When Barack Obama was running for president, he promised voters a simpler tax code. "When I'm president," he said, "we'll put in place a system where 40 million Americans . .. can do their taxes in less than five minutes."
But President Obama hasn't made good on that promise. Not only is there no five-minute tax form, but since he took office the byzantine tax code has grown increasingly complex. This year, it will take the average taxpayer 23 hours just to fill out form 1040 — up from 21 hours last year, according to the IRS. It now takes seven hours to fill out the so-called 1040 EZ.
Tax complexity isn't merely a hassle for taxpayers, it's a huge drag on the economy. It takes more than 6 billion hours — or $163 billion a year — for companies and individuals to figure out what they owe, the IRS says. And the Government Accountability Office estimates that the distortions and inefficiencies created by the complex tax code cause up to $733 billion in "deadweight losses." Together, these costs equal 6% of GDP.
In all honesty, most years most of my new clients comes from the big name national tax guys. This year, I seemed to have a lot of former Turbo Tax users who screwed up their own returns.
One of those clients doubled her mortgage interest deduction from 21,000 to 42k. The penalty alone was $1800.
So spend a few bucks and tale care of your local tax practitioner.
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