Sunday, February 03, 2013

How the Tax Code is Destroying Marriage; Super Bowl Sunday

Work, or How the Tax Code is Destroying Marriage; Gaming the System
The tax preparation business has increased greatly over the prior year, and I have been busy.  I like the increased activity.  I like solving problems.  I can't help but notice how the Internal Revenue Code discourages marriage among the young, and the overwhelming majority of clients who are couples with children, are unmarried.   Both the father and the mother split the children, file as Head of Household and get the Earned Income Tax Credit, which can put $4,000 (or so) each into their pockets.  This is "free" money, not money that has been withheld and is being returned to them.  The EITC is one of the greatest discouragements for marriage that I have seen as an accountant.  People quickly learn to game the system.  The overwhelming majority of the clients who do this are Hispanic -- white people, not so much.

Another gambit the tax gamers use is to "borrow" dependents from relatives who pay no taxes or who just don't need the extra exemptions.  It is common to have some young person making $20,000 or less to be "supporting" his niece or nephew or grandfather or parent.  The truth is that they probably did not support these people, but it is not up to me to make accusations.  The result is head of household status and the EITC.  This is a major rip-off of the American taxpayer, who has to foot the bill.

Last week I had an angry couple walk out after I refused to prepare their tax returns as "Head of Household," after they admitted that they were legally married as of December 31st, and still so.  I told them that as married people their only options were to file married filing joint or married filing separate.

49ers vs Ravens:
I will be spending Super Bowl Sunday at the house of my band leader, where we will practice from 1 to 3 PM, then watch the game.  I hope the Niners win, but won't be terribly crushed if they do not.  After being crushed  by the last presidential election, any subsequent disappointments (especially those of a sporting event) are insignificant by comparison.

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