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Thread: Why am I too dumb to understand my own taxes?

  1. #1 Why am I too dumb to understand my own taxes? 
    Forum Masters Degree DianeG's Avatar
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    I don't consider myself a stupid person. I'm literate. I have a degree. I can read fairly complicated scientific material. Why can't I understand simple tax forms?

    To make matters worse, as a US citizen living in Canada, I have to file in both countries, and the forms are different, they treat different types of income differently.

    It shouldn't be this difficult. I have a low income and some mutual funds.

    So my question is - do you do your own taxes, how did you learn how to do them, and how do you know you are doing them correctly? Are there any books one can read written at a very basic level?


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  3. #2  
    Northern Horse Whisperer Moderator scheherazade's Avatar
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    Hello DianeG.

    Rest assured that your comprehension skills are NOT at issue.

    The Canadian tax system is a series of questions which get applied to your income sources, your co-habitation arrangements and your place of residence. Most of that portion is fairly straight forward. It is the bizarre formulas that get applied to each number and where you are then supposed to plug in the answer you arrive at that makes my eyes glaze over. Then there are the various personal allowances and exemptions depending on your age, eligible expenses and donations and who you may be claiming as dependents. Finally, there are various levels of taxation, federal and provincial.

    I have done my own and hubby's for years although I did utilize an accountant when I had my own business because then there is another layer of detail required and a balance sheet, depreciation of assets etc. Since we went back to work as wage slaves, we receive tax forms for work and RRSP's only, so very much simpler. There is now tax software that gets updated every year to match any changes made by the government to the tax rules and it automatically does all of the calculations for you. I downloaded it on line for $20.00 for the first time this year, did the work on my computer and then printed off a hard copy and mailed it in. So much easier than doing the flipping math and I took accounting back in high school. You can go back and audit your work at any stage. One can also file on-line but I was not comfortable with that idea as our northern ISP and internet goes down quite frequently and then there was the security breach that forced the CRS to close down for a week so I am vindicated, lol.

    Canada has a self reporting system and if you make any glaring errors, the tax department will recalculate and advise you, especially if they determine that you owe them money. If you do not claim all of your entitlements, they are unlikely to point out that they owe you money however you can go back and reassess for up to 7 years at last count and claim any monies you may have overlooked.

    I do not know anything about the US tax system although you may be able to find answers to some of your questions on-line, I am thinking.

    So, to reiterate, it is not you, not at all. The tax system is decidedly more convoluted than it needs to be, in my opinion.


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  4. #3  
    Theatre Whore babe's Avatar
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    I married a CPA!!!!
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  5. #4  
    Forum Radioactive Isotope cosmictraveler's Avatar
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    They should just have a flat tax for everyone. Only those making more than 35,000.00 would have to pay a percentage of their gross earnings. A 15 percent tax would be a good way for all to pay. Both businesses and owners would pay on the gross income with no deductions.
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  6. #5  
    Forum Radioactive Isotope zinjanthropos's Avatar
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    Quote Originally Posted by cosmictraveler View Post
    They should just have a flat tax for everyone. Only those making more than 35,000.00 would have to pay a percentage of their gross earnings. A 15 percent tax would be a good way for all to pay. Both businesses and owners would pay on the gross income with no deductions.
    Agree but I think that could hurt charities for one thing. If people didn't receive a tax deduction for donating cash to a registered charity then why bother? There's also a fine line between taxing a business fairly and getting them to invest in your community. Enticements are a necessary evil, like it or not.
    All that belongs to human understanding, in this deep ignorance and obscurity, is to be skeptical, or at least cautious; and not to admit of any hypothesis, whatsoever; much less, of any which is supported by no appearance of probability...Hume
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  7. #6  
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    Been doing my own taxes since I was 15. Yes it's too damn complicated, in the early years meaning a few hours in a library, now made much easier with online software and access to IRS help lines and directions and mandatory reporting by of cost base. The progressive taxes aren't the problem leading to the complexity--that's a quite simple table to follow; most of the complexity comes from all the different partial credits, deductions and depreciations each of which requires separate calcifications, documenting through the year, and calculations.
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  8. #7  
    Theatre Whore babe's Avatar
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    Quote Originally Posted by zinjanthropos View Post
    Quote Originally Posted by cosmictraveler View Post
    They should just have a flat tax for everyone. Only those making more than 35,000.00 would have to pay a percentage of their gross earnings. A 15 percent tax would be a good way for all to pay. Both businesses and owners would pay on the gross income with no deductions.
    Agree but I think that could hurt charities for one thing. If people didn't receive a tax deduction for donating cash to a registered charity then why bother? There's also a fine line between taxing a business fairly and getting them to invest in your community. Enticements are a necessary evil, like it or not.
    Valid point.

    You aren't in business to not make a profit....you're profit is cut 50%....so are your donations...

    ......we just don't seem to get it

    I know when trying to raise money for charities!
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  9. #8  
    Forum Masters Degree DianeG's Avatar
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    In addition to the differences between the US and Canadian tax codes, and trying to figure out if I should exclude things or take a credit or a deduction and whether to do it on the US or Canadian end, I also don't really don't understand any of the capital gains stuff in regards to investments. Another problem I had, while I am pointlessly whining about possibly the most boring subject in the world, was that I got all these letters from banks and my broker in the US saying new laws would no longer allow them to manage my investments or make any future changes to them because I am a permanent resident of Canada. But there's no place to rollover an IRA in canada except their equivalent - an RRSP, which the IRS doesn't consider tax exempt, unless you fill out yet another form every freaking year asking them to defer taxes until retirement age. And you still have to pay all the penalties and taxes when you make that transition.
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    Northern Horse Whisperer Moderator scheherazade's Avatar
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    Ah, yes...RRSP's. They but defer taxes, they do not circumvent them. I gather that one can convert the RRSP to a GIF (Guaranteed investment fund) and pay the taxes on what you withdraw over the course of the year and then if your total income is modest, you will get most of it back as a tax return. What a waste of everyone's time and money. Let seniors enjoy spending what they have earned instead of worrying them into an early grave.

    I have not yet dealt with capital gains but if I subdivide and sell a piece of my property, I gather that I shall have to give a significant portion of the proceeds to the bandits, and yet if I sold the house I am living in, this would not apply as it is my sole residence and so would not invoke capital gains. If infrastructure were not so costly to install, I would be tempted to sell and build again but I have too much sweat equity in my residence and so this is unlikely to be the path I choose.
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  11. #10  
    Forum Cosmic Wizard
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    The hardest thing to understand in the world is the income tax.
    ~Albert Einstein
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  12. #11  
    Northern Horse Whisperer Moderator scheherazade's Avatar
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    Quote Originally Posted by dan hunter View Post
    The hardest thing to understand in the world is the income tax.
    ~Albert Einstein
    In conclusion, the quotation is not directly from Einstein, but it is from a man who was his friend and tax accountant. The most common current version differs slightly from the 1963 instance. The earliest known citation is after Einstein’s death, and the accuracy of the anecdote depends on the memory and veracity of Leo Mattersdorf. It certainly is a fun tale for tax time. Thanks for your question, and I hope you receive a large refund check.
    The Hardest Thing in the World to Understand is Income Taxes | Quote Investigator
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  13. #12  
    Theatre Whore babe's Avatar
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    If you have simple returns, it's not so bad.

    But complicated ones!!

    HOLY MOSES!!

    Different story!!!
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  14. #13  
    Life-Size Nanoputian Flick Montana's Avatar
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    Quote Originally Posted by babe View Post
    I married a CPA!!!!
    That's the first time exclamation points have ever followed the term "CPA". For some reason, Leo Bloom always pops into my head...



    Quote Originally Posted by DianeG View Post
    I don't consider myself a stupid person. I'm literate. I have a degree. I can read fairly complicated scientific material. Why can't I understand simple tax forms?

    To make matters worse, as a US citizen living in Canada, I have to file in both countries, and the forms are different, they treat different types of income differently.

    It shouldn't be this difficult. I have a low income and some mutual funds.

    So my question is - do you do your own taxes, how did you learn how to do them, and how do you know you are doing them correctly? Are there any books one can read written at a very basic level?
    I am good at understanding physical science, but math doesn't come easily to me. My wife is a human calculator so she does our taxes. She's constantly exasperated with my inability to grasp even the simplest concepts on our tax forms. I turn into a blubbering 5 year old when we do them. I kid you not, I once asked if I should check "joint filing".

    I'm a dunce.
    scheherazade and babe like this.
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