Tax Fever

I have certainly been busy over the last few weeks. My school schedule is still pretty demanding, and will remain so. Of course, I have also been working. My job is actually going pretty well right now.

I finished my 25th individual tax return of the season today! By day's end my count had grown to 27, and when partnership and S-corporation returns are added in, I've done a total of 35 returns.

This number is low for a couple of reasons. First, though some people do their taxes early, things only really got going in February, after I had been a work for two weeks. I've also spent some time working on a couple of audit procedures.

Still, I hope to do over 100 returns this year, and there's no reason right now to believe that I will not do so. I felt pretty good during the last few days, as I had six returns filed away yesterday waiting for additional information. I got three done yesterday, and the other three left my office today (only two were completed, the third had to go back to a partner so he could make inquiries of the client). These events made my morning seem very productive.

Then came the afternoon. I started work on three different returns and finished none of them, again because while we have almost everything, the clients again managed to leave out a key piece of information, though I really don't blame them in most cases.

A key example of this was one client who had sold some investments (stocks or bonds) this year. They included a statement from Morgan Stanley which recorded the net cash realized on sale. What the statement did not provide was the investor's cost basis in the investment. Cost basis is essential for establishing whether or not any part of the cash received on sale will be taxable. The U.S. government only taxes people on the capital gains, which is the cash received above and beyond the investment's cost (basis). If basis exceeds proceeds, then you'd even get to deduct the resulting capital loss.

I apologize to those readers who were already aware of these issues. I just wanted to point out that even if you include every statement sent to you by an employer or financial institution, you may not have enough data to complete your tax return. You may need to keep your own records of certain transactions. In my case, I'll be calling our client's stock broker who hopefully has this data for me. Otherwise the IRS will have to assume that the full net proceeds from this sale is a taxable gain.

Yes, tax season has been fun so far. I've seen a host of issues and topics that I've only heard about in a classroom before. Now I am confident (for the most part) about where things go on various IRS forms. It also makes me glad to think how simple my own taxes are right now.