Tax season has officially begun: Monday was the first day you could file your 2018 taxes.
I have a ways to go.
It's a false economy for me to do my own taxes; over the years an accountant probably would have saved me a ton of money. But I've got this stubborn idea that a person ought to be able to do their own taxes, just as they ought to be able to drive a stick shift and change a tire.
I employ some pretty serious software because, while I don't imagine that in the grand scheme of things our situation is terribly complicated, our returns can run more than 200 pages. Last year took me about 20 hours, which was pretty good. Because I'm a cautious man, I know there were some legitimate deductions I lacked the heart to claim.
I'm not complaining, though we invariably end up writing a check to the federal government on April 15. I'd rather hang on to our money than float them an interest-free loan. And this is partially offset by the check the state generally sends us. (Thank you, Arkansas.) That we have to remember to claim as income on our next year's return.
This year may be different. More than 600 changes to the tax code took place under the Tax Cuts and Jobs Act passed by Congress in late 2017. This led Ivanka Trump to claim "the vast majority" of Americans would be filing their taxes "on a single postcard."
Not yet. Congress never got around to providing a postcard option. We're all filling out the same 1040 form this year. (The shorter, simpler 1040 A and 1040 EZ forms are extinct.)
What the government did do was raise the standard deductions we can claim. Married couples filing jointly now have a standard deduction of $24,000--up from $12,700 on the 2017 tax returns. Single filers now get $12,000--up by $5,650 from the old amount of $6,350.
That's good. Especially for the more than 70 percent of taxpayers who have taken the standard deduction in recent years, and increasing the deduction will surely mean that itemizing deductions will benefit fewer people. And fewer people itemizing means fewer people will be spending as much time preparing their taxes. And fewer people overpaying their taxes because they didn't want to make the effort to itemize.
Maybe it means that more people will do their own taxes, which might be bad for CPAs and other tax preparers. It might also de-incentivize charitable giving. Every policy tweak creates winner and losers.
It won't change anything for me; even if we end up taking the standard deduction, I'll have to itemize for comparison's sake.
It's scary to itemize. And it's complicated if, like us, you tend to make a lot of non-cash charitable donations.
In case you haven't heard, we're moving soon, to a house with about 800 square feet less than what we have now. So over the past year or so, our non-cash charitable donation rate has increased from about one trip to the Salvation Army or Goodwill or First Tee each month to three or four (or more) each month. Over the course of 2018, I collected more than 40 receipts, nearly all of which were handed to me with the expectation that I would report the value on donated items. Most of the time this is only tedious--you're allowed to take "fair market value."
If that sounds vague, it's not. The IRS defines fair market value as "the price at which the property would exchange hands between a willing buyer and a willing seller, both acting with similar knowledge of the relevant facts" (IRC section 1001, Treasury Regulations section 1.1001-1). A set of used 2013 Taylor-Made Rocket-bladez irons sells for between $150 and $260 online, so I know that because mine have premium shafts and are in excellent condition, I can probably claim something close to the top end of that range when I donate them.
You can also deduct the fair market value of books donated to the library, unless those books were gifts or review copies; then you've got nothing to deduct. (Which makes sense, because you didn't pay anything for the books.)
But what if you donate, say, 1,000 books, and you aren't clear which ones you bought and paid for and which ones you received as a gift or a review copy? What you're supposed to do is value the books that you bought at fair market value and value the review copies at $0.
I have to guess on the fair market value of most of these books. Sometimes I'll be wrong. When we began our death-cleaning more than a year ago, we invited a book dealer in to inspect our library. Turned out the obscure four-volume biography of 19th-century baseball player Cap Anson was worth more--to him, at least--than the first-edition Philip Roths and Joseph Hellers. Some of the books I've donated were worth many times what I valued them, but not so much that I felt like getting the appraisal the IRS requires.
No matter what determines the fair market value of donated items to be, I never value them at $500 or more because that's the threshold above which a Form 8283 must be filed. I do not mess with Form 8283, so that late December run when we donated a 2010 Mac Pro, along with six fairly new hard drives, four brand-new routers, a bag full of late-model golf clubs and a bunch of other stuff--that was valued at $499.
My tax cheating inevitably benefits the government.
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Philip Martin is a columnist and critic for the Arkansas Democrat-Gazette. Email him at pmartin@arkansasonline.com and read his blog at blooddirtandangels.com.
Editorial on 01/29/2019