Tax Deadline 2012: How Accountants File Their Taxes
(The author is a Reuters contributor. The opinions expressed are his own.)
By Lou Carlozo
CHICAGO, April 16 (Reuters) - Do accountants do a better job of filing their own taxes?
Ask Elaine Smith, a master tax adviser at H&R Block's Kansas City office how she's doing with her own returns this tax season, and she laughs: "What is it they say? The cobbler's kids always go without shoes. The easiest return to ignore is your own."
But her colleague Gil Charney, principal researcher at H&R Block's tax institute in Kansas City, Missouri, dispensed with his federal tax return a month ago and has already pocketed a nice refund.
Charney gets the job done using an elegant and extremely organized system of computerized folders and banking software. "I scan everything I get all year and put it on my Mac," he says.
Smith's tax preparation method wasn't as structured, but, in the run-up to the April 17 filing deadline set by the Internal Revenue Service, she says she's done a better job than in previous years of tracking charitable deductions, and fine-tuning the W-4s that she and her husband file. Her goal is an even zero on her tax return, indicating no refund or payment.
With more than 700,000 registered tax preparers, there's no data that shows how many of them file their taxes on time.
But it's common for them, as a professional hazard, to approach the task of their own taxes with the zeal of archers trying to hit a bull's eye, says Austin, Texas-based Kay Bell, a tax editor with Bankrate.com, and author of "The Truth About Paying Fewer Taxes."
The goal of every taxpayer should be to "get as close to zero as possible," Bell says. "The wisdom is that every time you're getting a refund, you've really giving the government a loan. I personally try to owe Uncle Sam just a little money; under $100 is my personal goal. That way, I know for sure they got my return when my check clears."
To stay a step ahead of the game with his own returns, Charney grabs receipts the minute he gets them, scans them into his computer and categorizes them as the tax year progresses. He swears by iBank, personal finance software for the Mac that tracks checking and savings, cash and credit cards, investment and retirement accounts, and mortgages.
Charney had some difficulties this year, even though he's a CPA and CFP who first took the H&R Block tax preparation course in 1981. (He does tax returns for family and friends as a favor, though not in the Block tax office.)
"Probably my biggest liability is my wife not telling me everything she's doing," Charney says. "She throws receipts away, and I'm pulling my hair out."
Other family members can be just as vexing, he says.
"My mother-in-law walks in with a Social Security statement and 1099s, and they've never been opened before. ""That's OK," she says. "I'll let you handle it.""
Smith has a folder for her receipts, too, but it's a flimsy one, from which paper escapes and gets lost. She started organizing the massive pile in February, but hasn't made much progress since, making it look a challenge for her to file her taxes by the deadline.
"This is the latest I've ever filed," Smith says. "My clients say, 'You're lucky you probably know all the breaks,' and I say to them, I'm my own worst client. I never take my own advice."
Both Charney and Smith file electronically, in what looks to be a record-breaking year for taxpayers filing online, with 74.3 million returns so far, according to IRS statistics. Last year, more than 112 million taxpayers filed federal taxes online, up 13.6 percent from 2010's 98.7 million people.
Those who stake their financial solvency on a huge tax refund following an electronic tax filing should not hold their breath, says Bell.
"The IRS has said that if you e-file, they'll give you a refund in less than a week, but that's not been the case for a lot of people," she says. "In part, it's because of computer issues, and you have a lot of angry taxpayers out there."
The IRS, for its part, says it only promises that most refunds go out within 21 days.
"Some refunds will face additional delays and review before being released, which can add time," says Sara L. Egruen, a spokesperson for the IRS. (Editing by Beth Pinsker Gladstone, Lauren Young and Bernadette Baum)