Sunday, April 14, 2013


Hope you got yours done. I did the best thing I could have and went to one of those low-income "free" tax preparers and was able to help my husband get them done. The IRS by the way isn't going to help you especially if you err on the side of owing them more but there is something called an amended tax form. Anyhow this was very helpful to my life. There is something to be pondered here, why aren't young people taught how to do taxes or something useful like that in school? Anyhow I'm glad I trusted my instincts that something seemed very off with our taxes. My husband's freelance income makes them very complicated!


  1. Tax prep is such a cultural oddity. The only valid reason why they don't teach it in school is that the knowledge would date as the tax code changes. But what we've got is a task that the government asserts that everyone should be able to do by themselves at home, but in reality has created a bureaucratic cottage industry with low pay (free preparers are often volunteers, and may have out-of-date knowledge) but 'professional' demands and responsibilities (including, last year, a legal requirement to undergo continuing professional education). I'm trying to move on from individual/small business tax preparation into other basic accounting or tax work; no dice yet.

    My view is that the complexity of the tax code is itself a form of extra taxation. It means that people in your situation often have to pay a lot of money to a preparer - your having freelance income means that the preparer's liability risk is increased too, as it's mostly freelancers who get audited, so a lot of people who can't afford it wind up paying a lot of money for tax prep.

    Given that you're pretty internet-savvy and at this point you seem to know the score and have received some advice on what to look out for/what expenses to claim, I'd urge you to try going to and using one of their FreeFile programs next year. Many state revenue departments have even better free tax filing systems on their websites. You can do it!

  2. Thanks for your suggestions.

    It's true some of the knowledge would date but then most people out of school have to do some sort of taxes even if it's just an EZ Form for a part time job. I just feel schools do not teach people enough useful tasks. Maybe it is me and my own lacks and deficients but I have spent a lot of my life running to catch up.
    As an adult sometimes I ponder how so much time was wasted teaching me things I never would use like Geometry and leaving out things, I would struggle to grasp as an adult.

    With freelancers, they make you do taxes with endless schedules even if the freelancer makes the same as a disability check and a lower income as if they were CEOs of a giant corporation. We are taking SE Schedules--I figured out the long SE worked better, Schedule Cs and so forth and so on. I also didn't take the EIC we were owned because I didn't realize the "earned income" didn't include disability. So a lot of errors I made I am trying to correct. I may go watch Youtube videos to get the amended form right. I wish I could redo the actual tax forms, that would be far far easier, as I finally learned how to do them right...but they don't want to make a persons life that easy. What is going to happen when the complexity out does people's knowledge base? The IRS won't help you fix errors especially if your mistakes grant them MORE MONEY. It seems to be me there has to be a lot of people in our position where the taxes are simply being done wrong.

    Sometimes I wonder if all this ignorance regarding practical matters is purposeful. I am having to now do amended tax forms for the last few years. I did the taxes wrong while trying to do them right and was forced to bumble along the best I could. We could not afford a preparer and at least this year I found a special VITA program to go too, which opened the door to fixing the older tax forms. I even called one famous Tax preparation company yesterday and they couldn't quote me a price, they refused to work with me when I said I wanted my work checked, and even then he said, "Oh that will be 200 bucks as an estimate". We just don't have it. I agree there is taxation in the complexity, those who can afford accountants and more can get their taxes done properly and they know the deductions. I may use a freefile program when I am done, not sure yet. I wish I could get the low income tax preparer next to me again. Our tax debt is huge too and people wouldn't believe how big it is comparative to income. Hopefully I can fix what is wrong and reduce it. It is a long of stress. Anyhow thanks for your suggestions. I may do the amendeds on a computer to file. I may try to call VITA again to ask if I can get someone to check my work. Maybe someone will take mercy on me. LOL

  3. That's some sucky customer service, but one problem with tax work is that it's often hard to know what price to quote to a customer until you've seen the ENTIRE job, as on the surface it's hard to know how much work you'll have to do to finish the job. Fortunately many companies will double-check returns for free, as a way to entice you into paying for an amendment - but at least that way you can get a professional look at it and possibly some advice for free, and just say 'I'll think about it' or 'I'll save up for it' if they try to make you pay for an amendment then & there.

    $200 sounds about right - I can tell you that the place I work charges $150 for federal amendments and $60 for state amendments (although you may live in a state where a state amendment wouldn't benefit you - by far the bulk of tax for self-employed people goes to the IRS, as self-employment taxes are paid into the Social Security & Medicare funds).

    To amend a federal return, you need to look at a copy of the return you originally filed. You can redo the actual forms, and then print out a 1040X to show the difference between the original numbers and the new numbers. (It's a little fiddly to figure out what to put on each line of the 1040X - the self-employment taxes you guys pay get listed on line 9, and your EIC on line 13.)

    Fortunately all the old tax forms are still online on if you need to print out a 2010 and 2011 version of Sch C and the SE forms to re-do. You can only go back up to 3 years for extra refunds, so sadly 2009 is a no-go as of last Monday, but you can & should have another look at 2010 and 2011 as well as 2012. Amendments have to be sent by mail, so if you feel more comfortable printing them and working on them by hand, you should try it that way.

    I can believe how huge your tax debt is compared to income. It's a burden, being your own employer. Funny thing is, you guys directly benefit from it in terms of Social Security Disability - the self-employment tax mostly goes into the Social Security fund. If nothing else, your husband is banking SS credits for the day he retires - if he can ever afford to do so.

    I'm tempted to agree with you that ignorance regarding practical matters is purposeful, but I don't think it's malicious so much as a result of a whole system that's afraid of being practically useful. Like I said, tax prep doesn't pay much - imagine all the upper-middle-class parents getting offended if their children were being taught to do something tangible and useful that didn't pay much! And I don't think education has a clue when it comes to connecting to employment and young-adult life. It's all about self-perpetuation.

  4. Yeah the customer service sucked, the guy seemed annoyed I was even asking what it would all cost. I can understand them wanting to know what the whole job will entail. I won't be able to afford the cost so I hope I get the taxes right. Sometimes the lack of money in one's life really means you are flying by the seat of your pants. I do have annoyance that even finding out how to DO these taxes was so difficult. We are so low income, this isn't a huge amount of money--less then my disability checks this year and I have to do taxes that are equal to the CEO of a mega-corporation. It is insanity. I plan to go to VITA next year, but have to get 2010 and 2011 done, I had to go get more papers. I think I have some deficients even trying to do this work and my husband doesn't even know how to do an EZ form. That is a good idea to redo the actual tax forms and then the 1040X. Thanks your advice has helped me a lot! I appreciate it! I got the SE taxes and regular ones confused doing the originals! They are a mess and we owe so much even with deductions it is insane. One thing poor people never get tax refunds, even when they have jobs and are doing Ezforms. When people say I am getting a tax refund, I know they are at least middle class or rich.

    I figured 2009, I missed, I never would have gotten that done, and I will mail everything.I printed forms off the IRS website at the library. I don't have a printer at home.

    Yeah husband is too sick to work regular job but got turned down for any employment. His field is dying too [both of his old bosses who laid him off some years back are now unemployed] One to be frank, I like seeing getting a taste of the medicine he dished out, but he probably lives off his wife who has a great job. He didn't care that my husband was supporting a disabled wife. Age discrimination after the last lay-off is rearing it's very ugly head. They certainly don't enforce those laws anymore. Thanks for understanding how huge the tax debt is. I won't be able to erase it redoing the taxes, just get the EICs taken off, and I know one year we missed the qualification by a couple thousand. The tax guy told me EIC looked at EARNED income which disablity didn't count as.



  5. I know we have the SS fund so it's weird we have to pay into something we get. I am not one of those anti-tax nuts who thinks no one should pay taxes, but the income to tax ratio around here is nuts. It is weird to be so poor, I mean we are the food pantry set having to do multiple pages of tax forms. I don't see other poor and less educated people even managing this and my education definitely failed me screwing them up so badly.

    There will be no retirement, if social security still exists at 65, that will be it for him. None of his jobs provided retirement or pensions, that is the life for many in Generation X and below. It's very scary for us. I know disability even drops when I get older, one friend told me that and Obama wants to cut it. I probably won't live very long, my health is so bad even making it this long has been a miracle so my living into old age is very dubious. Even if I lost all my weight my heart was destroyed by untreated hypothyroidism but I get seriously worried about husband's future. We have no kids. I don't know what I'd be telling kids now.

    Yeah I see them dumbing down kids in school--John Taylor Gatto territory. I wonder why the system is afraid of practical usefulness, maybe they fear people losing work over people being able to know and do things and fix things. I am not sure. I thought tax prep paid good money, and that accountants did very well for themselves. Maybe that has changed, I did wonder what the likes of Turbo tax and the rest did to the tax preparers and accountants. LOL course what makes money today? Computer and math skills? I still knew unemployed mathemeticians and IT people. I think the schools need to do a better job of telling the students the realities of the work world. I believe the "jobs" system is failing due to technology alone but that another post. Globalism is definitely destroying the American economy.

    Anyhow thanks for your help. I think I know what I am doing now. I turned into tax forms with so many errors, that nothing could be far worse. I will try my best with this and think I got it now. :p

  6. You're right - getting a tax refund means having a steady job, as an employee, and who has one of those now? And it often means being able to AFFORD to do the things that get you refundable tax credits, like taking college classes or having children. You know how hard it is to qualify for EIC without children; but if you do have kids, you can claim EIC on $40k+, and it can be over $5000 depending on how many children you have and what your exact income is. I feel like there's something very wrong with self-employment tax for people who just have a very small bit of business income - the THEORY is that you have to pay both the normal employee part of SS & Medicare (which most people don't even notice as it's taken right out of their paychecks), and also the employer half, because your pay ought to be higher than an employee's pay! When is that ever true? I've met plenty of self-employed people who are on effectively less than minimum wage if you take their out-of-pocket expenses into account. One thing I do notice is that self-employed people are a lot more aware about their taxes than employees tend to be. They're paying that automatic 15% of their income even before they have to think about income tax; it's a serious burden and you get no breaks on it however poor you are.

    re. 2009 - they wouldn't repay you at this point if you paid too much that year, but if you've still got some debt from your 2009 taxes that hasn't been paid off yet, it could be worth taking another look at it. They don't issue refunds from over three years ago but they will adjust debts.

    Make sure you claimed the Making Work Pay credit in both 2009 and 2010 - even if you weren't working, your husband would have qualified for an $800 credit in each of those years. Sadly that was a two-year stimulus program and it's gone now.

    Also, did your husband have health insurance in 2010? Uniquely in that year you could use the Self Employed Health Insurance credit to lower your self-employment taxes, not just to lower federal income tax. Sadly the only thing you can do to lower the self-employment tax for other years is to make sure you're reporting all your business expenses as accurately as possible.

    (I imagine that you guys are mostly concerned about self-employment tax, not federal income tax, as Social Security income is only taxable if you have a lot of other income as well, and the first ~$19,000 of taxable income for a married couple is exempt from tax due to your standard deduction and personal exemptions. If you qualify for EIC you probably don't have to pay any income tax at all, just self-employment tax.)


  7. The problem I've had from working in personal tax prep is that it's a thin niche that only pays for three months of the year. I worked anything from 50-75 hours a week for three months at about $13/hr (this is fairly middling for tax prep pay - I've been working through an agency, otherwise I might be getting up to $20 at my better job. Retail tax places like H&R Block start at about $9 plus a performance bonus, but it's not the worst place to get started; I took a free training course for one of the smaller tax chains in 2009 and that's how I found out I was good at this stuff.) So now I'm pretty much high and dry - still working part-time for two different small accounting/tax companies, and fortunately one of them is training me in some basic accounting skills, but they're both small businesses that don't have enough work for me to do full-time outside of tax season. What I've found is that because I chose the wrong major in college, I'm not qualified for any kind of permanent, full-time job; it doesn't matter how hard I've been working or how good I am at my work. I'm currently trying to get certified as an Enrolled Agent, which would prove I know how to do corporate tax work (I've done a little of it for incorporated small businesses already) - I've been told by my boss that this would help a lot. Until then, it's just a matter of getting by.

    TurboTax has shrunk the retail tax industry, though we get a steady trickle of off-season work from people who messed up their returns on TurboTax and got audited. TurboTax and other software providers do employ a lot of tax experts for phone and web support; they only take Enrolled Agents, but I could see myself doing that as a work-from-home second job once I'm certified.

    The other big effect of TurboTax? They've been lobbying to keep the tax filing process as complicated as possible. Talk about vested interests.

  8. Yeah a tax refund does mean a steady job as an employee and as more and more people are being forced out into "contracting" or under employed I guess that will become something that is far more in the past. I agree too, yeah one needs to be able to AFFORD children and college classes.

    We qualify for EIC I think because I am disabled. I did the EIC link on the IRS website to even figure out the amounts for 2010 and 2011. I think there is something very wrong with the self employment tax being so high on low income people. It's an insane percentage. Also if you have more money, you can get have a separate home office [his is in our living room and obviously part of the room] and deduct for that and so forth and so on.

    Yes with the out of pocket stuff, it does sink below minimum wage. In his case his career field is in trouble. He did look for regular work for a long time and we do not have the money to move or even the stamina to move somewhere else and see the job taken away. I just won't do it again now. His health is such, that he is not quite at the point of being disabled [he was turned down] but then old and bad off enough that he isn't being hired or is one of of the first out the door when lay-offs come. Yeah it is a serious burden, and we are digging the tax hole deeper every year, because we have to use every dollar that comes in as it does.

    There is nothing left to cut and I am too sick to give up the apartment and live in a rented room or take in a roommate. Ok I will relook at the taxes. Did you see what I posted, I did redo the tax forms, and well I figured out the IRS must have redone our taxes since I did them wrong, and some of their numbers matched my own except they did not deduct for EIC, so I am doing a lot of paperwork to get rid of 400 dollars and MAYBE another 270 but I guess every little bit counts. Im got the tax forms done except for the 1040 Xs.

    Making Work Pay, ok, that would helping in 2010. Thanks. Too bad its gone.

    No he is uninsured. {trust me I worry about it} We can't afford health insurance, this community does have a good free clinic we send him for, for the gout attacks, but I do worry about his vein issues not being dealt with on a continous basis.

    Yeah the federal income tax is pretty low. The SE is the worse.Thanks for understanding.

    Sorry the tax prep is limited and only three months a year. That would be tough. I thought the pay was far higher. It seems a lot of jobs are falling in wages. H&R Block quoted me such high prices, I hope they don't pay their agents at that rate but maybe they do. It does sound like you are pretty good at this stuff to even understand our complex taxes. I messed the taxes up not even realizing SE and income tax were separate things, talk about confusion. I hope you can find full time work, that has to be hard. Maybe with more training in accounting you could advance. I hope they are not closing people out of work they could do, because of the lack of a specific kind of college degree. Good luck on the Enrolled Agent program.

    Yes there are all these computer programs doing the taxes and I had wondered about that with Turbo Tax. That's good if you could get a second job with them. That is scary they want to keep the tax filing process as complicated as possible. Sigh!!! It's so complicated now, it is moving beyond most people's abilities unless they are trained. Next year, I plan to list the deductions again, and have the VISTA people do next years taxes for sure. Thanks so much for your help :)