Taxing Your Patience, Not Your Wallet

Taxpayers beware!

The Internal Revenue Service, this tax filing season, is taxing patience like never before.

This marks the first year taxpayers negotiate their way through the maze that is the 1997 Taxpayer Relief Act. Although the new law offers $152 billion in tax cuts by 2002, its 800 pages of tortuous rules exact a big cost in citizen exasperation, tax advisers say.

"Parts of the new law are so complicated, my clients leave more confused than when they come in," jokes Thomas Cunningham, a certified public accountant in Washington.

And it may not stop there. The complexity and resulting perplexity make taxpayers more vulnerable to IRS abuse, says Daniel Pilla, author of "IRS, Taxes and the Beast" and other books about the agency. As a result, tax filers need, more than ever, to master their taxes.

The new law has made the IRS an equal opportunity aggravator. Before the so-called "relief act," only affluent taxpayers had to file the most complex returns. Now people of more modest means also have cause to tear their hair while wrestling with their taxes.

The law especially helps big investors and middle-class families with a bent for savings. It includes a $500 per child tax cut and breaks for college tuition and expenses.

One of its simplest gems allows taxpayers who sell their residence after May 6, 1997 to exclude up to $250,000 in gain. Married taxpayers filing jointly can exclude up to $500,000.

More complex, but equally sparkling, are the new, lower tax rates on investment profits, highlighted on Page B7.

And next week's Work & Money section will explain the Roth IRA, a new individual retirement account especially appealing for savers with a decade or more till retirement. Again, it daunts as well as dazzles. Deciding whether to convert an existing IRA to a Roth IRA isn't easy.

Ultimately, the biggest winners from the new raft of complicated tax rules could be professional tax preparers. "The new law is the most complicated, convoluted stuff I have ever read," says Mr. Pilla: "I call this the Tax Preparer's Relief Act."

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK