I'm no cook. I can boil water and operate a microwave, but cook a meal from scratch? The 20 minute meal takes me several hours and leaves me too tired to eat it. That is if my attempt is edible. The simplest instructions stump me. Take last night for example, one simple line, drain the fat.
All right. How? Into what? The pan is hot. The broken up hamburger is steaming and popping with its own hot oil. The fat itself is rather dangerous to my skin and, I think, maybe to my drain pipes. What am I to do with the stuff? And really, what if I make a mistake? What if I don't do it exactly right or as fast as an experienced cook? It's only cooking.
Many people can throw together a meal, drain the fat, and cook a casserole. They don't give it a second thought and if they mess it up a bit, no one cares. Taxes aren't that way. Do 'em wrong and people care. IRS Agents care a lot and they'll let you know about it, too. Don't worry. You'll have directions on what to do and how to do it. Directions that are obtuse, overly complicated and rarely on point.
But taxes to me are like cooking to an experienced cook. Just as a good cook scans a recipe and automatically begins mentally listing the first steps and size of pan he'll need, I do the same with tax information. Based on the informational forms the taxpayer presents, I begin to plan the tax forms I need. 1099 - better check it to see what income is being reported - rents (Schedule E), interest or dividends (Schedule B), K-1 partnership or S-corp (Schedule E page 2), 1098 (Schedule A). Since the Schedule A is already in play, how about real estate taxes, medical bills, state taxes, contributions? W-2, self-employed, retired? Depreciation, vehicle expenses, employee benefits? Each tax client is different just like a recipe.
I can't cook a meal but I can prepare a tax return with one had tied behind my back.
Well, not too tough with one hand and a computer.
How did I get this way? Was I always strange and slightly crazy? Well, maybe, but it could be years and years of experience. Yep, that and growing up with a CPA. My father ran a small one man shop. Just like a good cook brings the children into the kitchen as babes to begin learning through observation and prep work, so it was in my childhood home with taxes.
My father's cottage industry involved the whole family from January to April. My first job as a child was to read the appointment schedule to see who was coming in next. Then pull the taxpayer's file to find out which forms had been used the year before. After I had my stack of forms I wrote the taxpayer's name and ID on every one. I put these in a folder and placed the folder on my dad's desk.
After my father prepared the tax return, my grandmother proofed his addition. After he corrected any errors, my mother typed the tax return. After my sister proofed her typing, the client was contacted to pick up the tax return.
The process was repeated in our house 100 to 150 times a year, every year.
Then around 1979, my dad bought a personal computer with some basic tax software and life changed forever. Proofing and printing became a lot easier but knowing which forms to use and where to put the numbers required the same high level of knowledge.
Make a few mistakes in a recipe and you might have to eat a meal that's a little less tasty than you'd hoped, but probably not fatal. And while making a mistake preparing a tax return isn't fatal either, it sure feels like it when that letter from the IRS arrives - usually two years after the return was filed - asking for an explanation about an entry the taxpayer doesn't remember making.
Many people begin to prepare their own taxes, just like I try to make my own meals, and get stumped by the instructions. What does that mean? How do I do that? What form do I use? It can be scary and it can be difficult, but it's not impossible. Maybe you'll never prepare your own taxes, but by reading this blog you'll be more educated and organized when you sit down with your CPA and she starts asking questions. Maybe your tax prep fee will drop because you bring the correct documents and information to the interview the first time and the CPA doesn't have to call you repeatedly to get the information she needs to finish the tax. Maybe your anxiety level will drop and you'll gather your tax information without breaking into a sweat or screaming at your spouse and children.
Maybe you'll just read the blog because you can't believe anyone would write about something as boring as taxes.
I plan to write a new blog each week and discuss a topic that I find interesting or timely. If my readers have questions or problems or confusion or fear, they can ask questions or make comments and I may use those for future posts. Don't be shy. I'm a real CPA licensed to practice in Tennessee. Outside the state of Tennessee, my state specific information will be spotty, but if you're in the United States, my federal information will apply to all. Until next time, keep cooking.
