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6.1 Billions Hours Americans Spend Preparing Their Own Taxes!

February 28, 2011

The National Taxpayer Advocate (the agency that helps taxpayers who have problems with the IRS) reported to Congress that Americans spend 6.1 billion hours a year (that’s collectively) preparing their own taxes. Two things pop to mind right away…we need tax reform and we (You) need to use a tax preparer to file income taxes. Here is my analogy story of the day.  Two years ago I needed to go to the dentist as I had a chipped tooth that became painful. I’m sitting in the dentist chair and after the dentist looks at my tooth, he tells me what is wrong and what needs to be done; he then steps aside while his “financial person” comes over and explains how much it would cost and the various ways I can pay. I needed a crown (for the chipped tooth) and it was going to cost $1500. I have no dental insurance ( she mentioned that even if I did I’d be paying at least half of that myself, anyway!) so I opted for a payment plan. I asked her what do people do if they can not afford this…and she said they usually have the tooth pulled (which can cost as little as $100.), and if they don’t have the $100….many people, she said, pull their own teeth. OUCH! And there you have my analogy. I feel that doing your taxes yourself is like pulling your own teeth. Here are some more statistics that may sway you my way.

  • Over the past 10 years there have been 4,428 changes to the tax code – which averages out to more than one a day.
  • The code is so complex that nine out of ten Americans have someone do their taxes for them or rely on tax software.
  • The tax code’s complexity often leads honest Joes to make costly errors, while sophisticated taxpayers find loopholes to exploit.
  • And my favorite: The tax code is so long that no one is certain exactly how long it is.

This recent report to Congress use the above stats and observations, as well as others, to build a case for tax reform – not a mere tinkering around the edges, but the kind of sweeping reform we last had 25 years ago, when marginal rates were slashed in exchange for the elimination of a lot of tax breaks. The President and Republicans in Congress have voiced support for an overhaul, but its early days; The Regan tax reforms took three years to hammer out. Everyone likes tax reform in the abstract, but when talk turns to getting rid of deductions like, say, the one for mortgage interest, you may be less enamored of the idea.

The other day a (new) client came in as she decided it was time to use a professional tax preparer. She said she never wanted to spend the money but felt that she may have missed a few deductions.Within  minutes of looking at her last years tax return I found $800.00 in deductions that she never took and was entitled to have. I didn’t ask her if she pulled her own teeth, as she had great smile and I knew (intuitively) she spent the money on those pearly whites. At GAI(www.gunwel.com) we know that finances are tough, we know that every penny counts, but we also know that we can help you save money and get money back from the government. Let Gunwel Tax & Bookkeeping help you with all of your tax needs. Call us at 212-979-6830  or stop by for a visit. We also have dentist (clients) that would love to help you pull your teeth, and can put you on a payment plan. See you soon!

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