For the last several years I’ve promised myself I would do my taxes early. And for the last several years I have found myself Tokyo-drifting my way to the post office at 11:59 p.m. April 14. This year, I was determined to get an early start. After clearing off the kitchen table and finding an outlet for the calculator, I sat down to do my taxes. As always, I made sure to have all the necessary documentation and forms, like W4s, tax forms, bank statements, insurance reports, tax schedules and, most importantly, a box of Kleenex.
As I sat staring at this year’s tax booklet, I noticed a special section of “Tax Terms,” which is an alphabetical listing of terms one may encounter during the tax preparation process. Each term is followed by a brief description meant to enlighten the truth-seeking taxpayer through “real-life” examples. For instance, the IRS uses “Jane” and “John” to illustrate the term “Ability to Pay.” In this scenario, Jane is filthy rich, with homes on both coasts that she visits by way of her own Lear jet.
By comparison, John earns what the IRS calls a “more modest salary,” which affords him a flashlight and a camper shell to live in.
The only thing these two have in common is the oil industry: Jane is an executive in it, and John had his SUV re-possessed. According to the booklet, due to their income disparity, “John and Jane do NOT pay the same amount of taxes, because their ability to pay differs vastly.”
This brings us to a term not included in the handbook: “Highly-paid tax lawyer.”
In this example, Jane is able to filter her $1.6 million earnings through a maze of tax shelters and special credits before wiring an undisclosed amount into a Swiss bank account, leaving her with a taxable income of: $6.28.
John, who files his return on the 1040 EZ form, is entitled to a refund that, coincidently, adds up to exactly…
See? “Jane” PAYS and “John” gets a tax CREDIT!
All together, there are 65 terms listed in the handbook, many of which seem self-explanatory until you read them closely. With the tax deadline just a few weeks away, I’ve taken the liberty of paraphrasing some of the more complex terms that you may encounter before now and tax day.
1.) Simplest tax form offered by the IRS.
2.) A wealthy, white rapper.
Gross Income: The dollar amount that appears in the box after “federal income tax withheld.”
Adjusted Really Gross Income: The amount left over after completing your taxes.
Bank interest income: If you make more than $400 from your savings account, the IRS is interested.
Tax Shift: What the average taxpayer does in their seat after determining his/her adjusted gross income.
Dependent: A child, parent, spouse or household pet with a human-sounding name, such as “Fred” or “Sally,” whom the creative taxpayer can claim on his/her income taxes.
Estate Tax: The amount of tax on a deceased individual’s estate that has been passed on to surviving family members. Short explanation: Something our children will ever have to worry about.
Filing Status: A spot on the IRS’s Facebook account where you write about what you’re doing right now.
Passive Income: The response most writers get when people ask them about their annual income, i.e., “Thanks, but I’ll pass.”
Duty Deposit: What most taxpayers would like to include with their IRS payment.
While there are plenty of other terms in the new IRS tax glossary, it’s probably a good idea to stop here.
To be honest, I’m already feeling taxed…
44 thoughts on “Get a jump start on your taxes! (And depression!)”
Sounds like a tedious and taxing job.
The Federal isn’t to bad. It’s the state taxes that are a pain in the [censored]. And I don’t even smoke marijuana…
Oh, that’s right. You have state taxes over there, across the border. Yuck! Maybe it’s time to take up toking. BTW, would love your thoughts- if you have some- on my most recent post (a guest post for Mama Mick).
Haha! Sounds like a smoking idea.
And you post is in my cue! Looking forward to reading it, Susan 😉
Oh, ugh! I was just thinking about my taxes yesterday. Now that everything has arrived in the mail, I have no more excuses.
Is 1040EZ cute? If so, would he help me with my Schedule C?
You’ll need to make room for his posse…
My husband’s man cave?
As long as it’s not in an actual cave. They get cold easily.
So would the groupies 🙂
A very helpful post, I especially liked the duty deposit. I prefer to do my taxes the easy way, watch my husband use TurboTax while I veg on the couch watching TV.
I definitely like your method better. But you and your husband would probably get tired of me hogging the TV.
I like your definitions! I have to do a schedule C, which isn’t as fun as it sounds.
I prefer the Schedule ZZZzzzzzzzz
So i guess we can claim our Bichons Jack and Max as dependents, but not Captain the Yorkie-poo?
Only if he stars on a kiddie show.
I’d leave a comment but I’m withholding.
Owe, I see.
This article is full of useful infromation, which I am happi too have had presented to me.
Your welcome, spambot…
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HAHAHA. Thanks for adding some humor to thinking about tax preparation, which makes me think of Preparation H, which one always needs for the pain in the ass that doing taxes gives us.
Hahahaha! I wonder if that’s where H&R Block came from?
Just find out I can buy a little more time before filing, as it seems the e-file site is currently down.
Hopefully until 2017.
Here I was, living a pleasant little life, and you crushed it all with your trash talk … er, tax talk. 😉
Sorry, Lynette! I tried to warn you in the title… 😉
Using a human name for the dog (like, say, Cody) and then trying to claim said dog as a dependent no longer works, now that the town dog licensing records have been digitalized and can be checked by the feds. Not that I would know, of course.
So you’re telling me the Social Security card I had issued to my dog won’t work?
Only if you can somehow prove that “Billy” really is your son and that for some weird reason you applied for a dog license for him. Of course, in that case, you might run into a whole new set of problems with the authorities.
… especially since you presumably would have checked off the box on the dog license application indicating that you had “Billy” neutered.
No one wants any more offspring from my side of the family.
“Billy” is my therapy child…?
It will work while Social Security is withholding 12% of your dog’s income.
I really need to get him signed up for AARF.
He’ll have to be 350 years old in dog years to be eligible.
And he’ll probably STILL get better benefits than me.
Congratulations on filing your post prior to the April 15 deadline!
…you still have to file the tax returns, though.
I’m filing for an extention…
Thanks so much for simplifying that for us. It all becomes clearer now.
Can you explain it to me?
You pay taxes, Ned?
What’s that feel like?
I am SOO thankful I have an awesome accountant who does our taxes every year. He loves me because I have everything so organized! All I have to do is hit a few buttons, print reports out and send corresponding documentation. All of which is sitting on my desk right now!! I just have to find it!! HA HA HA!
Seriously! I used to hate getting tax stuff together, but I learned to do things along the way that makes life so much easier. I use a program called Quicken and put every dime we spend into that program in categories. So at the end of the year, wal la! 3 Reports and I am done! It has only taken me 20 years to learn how to do this! *snort*
Highly recommend Quicken though! It has been a God-send! 😀
I know, I know… you hate me! 😛
Lol! Never 😉