**Oregano’s fan club has been clamoring for a new post from him. Unlike most people, this is his favorite time of year. I’ve turned Good Humored over to him this week to explain his unconventional mindset.**
January is not a month that most people look forward to. The holidays are over and the reality of a month of overindulgence is rearing its ugly head. The weather doesn’t help either. It’s cold and dry outside and shoveling snow is a common occurrence. In fact, psychologist, Dr. Cliff Arnall has even declared the third Monday in January to be known as Blue Monday, the “most depressing day of the year.” Although the science behind his determination is questionable, nobody can deny that many people feel icky throughout the month.
January does have a few bright spots. The days start getting longer, great football games are on television every weekend and, best of all, tax documents begin arriving in the mail! Yes, it’s almost tax time, the most wonderful time of the year! What was that? Taxes?!?! Wonderful?!?! Yes, wonderful! Allow me to explain my unusual perspective on taxes.
The procrastinators among us consider April to be tax time. However, true tax geeks, like me, know that the fun really begins in January. By April, the magical winter days spent with my tax documents are fading from memory. The refund has already been deposited to my bank account and I have to wait another nine months to begin the process again.
Benjamin Franklin once wrote, “In this world, nothing can be said to be certain, except death and taxes.” Most people find both of these certainties equally unpleasant. Although I’m not particularly fond of death, I do love preparing taxes! Why, you say, does this crazy man look forward to preparing taxes every year? Is it the promise of a payment coming from the government? Of course! Is it the chance to comb through the tax code and squeeze out as many deductions as I can? Yes again! However, the real thrill comes from taking on the challenge. Okay, okay, it’s really because I’m too cheap to pay for an accountant and I think math is fun.
The first sign of tax season begins in the middle of January, when the Form 1099s and W-2s appear in the mailbox. Paprika says that I skip up the driveway with the mail, full of excitement. I wouldn’t say that I skip, but I cannot deny that I do have an added spring to my step. Every day, I look forward to the mail and the inevitable tax documents that are waiting to be collected. Sadly, since we have entered the paperless age, some information is sent electronically now. It’s certainly not as exciting to open e-mail, but my love for all things environmentally friendly has trumped my love for grabbing financial documents out of the mailbox. By the end of January, all of the tax documents have been delivered and it’s time to get to work.
In the old days, before there were computer programs to help me, I was on my own. It was just me and the Form 1040: mano-a-mano. I sharpened my pencils to the finest point I could muster and lined them up, ready for battle. My weekends were spent meticulously reading the tax code, recording information and calculating deductions. Schedule As, Bs, Cs, and Ds were drafted and re-drafted. Finally, I emerged triumphantly from the office, sweaty and covered in pink eraser dust clutching a completed 1040.
These days, there is plenty of tax software available to make completing taxes much easier. With a few clicks of the mouse, I answer all of the questions and the software does the calculating. Although most of the tax rules are precise and the calculations are indisputable, there is one area on the Form 1040 that leaves plenty of room for creativity: the deductions!
Not sure what qualifies as a legitimate deduction? Are you worried that some of your deductions might not be entirely… how do I put this… kosher? Don’t be afraid. You would be amazed at some of the ideas our fellow taxpayers have come up with! One legendary tax story is about an exotic dancer from Indiana named Cynthia Hess, aka “Chesty Love”. She deducted over $2,000 for breast implants claiming that increasing the size of her breasts allowed her to increase her earnings. Then there is the story of the owner of a junkyard who deducted the cost of cat food. He used the cat food to feed stray cats who controlled the number of rodents and snakes on the property, thereby making the junkyard safer for customers. Believe it or not, after a court battle, both of these deductions were approved by the IRS.
Before you get all deduction-happy, there are plenty of unorthodox deductions that were not allowed by the IRS. For example, in 2004, William Halby deducted $100,000 worth of expenses for prostitutes’ “services.” Because he was depressed and alone, he argued that his deductions were medical expenses and were justified as part of “sex therapy.” Not surprisingly, the U.S. Tax Court denied the deductions because not only is prostitution illegal, it’s not an approved medical treatment. The moral here is: don’t abuse your creative license when taking deductions. Audits happen!
The next time you are starting to feel depressed in January and you’re reaching for the hand cream and lip balm for the thousandth time, cheer up. Your tax documents are coming! Happiness is only as far away as your mailbox. Let the fun begin!!