Taxes: How not to spend a sunny weekend
While most everyone else in Washngton was viewing the cherry blossoms or otherwise enjoying a beautiful weekend, I was trapped indoors trying to get a handle on my taxes. Unlike most folks, as described in this great column in the Washington Post on Tax Myths by my Tax Policy Center colleagues Rosanne Altshuler and Bob Williams, I usually do my taxes myself and often without the aid of software. I'm a tax geek, so doing my return on my own gives me an up close and personal look at what I study. Plus I get a charge out of conquering the tax code. I did admit to being a tax geek.
However, this year my taxes took a turn to the obtuse, due mostly to some big medical bills. First, I needed to figure out what I spent on health expenses and then determine how much either insurance or my flexible spending account (FSA) covered. Worse, since my health problems didn't coincide with the calendar year (illnesses rarely do) and my health insurance isn't on a calendar year, I had to sort out which bills came from which calendar and medical year and when they were paid. In the end, it turned out that my current FSA covered enough of the cost that I couldn't itemize medical expenses (which would have to exceed 7.5% of my income). All of that took much of Saturday.
Sunday, I had to figure out how to file. Should I buy software with its built-in checks or go with free filing, which is, well, free? In the end I decided to buy commercial software to make sure I didn't omit a form or screw something up. And, in fact, when I double checked which disability payments are taxed vs. tax free, I found that I qualify for the Making Work Pay Credit (Schedule M). I didn't pay an extra $30 for the added benefit of having an on-line someone look over my taxes. I figure if I need a second pair of eyes to review my return one more time, there are plenty of other tax geeks just down the hall.
If you want to hear more about tax complexity, come to the Urban Institute at noon this Thursday for a panel discussion on the subject.
Oh, and by the way, I'm feeling fine now. Thanks for asking.
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