Our office just finished up preparing our 200th tax return this year.
Out of those 200 returns, we've had seven clients who received unemployment during the year. That compares to an average year of about 20-25 on 600-700 returns. That's a little surprising in a number of respects. First, I would expect people who've been out of work to be in early. Second, I have a number of clients who worked at the Ford Batavia plant which shut down this year. It appears many of those clients were relocated to the Sharonville plant.
What's been most surprising to me is the number of clients with debt forgiveness; and it's not poor or middle class clients. Most of the debt forgiveness was to people making well over $100,000. I've seen $60,000 plus in credit card forgiveness to some of my clients.
Investment income is taking a big hit. Expect Treasury receipts to be down big time because of all those "rich" people taking major hits on their security investments and, conversely, paying no taxes on them.
Finally, I've always preached to my clients that home ownership is a horrible investment in and of itself. Owning a home costs money. Most people look at the price the paid and then sold. They forget about all the roofs, water heaters, paint jobs, etc made on the property.
Home ownership increases wealth because it's signal of stability. If you look at my 20 wealthiest clients, you'll see that stability is the trait that they all share. No one gets rich quick. It's a process of slowly saving your money, living a long time in a modest home, and avoiding the dramas of life, (divorce, moving, buying cars, boats etc.).
If you want to see a financial mess, look for a family with five different last names in it. It doesn't matter if the family makes $20k or $200k; it's a family on the economic brink.
So far this tax season, that lesson has played out completely.
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