I used to attempt to look up answers to these questions, but now my standard line is I don’t work with tax, I work in private industry. If I can answer their question I do so, but usually I cannot.
Now for the assignment:
When do you file your return?
I work a lot of hours each year in January and early February; afterwards I give myself a couple of weeks to regroup before filing our taxes. This year I filed both our Federal and State returns yesterday. We are getting a small refund back on both, which is typical.
Who actually does your taxes, and with what software or other resources, if any?
I always prepare our taxes and do so manually. As I mentioned above, I have experience with both TurboTax and TaxCut, for me it is just easier and cheaper to file manually. It took me an hour and twenty minutes to complete both returns. I did use the amt calculator on the irs.gov web site to make sure I didn’t owe AMT. Wisconsin is offering free electronic tax filing this year, but I didn't take advantage of it. Adobe Reader 9.0 was required which I don't have. Also, I needed to include my federal income tax return in an electronic format which I also didn’t have. They do offer a couple of options for submitting the form electronically, but I decided to keep it simple and just file manually.