Written by: Theodore M. Davis, Chair Tax Law Committee
1) What does January 24 mean to you? If you’re being sensible about this winter business, it will be just another day to go for a dip or a stroll at the beach in sunny Florida. But if you find that you are still well anchored in New Jersey and worse, responsible for the preparation of individual income tax returns, that day is the official start of tax season. Yes, on Monday, January 24 the IRS will begin accepting and processing 2021 tax year returns. Hoping most taxpayers will file electronically the IRS teases them by saying that if they do, they will receive a refund within 21 days. That’s only true if they choose direct deposit and there are no issues with the tax returns they have filed. I am truly amazed every year when individual taxpayers boast with regard to the size of their tax refund. I am convinced they just don’t get the idea that a tax refund means they had been lending the IRS their money for free.
Good accountants know that the ideal position to be in is to actually owe the government a few bucks without incurring an estimated tax penalty. But I know many people look at a tax refund sort of like the old days when banks had Christmas Clubs. If you are old enough to remember them, it worked this way; you put money away every week and then at Christmas time you got to yank it out and you actually felt there was in fact a Santa Claus behind the money you received. I think it is the same philosophy here. It just feels good to get something back from IRS even if it is your own money they give you without interest. Heck, you would earn more with a Christmas Club account at the bank. Just to be clear the filing deadline for individuals this year is April 18, 2022. Accountants will also tell you that the filing season used to run from April and perhaps May to October. These days tax filing season lasts all year long. Keep that in mind if you’re thinking of getting a second career as an accountant. If you do, you’ll know damn sure where you will be on January 24 or whenever tax season starts.
2) By most accounts 2021 was a lousy year. Travel was redefined to include only required trips to the supermarket and perhaps the barbershop or hair salon. You wouldn’t touch another human being with at least a 6-foot pole. If you suffered from an allergy the slightest cough or sneeze got you in line to have a stranger stuff a swab unceremoniously up your nose. Going out to dinner meant dragging the dining room table onto the lawn and telling friends about the benefit of eating en plien aire wearing hats and gloves. It has taught us a great deal like getting a lesson in the Greek alphabet as virus variants are given catchy Greek letters. If it makes you feel any better the National Taxpayer Advocate in her 2021 annual report to Congress called calendar year 2021 “the most challenging year taxpayers and tax professionals have ever experienced.” Her office in the report proposes 68 legislative recommendations for consideration by Congress. If this winter has you bored out of your mind, all of those proposals can be read online
3). Friends and colleagues of mine were chatting the other day sitting under a palm tree about their objectives for 2022. All were agreed that survival was paramount. Right after that business of survival was the problem of inflation. Cheap money, ready credit, toss in greed and avarice and a lack of discipline and you have inflation. I am no economist but I think the long-term prognosis can’t be very good. One friend was reading a book from 2011 called “Aftershock.” It forecasted an implosion of the American economy, the crash of the stock and real estate markets and uncontrollable inflation. The conversation then shifted to the inflated price of a cup of coffee. And with that impending doom I close with a poem:
Would you ever think
You’d pony up two bucks to drink
Who said coffee and steamed milk go
At over three bucks a throw?
Why most places, at one time,
Had trouble charging one thin dime;
But now, it’s latte, skim and foam
That costs a fortune where-ere you roam.
I am sure I am not alone
To make my coffee while at home;
Water from the kitchen sink
Makes a decent coffee drink;
Tall or grandee all the time
And never is there any line.
O.K., I’m cheap, but at least I’m frank;
I like my money in the bank;
Not wasted on the coffee scene*,
Paying for the coffee bean–
And getting lousy coffee.
*I realize that expensive cups of coffee served up by a barrister
Has been turned into a simple and enjoyable luxury
But I’d still rather own stocks and bonds