Archive for the 'taxes' Category

Being too competent?

March 17, 2015

I was on the phone last night with a friend, talking about such topics as asset basis and non-resident domicile and tax returns and account registrations and settling parents’ estates.  A large piece of his advice to me was for me to stop displaying and using my competence so much and to instead play with the accountants and lawyers the role of a character he called “Jane the Dunce.”  He threatened to start calling me “Jane,” just to remind me.  The issue, as he saw it, was that nobody but me actually cared about getting the stuff right and that I should remove myself from the role of trying to get this stuff done properly.

I had a neighbor named Jane, who would be appalled at her name being used thus — she reveled in her competence.

The countervailing issue, which he did understand from his own experience, is that as a fiduciary, I am answerable to others — this isn’t just about my own stuff.  But he said that the standard in that context is not for me to act as a professional accountant or as my lawyer is expected to, just to act as a reasonable or prudent layperson would act.  Which he said is more like his character of “Jane the Dunce” and less like me.

Now we’re into territory about whether it’s ever a good idea not to use your own style and to try to act like someone else.  Some people, of course, ask themselves, “What would Jesus do?”  and nobody thinks that will end badly.  But aiming in the other direction, I have my misgivings about that.   On the other hand, there is the risk of getting everybody mad at me as I try to get the forms corrected or the transactions adjusted.  I could win some battles and lose a war.

My friend and I agreed that this is why many people, himself and my father included, end(ed) up trying to do all these tasks all by themselves.  (Interestingly, both my friend and my dad seem to have similar issues with their wives about financial matters.)  Which, actually, is a large part of why what I have now on my plate is so complicated — my dad arranged things his own way and without a lot of regard to what would happen after he was not there to handle the stuff.

Anyway, my friend said that he and his sister just signed what the lawyer (when he did use one) put in front of them, they didn’t check it over.

It’s a thought, but it’s certainly not how I was brought up.

I certainly see a challenge for me here.  The challenge seems to me to be something about striking a balance between pushing to get things right and not alienating others, between picking up other people’s slack and keeping my equilibrium, between my responsibilities to others and taking care of myself.  It’s a work in progress.


The power of money and corporations

July 18, 2014

I had to send three tax waiver certificates from the New Jersey Division of Taxation to a brokerage firm office in N.J.  I’m up in Massachusetts.  I sent them by overnight express mail from the Post Office (and I used the street address for the firm, not a Post Office Box).  That service claims it guarantees delivery the next day by noon.

I didn’t need the speed of express mail as much as I wanted the tracking, and I also wanted the documents to spend as little time in transit as possible, to minimize the opportunity for their getting lost.

So I expected the item to show up on the tracking as having been delivered by noon the next day.

Well, it didn’t and it wasn’t.  But what really surprised (and frustrated) me was that the USPS thinks this is okay.  Their claim is that it’s all up to the brokerage firm;  the firm has paid the Post Office a handsome fee to pick up its mail at the Post Office at will, as many times a day as it wishes to send a runner.  Apparently this means that the USPS does not deliver to the firm’s door, even overnight express mail.

So my piece of mail arrived at the Post Office on the day following my mailing of it, at 10:44 a.m.  It was “available for pick up” at that time, and, apparently, that fulfilled the Post Office’s duty on this delivery, from their point of view.  Didn’t matter that that wasn’t my arrangement with them, they allow this corporate arrangement to mean that the firm can decline to pick up the mail until they decide they want to.  Of course, the particular recipient of the mail could probably have requisitioned a pick-up by noon if they had wanted to — they did receive a call that the item was there at the Post Office, although I am not sure exactly when — certainly by early afternoon.  As it turned out, the item was picked up the day after the guaranteed-by-noon day, at 8:00 a.m., and this wasn’t posted on the tracking until the day after that.

Next time I may try UPS.

I am surprised that the arrangement with this corporation was allowed to trump my control over how I wanted the mailed item delivered.  I thought that in many situations, people and institutions depend on the delivery mechanism, and timing, being as advertized at the point of purchase.  Instead, it looks as if the Post Office has outsourced this decision to the recipient corporation, if they are willing to pay.  With all this technology, I might have thought the clerk at the counter where I mailed the item could have been alerted to the fact that this service would not be implemented as advertized, for this recipient.  In any event, there needs to be better communication.  (There also needs to be better handling — one of the clerks at the receiving Post Office told me that the item had been flung onto the counter and no one could figure out what to do with it for some time.)

I’m glad the tax waiver certificates arrived, and I hope to be able to distribute the remainder of the account to my mother today, to close the account for my father’s Estate, and to, for all intents and purposes, have finished administering my dad’s Estate.


January 15, 2014

I found myself in Belmont Center yesterday.  I apparently hadn’t been there for years, because every time I asked shopkeepers about changes, they told me “about three years ago.”  Without Bildner’s (a grocery store) and Filene’s (a department store; the Macy’s replacement just wasn’t the same, and now the location is empty) and Charlesbank Books, it ceased to be a particularly beckoning destination for us.

I saw a gorgeous scarf.  It’s more of a shawl, it’s wool, cream colored with pinkish paisley, and it’s, tastefully, beaded.  It was not cheap, but nor was it unreasonably priced.  I braced myself and got out my cash.

The salesperson rang it up with sales tax, so what she asked me for was noticeably higher than the tag price.  I said, “But it’s clothing” [and so shouldn’t be subject to sales tax], and she and her colleague said, “It’s an accessory” [and hence taxable].  I inferred that my choices were to pay what they were charging or to put it back, and I went with Option A.

When I got home and had eaten lunch, I went to my computer and googled “scarves sales tax ma,” or something to that effect, and sure enough, it’s exempt from tax, according to a state government document I found right away.  Right there grouped with neckwear and ties.

I called the store, they were very nice, told me if I came back with the receipt, they would give me back the tax.  Which I did.  We had a lovely conversation, quite friendly.  I recalled I had actually been through this at least once before, with shawls sold by an antique store that used to be in Brattle Square in Arlington.  I think shops that don’t sell primarily clothing are more apt to make this mistake.  (This shop in Belmont told me, “That’s the way it comes up in ‘the system.'”  I won’t get started on my technology issues here.)

Why I bring this up is that I don’t think I could have gotten any further at the time of purchase than I got.  There was no willingness to entertain the issue at that point.  They, not surprisingly, had a computer, but I don’t think it would have been effective to have asked them to go online and check.  I ended up expending the extra time and gas to go back, but c’est la vie, it didn’t take long and it’s not that far.

This resonated for me with other encounters, including formal meetings with bureaucratic officials, I’ve had, where afterwards, I wonder why I didn’t press my case further.  The scarf situation didn’t have much emotional overlay to it, paying the extra money was not fraught with anything in particular — it was just money, enough that I noticed, not so much as to be upsetting — so I could see more easily that there really wasn’t an opening to pursue the issue further at the moment.  It made me feel better about similar experiences in past situations, reassuring that I probably really hadn’t missed real opportunities.

Cost basis methods

November 7, 2013

I was trying to understand the current rules for assessing gain or loss on the sale of part of an account’s holdings in a particular mutual fund.  And while I won’t go into the nitty-gritty, I thought it was worth remarking that people who think they know what the rules are, offer assessments which conflict with one another’s.  I’m talking about people who work for brokerage firms and people who write explanations online on reputable websites, purporting to explain the rules.  They can’t all be right simultaneously.

Some seemed not to distinguish between what is the IRS’s default method and what is a particular firm’s internal choice of default method.  Or so it seemed to me.  When must a selection or a change in selection of method be made in writing by an investor?  How does a method used for one sale affect the choice of methods for future sales from the same fund in the same account?  How does it impact the valuation of remaining shares?  The sources I looked at varied on these issues or confused them, and it wasn’t just because the rules changed for shares bought after a certain date.

My sense is that we develop systems that are too complicated for many of the people who are involved with their use and implementation to understand adequately.  Plenty of small-fry people own shares of mutual funds, people who may not use accountants or financial managers or tax advisers.  The complexity of the rules may give them more choices and ways to reduce their taxes, but confuse them.  If the people who work in the field professionally have trouble explaining how the rules play out in practice, then, I think all the more that something is amiss.

Didn’t lose his touch

April 5, 2013

My mother’s accountant told me recently what he thought my mother would have to pay in taxes for 2012, and it seemed high, but what did I know?  Then he said it included a penalty for not having paid enough in estimated tax during the year, and I thought, “Maybe he [my dad] miscalculated because he was sick?”  I knew my father didn’t use a “safe harbor” approach, that he calculated his income each quarter and paid accordingly.

When the accountant said my dad hadn’t made a third quarter payment, I thought, “That is so unlike him.”  I also remember having reminded him about that one, because he was laid up in the hospital just before September 15th.  I thought he actually had said afterwards, when I checked in about it, that he had paid, perhaps even writing the check from his hospital bed.

So I called my mother and asked her to check the check register, and sure enough a record of it was there.  Just not recorded in my dad’s notes in his tax file.

Called back the accountant.  He recalculated.

Then we checked into why the accountant thought my dad had overpaid his NJ estimated taxes by as much as he seemed to think.  Again, a handwritten notes issue.  Recalculated that.

And finally, went back to the federal return, because it still looked as if my dad had missed in his estimate of what he would owe.  Turned out he had asked for a portion of his 2011 tax overpayment to go towards 2012, and the accountant working on my parents’ return hadn’t been given the copy of the 2011 return his boss had been given, so he didn’t know that.  Recalculated again.

So, I am pleased to report that even when he was so ill, my dad got his estimated taxes really, really close to his total tax due — no penalty, very little to pay.  That seems much more in keeping with my sense of my dad.


March 2, 2013

My dad always did his taxes himself, and they were not simple.  He resisted the idea of getting an accountant.  He was one of the smartest people I’ve known and he was good at math, so his doing his own tax returns even for his level of investment sophistication was feasible.

During the last period of his life, while he was cycling in and out of the hospital with kidney blockage and failure, he told me how he and I were going to go over his tax returns together “line by line” this year, because he realized he would need to have them double-checked by somebody else.

The package of material for my parents’ 2012 tax return arrived today at the accountant’s office.  Jordan and I figured out how to send my mother a box with a prepaid UPS label and how to schedule a pick-up from her house, to get the material from there to the accountant.  And today the box was delivered to the accountant’s office.

I don’t know what my dad would have thought of this — that we’ve engaged an accountant — disappointment?  anger?  I am pretty sure he expected I would learn to prepare his tax returns myself, and that I would have time to do them, too.

I just find the whole situation incredibly sad.

Maybe it’s a portal through which to express my grief.

Struggling with technology

February 25, 2013

I was using a tax software program yesterday.  In its running summary of my progress, it did not include all the information that had been entered according to its instructions.

Some of that information turned out to be there, and indeed landed in the proper boxes and lines on the forms.  Some of it I had to re-enter manually.

So it’s not just on my end, the software has idiosyncrasies.

At one point, I was on hold waiting for customer service, and I started wondering why I seem to have such a struggle with technology.  And I thought, maybe other people feel the way I do about technology, about something else that I actually feel comfortable with.  And maybe my struggles with technology are a gentle reminder to be more understanding of others who struggle with those things, and to be clearer in my explanations if I am trying to help them with that.

Mail, unbidden and missing

January 8, 2013

So I finished a personal care product this morning, threw the container into the trash, and, unbidden, a sample of the same product (different brand) arrived in today’s mail later in the day.  Nice timing.

On the other hand, I made a sizable (for me) charitable donation last year, and the recipient organization (which is located in the next town) says they have sent me a confirmation letter twice, and neither have I received.

Years ago I donated some goods to an organization down the street, for a charitable auction, and they never got the paperwork to me, and I remember clearly understanding that it wasn’t meant to be a tax deduction.  They were items (a quilt and some other handmade textiles) that meant something to me, and there was something in the act that would have been diminished through the coldness of introducing tax considerations.

This time around, it was a cash donation.  But maybe it is not meant to be entangled in tax considerations nonetheless.

In both cases I had had some prior involvement with the organization and felt I had received some benefit from it and wanted to make sure they could continue to do what they do and benefit others.  So maybe in that context, charitable tax deductions have no place.  I sometimes feel that I have a special need to keep my books in balance between my benefiting from this world and my contributing to it;  maybe the way these donations play out has a lot to do with that — the universe is helping me keep my books when on my own I wouldn’t be squaring the entries right.

Tax software

February 13, 2012

I had been avoiding using tax software because I routinely have trouble guessing what software programmers think is intuitively obvious.  While I am no accountant or tax attorney, and it’s been, shall we say, something of a learning curve, I have found the IRS publications and help from their representatives I can reach by phone understandable for most of the issues that have arisen.  The added benefit to doing my taxes this way is that I have come to understand more about my finances, finances more generally, and the structure of the tax system.  This I have found has helped me discuss more cogently and estimate more accurately my financial situation in other contexts.

But my son’s university is basically pushing financial aid applicants to e-file (the time frames really don’t work if you file on paper and also can’t actually prepare the return until various tax documents are generated that are only available well into the tax season).  So, I thought, “Okay, it’s time to learn to to deal with e-filing federal tax returns and learn to do it.”  I was advised by my computer guy to use purchased software to prepare the returns on my own computer, not up on a website.  So, I duly went out and bought some.

Well, I am having enormous amounts of difficulty using the software (a reputable one), even on a return that takes me on paper very little time to prepare.  The software doesn’t take into account certain situations, and would produce an erroneous result if not somehow manipulated (for example, it insists on taking a tax credit that the taxpayer is actually not eligible for if I answer its questions accurately — its questions aren’t taking into account a distinction in sources of income that is relevant).  Trying to put numbers directly onto the forms didn’t work either, because the software kept claiming we had overridden entries and so would not allow us to use e-file.  Eventually, hours later, I spent almost two hours on the phone with a customer service rep for the software company, and between my knowledge of what the entries were supposed to be, and hers of how the program chooses to handle things, we got it done.  (That is, the simpler of the two returns I have to file for my family this year — I have still to do the more complicated one, and that one is also required by the financial aid office.)

I suspect the software can be very helpful in other respects, like helping with accounting issues I don’t know much about — it will, I have the impression, perform the number crunching through equations I might not know.  So, I can see where I might benefit from it (and probably could have in the past).  But it also requires more knowledge of tax issues than it incorporates into its own workings.  And it does things the IRS advises against.  Here’s one example.  There’s a place on the return I did yesterday where the arithmetic produces a negative number but the IRS wants a zero.  The software insists on the negative numbers for a few lines.  Eventually what I would put on a paper return and electronic versions match up, and the rep claimed the IRS will accept the software version, so I agreed to it, but it isn’t what the IRS has advised me to do.

My more general concern is that the methods we use to solve some problems end up creating new ones, including, here extra time and expense for the taxpayer.  I realize that the system might be structured such that people who want financial aid are required to expend resources in other ways, and that for a taxpayer with not much income but a complicated tax situation for other reasons, an accountant or professional tax preparer is nevertheless deemed necessary.  But quite frankly, I’m not sure I could afford a preparer who understands the concepts involved in a non-routine situation — I have the impression from the IRS reps that my family has an odd combination of factors that intersect with the tax code in unusual ways, so someone who prepares routine returns might not be willing and able to handle my returns.

I will note in closing that last year, the Massachusetts Department of Revenue did not mail taxpayers the instruction booklet with the forms for the state return, and we were supposed to look on their website for them, as I recall (I can’t remember if they got rid of the three-column format on line, but I would note that I find it really annoying to have to scroll up and down on the same page to read the content in the right order).  This year the paper instructions were included with the forms.  I take this to mean that I am not imagining that a transition to electronic-only is not solely a story of improvement and benefit.  I think it is rather one of those situations in which costs are being shifted, and that not necessarily being shifted to where in the system they can be borne, and that they are being shifted in ways that are not always readily apparent but damage the system and its stability nonetheless.


February 8, 2012

I spent the day dealing with tax issues and health insurance coordination of benefits issues.  I try to take a positive attitude and think about how the workers I speak to are the lifeblood of our systems we rely on.  Actually, most of them really are quite pleasant to deal with — friction only arises when they don’t have the access to the resources necessary to help and I want them to be able to help, and I’ve learned to try to learn from them where to try next (frustrating when all they can suggest are others who are equally unable to help).

But I learned two fascinating things today.  One is that Congress did not authorize funds for training the IRS representatives whom taxpayers can reach by phone in how to fill out the Alternative Minimum Tax form.  I had a specific question about something vague in the instructions to one of the lines, and after the rep looked into his general information (which gave no further information on the point), we ended up both searching the internet using Google and getting some information about what kinds of situations the line in question pertains to.  He was apologetic, the rep was, and he explained how limited their training in the AMT form is and how they have been instructed to advise taxpayers to seek professional tax preparation help.  He said it was the result of Congress not authorizing funding for training in helping taxpayers with the AMT form.  I was surprised.  I kind of felt that if we taxpayers have to fill out the form, those who are requiring us to fill it out (including those of us who don’t owe AMT but have to fill out the form to determine that — yes, I tried using the IRS AMT assistant tool on line but fell into one of the categories of people who can’t use it) owe us some kind of sufficient explanation so we can fill it out.  (I do consult Lasser’s and things like that, but I just couldn’t find anything that elaborated on the point, and quite frankly, sometimes I’ve thought the explanations in Lasser’s on other points are paraphrased to the point of being misleading.)

The second thing I learned is how we leave health insurance phone reps unable to help when we divide up the issues, assign them to this, that and the other department, and have software written that means reps in each department can only see limited information and perform limited tasks.  The subscriber has an issue that fits into the system as designed one way, but the bureaucratic divisions among the insurers means that individual departments can’t actually handle the issue because they are not tasked with dealing with enough of the system to handle the issue as the system was originally designed — each of the departments handles a piece of it and at different stages, so none of them can actually produce the document I’m told I need.  Which sends me back to the employer’s benefits department, which felt ill-equipped to produce the document themselves when last I left off.

As I said, I try to focus on these workers as doing their thing to keep the hive humming, because if I focused on getting the task accomplished quickly and efficiently, I would become very frustrated.  I think we’ve made things too complicated, even if there have been reasonable policy justifications for each additional piece of complexity as it was added on.  But, it does get us all talking to one another and maybe learning to be more patient and compassionate in the process of trying to accomplish what we need to.