Latest And Greatest

Tax terms that can help cover your assets

image After clearing off the kitchen table and finding an outlet for the calculator, I sat down to do my taxes. As always, I made sure to have all the necessary documentation and forms — W4s, tax forms, bank statements, insurance reports, tax schedules and, most importantly, a full box of Kleenex.

As I sat staring at this year’s tax booklet, I noticed a special section of “Tax Terms,” which is an alphabetical listing of terms one may encounter during the tax preparation process. Each term is followed by a brief description meant to enlighten the truth-seeking taxpayer through “real-life” examples. For instance, the IRS uses “Jane” and “John” to illustrate the term “Ability to Pay.” In this scenario, Jane is filthy rich, with homes on both coasts that she visits by way of her own Lear jet.

By comparison, John earns what the IRS calls a “more modest salary,” which affords him a flashlight and a camper shell to live in.

The only thing these two have in common is the oil industry: Jane is an executive in it, and John had his SUV re-possessed. According to the booklet, due to their income disparity, “John and Jane do NOT pay the same amount of taxes, because their ability to pay differs vastly.”

This brings us to a term not included in the handbook: “Highly-paid tax lawyer.”

In this example, Jane is able to filter her $1.6 million earnings through a maze of tax shelters and special credits before wiring an undisclosed amount into a Swiss bank account, leaving her with a taxable income of:

$6.28.

John, who files his return on the 1040 EZ form, is entitled to a refund that, coincidently, adds up to exactly…

$6.28!

See? “Jane” PAYS and “John” gets a tax CREDIT!

All together, there are 65 terms listed in the handbook, many of which seem self-explanatory until you read them closely. With the tax deadline just a few weeks away, I’ve taken the liberty of paraphrasing some of the more complex terms that you may encounter before now and tax day.

1040EZ:
1.) Simplest tax form offered by the IRS.
2.) A wealthy, white rapper.

Gross Income: The dollar amount that appears in the box after “federal income tax withheld.”

Adjusted Really Gross Income: The amount left over after completing your taxes.

Bank interest income: If you make more than $400 from your savings account, the IRS is interested.

Tax Shift: According to the handbook, this is either:
a) “When one person or group is able to shift a tax they are supposed to pay to someone else.” (For a more detailed explanation, re-read the “ability to pay” portion of this column.) A Tax Shift can also be:
b) What the average taxpayer does in their seat after determining his/her adjusted gross income.

Dependent: A child, parent, spouse or household pet with a human-sounding name, such as “Fred” or “Sally,” whom the creative taxpayer can claim on his/her income taxes.

Estate Tax: The amount of tax on a deceased individual’s estate that has been passed on to surviving family members. Short explanation: Something my children will never have to worry about.

Filing Status: A spot on the IRS’s Facebook account where you write about what you’re doing right now.

Passive Income: The response most writers get when people ask them about their annual income, i.e., “Thanks, but I’ll pass.”

Flat Tax: (Hollywood, Calif., residents only) A controversial levy against any woman without breast enhancements.

Electronic Preparation: Filing online

Electronic Preparation H: Used only as a last resort.

Duty Deposit: What most taxpayers would like to include with their IRS payment.

While there are plenty of other terms in the new IRS tax glossary, it’s probably a good idea to stop here.

To be honest, I’m already feeling taxed.

(Ned Hickson is a syndicated columnist with News Media Corporation. His first book, Humor at the Speed of Life, is available from Port Hole Publications, Amazon.com or Barnes & Noble.)

——

MORE PLACES TO FIND LONG AWKWARD PAUSE:

Facebook: Long Awkward Pause
Twitter: @LongAwkPause
Podcast: iTunes or PodOmatic
 
Would you like to see a topic discussed on L.A.P?  Follow this link HERE.
Advertisements
About Ned's Blog (35 Articles)
I've been a journalist and humor columnist at the Siuslaw News for 16 years. I'm also a volunteer firefighter. If the newspaper ever burns down, I will have some explaining to do. I'm married to the perfect woman, have four great kids, and a tenuous grip on my sanity...

40 Comments on Tax terms that can help cover your assets

  1. Did you see where millions in Earned Income Credits have ended up in the hands of illegal aliens? Wouldn’t it be nice to get $11,000 in tax credits to send to your family in another country? I’d rather have a flat tax–sort of like flat line in ER. That way the entire tax code is dead. 🙂

    Like

  2. LOL! Landon has medical and dental, unfortunately he is close to four years old and all he muster up is a growl and bark. 🙂

    Like

  3. ‘The IRS is interested.’ By their name and their awareness of the balance of every bank account in the country, one would think that the IRS was a high profile spy agency. How unfortunate is that they are decidedly less noble than that.

    Like

  4. Ah yes, the Tax Man. Up here in Canada they use very different terms, more polite you see. However, they are equally dedicated. I once had a disagreement with Revenue Canada (a.k.a. CRA) and they decided it was time to visit my bank account. To my delight (and confusion) my bank had been merged with another bank and they had shut down my branch (my account seemed to still exist in some sort of electronic limbo that I could access but that was not attached to any branch). I was not aware of this and went to visit my bank one day and found it was a pizza parlor. A call to my bank (oddly the phone still worked) confirmed I no longer had a branch – which seemed to confuse them too. Anyway CRA called and they were upset. They indicated they had tried to seize my bank account and it was not there. I felt quite chuffed that they called upset at me because they couldn’t find my bank account – and I told them I was equally confused and that my bank was now a pizza parlor. Not a word of a lie. So, I assured CRA that I would call them as soon as I found my bank account. Meanwhile, large meat lovers with extra cheese please? Bwahahaha!

    Like

    • I’m sure the CRA will eventually come asking for it’s slice of the pizza pie.

      Like

      • Oh yeah – that was about 10 years ago and we’ve settled up, but they never did get to my bank account. The story was really complex – I hadn’t actually committed any crime, which was what upset them even more. I had been diagnosed with cancer and was undergoing treatment. When my info for tax time came from the last company where I had been laid off, the company had made an error on my T4 (declaration of income and taxes paid) and showed my separation bonus (I left on good terms after 12 years of service – so the sum was 10’s of thousands) in the Taxes paid column in error. Their mistake and their responsibility. Meanwhile I was unable to work because of the cancer, and when I applied for benefits, I was told that because it was uncertain whether I would die or not, they would not award disability benefits until the situation was clear. So, I had lost all I had, had no job, no home, uncertain medical future, and no source of income. When CRA sent me a refund of $20 k dollars. I changed it to cash, thanked God and promised (in my head) to repay it when or if I lived. Meanwhile I lived on it for 10 months while getting chemo and radiation treatment. CRA discovered the problem during that time period, but hey, it’s hard to get money from a dead man, especially when you can’t find his bank account (which was empty anyway – I wasn’t that stupid). I did get well and have been cancer free for about 8 years now, returned to work, paid off my debts, including CRA.

        They always get their dime, sometimes it’s just a matter of when. And I offered them a slice of pizza (when I told them about my bank being a pizza parlor), but they refused.

        Like

  5. Jane is officially on my sh!t list.

    Like

  6. …..oh. my.

    i could be ..vastly jane.

    Like

  7. 1040EZ’E’ is the white rapper form. The ‘E’ is for Earl by the way.

    Like

  8. No logic: I’m military, so therefore I pay – in part – my own salary every year. Do not get it.

    Like

  9. Flat Tax: (Hollywood, Calif., residents only) A controversial levy against any woman without breast enhancements.

    Keep that one quiet. I don’t like explaining why I left Sacramento.

    Like

  10. Do you think Big Orange (the neighbor’s cat who now sleeps on my bed) would quality as a human sounding name? I’ve taken him in, plus I already have three cats. I should get a break for this, no?

    Like

  11. My taxes were done early this year. I hate the reality they point out about my finances. I have none but they will still get some.

    Like

    • I used to think I put off doing my taxes because I’m a procrastinator. Then I realized: Who wouldn’t want to put off seeing how far in the hole they are?

      Like

  12. I just did my taxes…I owe $1294139740913840981390480 but the government will take Long Awkward Pause as a payment instead…Ned…we now work for the government…

    Like

1 Trackback / Pingback

  1. Tax terms that can help cover your assets | Ned's Blog

Comments are closed.

%d bloggers like this: