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Humor February 2017

Levine's Levity

Tax Loopy Holes

By Bill Levine

As a tax pro at a retail firm, I have found that every line in the 1040 is the catalyst for a mini-series. In fact a good name for what ensues is a “Funny Thing Happened on the Way to The Forms” If you don’t agree, I will refund your time spent reading this.

Nothing is certain except death and taxes, and nothing is as certainly boring as taxes. We know this because there is no TV show featuring a forensic accountant, in which the telegenic hero ferrets out the creepy tax cheats among the usual suspects of cabinet members and congressman. As a tax pro at a retail firm, I have found that every line in the 1040 is the catalyst for a mini-series. In fact a good name for what ensues is a “Funny Thing Happened on the Way to The Forms” If you don’t agree, I will refund your time spent reading this.


Filing Status (line 4)

Just like Facebook status, 1040 filing status can be fraught with soap opera. A young, newly married client came in hellbent to go married filing separately (MFS.) When I said that married filing jointly (MFJ) was preferable, he balked at the idea. According to this so-called newlywed, everything spousal was separate: separate savings, separate checkbooks, separate investments. I could extrapolate from this their existences in parallel universes. At any rate I was able to have him consider MFJ, when I showed him that his family income would be taxed at a higher rate with two MFS as opposed to an MFJ. He only then finally agreed to MFJ. He said then that he would come back, but I have not seen him since. Perhaps, he and his wife are now on separate vacations.


Gambling (other income line 21)

I had a client who had $100,000 in gambling winnings, but was also unlucky enough to itemize $30,000 in gambling loses. This woman was a gifted amateur as you cannot possibly be a professional slot machine player. But there are professional gamblers, taxpayers who make a concerted effort to make a profit against the odds. They can attempt then to deduct expenses and on a Schedule C sole proprietor, as follows:

  1. Disguises for getting back into casinos after banishment for card counting.
  2. Brooms for of sweeping up losing, scratch tickets, etc.
  3. Depreciating the bad luck from mirror breaking over a seven-years, double-declining balance method.
  4. Fan Duel membership (oops not gambling).
  5. Visits to psychics.
  6. Cruise to Bermuda (affidavit that you were in the casino the entire trip).


Itemized Deductions (line 40)

I was able to find a mistake on a previous return where a tax deduction on Schedule A for mortgage interest was understated by about $20,000, generating an amended tax savings of $5,000 or so. This to me was the reason d’etre of tax prep, akin to oceanographer raising the Titanic or an Iron Chef whipping up an edible kale dish. I recently called this client to set up an appointment for 2016 filing. It would deflate me a little if I lose her to Turbo Tax. Turbo Tax won’t get excited if it uncovers a big refund. OK, well maybe it will sound a few alarms.


Exemptions (line 42)

The IRS does in fact allow the slacker deduction. A young woman client came and wanted to claim her boyfriend as an exemption. This lowers the taxable income by $4000 so I had to question this claim. It turned out to be legitimate. The boyfriend was an aspiring screenwriter who had no income and was supported by the client. This may not be a good social-economic policy for lazy basement dwellers but can always argue that they are providing loved ones with tax advantages.


Earned Income Credit (IRS gives you money) (line 66)

With one EIC client I didn’t have to get to due diligence to become suspicious of the claim for an extra EIC dependent. A “nephew” was thrown out as a lucrative EIC dependent living with the taxpayer’s family and supported as such. The only problem was that though they could name him, the family could not come up with the youngster’s birth day. They were able to zero in on the year, but were hazy on the month and day. I tried to help them. “What is his sign?” or “When was his birthday party?” “Think hard about the 100 or so forms you presumably filled out for this so-called dependent – what was the birth date entered.” Not surprisingly this kid did not get included as an EIC dependent.



On some level all clients are just looking for a wizard-like makeover of their return. They think that the preparer is a master attic rummager who will be industrious enough to find a lost Van Gogh, when he is more likely to find a missing case of Go-gurt In fact, in a client’s perfect world these would be valid deduction assertions: 

  • Mercury in retrograde destroyed my seventh house so I am claiming a casualty loss.
  • My 30-year-old kid acts like a dependent child so I claiming him.
  • I want to claim 800 dependent children who I totally support via the Save The Children Fund, albeit for 25 cents a day.
  • My kid said our trip to Disney over the summer is business expense because he needs to maintain standing in show and tell.
  • How much exemption for God parenting? I furnish more than half these kids spiritual support.


Bottom Line

There is often huge disappointment and some anger in the eyes of clients getting a smaller-than-expected refund, or worse owing taxes. I’m sure that they are thinking that a monkey could key into Turbo Tax and generate a bigger refund. My biggest impression in my tax pro career is that people might want to “walk like an Egyptian,” “be like Mike,” “dress for success,” and think like Spock – but most of all that want to file like a billionaire and pay no taxes.


Bill Levine is an IT professional, aspiring humorist and confirmed freelance writer from Belmont, Massachusetts.

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