General

According to the IRS: Individual taxpayers spent a total of 897 million hours in FY 2022 just on record-keeping. This is in addition to the 1.15 billion hours spent on tax preparation of individual returns. Business entities spent about 1.14 billion hours and $48.3 billion on tax preparation in FY 2022.

Tax season causes stress all year long. I’ll never forget how when my dad was 90 years old and in hospice care he told me to be sure and file his income tax return. He seemed very concerned.

The truth is that every penny of his income was reported to the IRS and he should not have had to have a tax return prepared at all.

As a business owner I pay $$$$ to have my taxes prepared. I can do them myself but found it too stressful and time consuming.

I especially remember warm sunny April weekends where I had to stay inside and work on my taxes.

I have to keep a lot of records but these days most of my record keeping is automated and I keep records as I go. It takes me about 3 hours to gather my information for the tax preparer. I mostly understand my taxes which helps me make decisions about business expenses.

I do my best to not over pay when I pay quarterly taxes because I don’t want to rely on the IRS to send me a refund. If I am due a refund I roll it over to pay first quarter taxes which are also due on April 15th.

Happy Tax Day!

Yes it snowed and now it is cold but we really needed it. It was a wet heavy snow that will add water to the Mississippi river which is running low. The farmer’s need it so that there crops can grow. Most if not all of the state of Minnesota is in some stage of drought.

Snow is a good thing and this time of year it won’t be around long. A few inches of it have already been absorbed. It is going to be a beautiful spring.

Yes, the taxes are done. I remember when my dad was 90 years old and one of his last requests was about his income tax return. He reminded me that it needed to be prepared and filed. Few things in life cause as much stress as income tax compliance. There may be a penalty if the filing deadline isn’t met and there are underpayment penalties too.

Most American workers have taxes withheld from every paycheck. The IRS knows exactly how much W2 workers make.

According to the National Tax Payers Union taxpayers spend $104 billion a year on out-of-pocket expenses associated with preparing and submitting tax forms. Some entail basic costs such as making copies of financial statements, receipts, or forms.

The Office of Information and Regulatory Affairs (OIRA), found that complying with the tax code in 2022 consumed 6.55 billion hours for recordkeeping, learning about the law, filling out the required forms and schedules, and submitting information to the IRS.

For those of us who are self-employed, record-keeping is a daily part of running a business. It isn’t just for determining profit and loss it is all about having everything we need at tax time. Income tax compliance costs time and money, time that could be spent making more money.

Taxes are not withheld from any of my revenue. I have to calculate how much I owe and make payments. If I estimate too high and pay too much, it is best to apply what could be a refund to the next year’s taxes. If I pay too little I have to write big checks. I know plenty of people who are interested in self-employment but believe that their taxes would go up or that taxes make self-employment too risky.

I keep records as I go and almost everything is automated it takes me about three hours to gather all of the information I need to file an income tax return. I used to have to spend entire weekends working on income tax returns. Usually, warm sunny spring weekends when the birds are singing and the flowers are blooming.

Once I have all of the forms and documentation put together I pay a professional to do my taxes. Yes, I can do them myself but hiring a pro takes some of the stress out of the process. I learn something new each tax season and that helps me make better choices throughout the year. I actually mostly understand my taxes.

As for using tax preparation software, no thanks. I have used it in the past. I would call it a “bad experience” all the way around.

Supposedly the IRS is understaffed but they always have the time and the staff to find small errors in the tax returns that come from small businesses. I am not going to argue over a few dollars even if I don’t owe it.

When I am on my deathbed bed I am not going to worry about taxes. If I die owing taxes I am OK with that.

In some countries, taxes are paid online using a simple free form. In the U.S. taxes are a multi-billion dollar industry that isn’t going away anytime soon. Neither are the  74,608 pages of U.S.tax code or the 79,000 IRS employees.