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Let's Talk Taxes
It's getting to be that time of year again, isn't it? Tax time, that is. Some people have already filed, but, according to statistics, most of us will wait until very nearly the last day. In fact, this year we get to prolong the agony an extra day-- since April 15 is a Sunday, taxes are not due until Monday, April 16.
Most of us will spend about one-third of our working time paying for taxes. According to the Tax Foundation, the average American devotes nearly three hours out of every eight-hour workday just to paying taxes. That's more time than we spend working to pay for food, shelter, clothing and transportation COMBINED! My friends at G.E. Financial Capital sent along a little brochure to act as a reminder of where we are.
They say another way to see your annual tax obligation is to imagine that you start on January 1 to work full-time toward paying personal, business and other taxes on income property and sales. The day when you've earned enough money to pay for all of your taxes and can finally keep what you've earned is your personal "tax freedom day." On a national level tax freedom day has been moving later and later with each passing year. As example, in 1992 the average person had to work until April 29 just to pay all their taxes, by 1999 the national average had been pushed to May 11.
I think the most interesting example is when you take your eight-hour workday and divide it up and see how your expenses are paid. Out of the average eight-hour day, one hour and 57 minutes are spent paying federal taxes, 54 minutes are spent paying state and local taxes. Housing covers one hour and 16 minutes for the average person, and we spend about 50 minutes paying for healthcare, 41 minutes for food, 33 minutes for transportation, 24 minutes for recreation, 22 minutes for savings and 16 minutes for clothing. All other expenses that go into the average person's life require about 45 minutes out of each eight-hour day. I find that when you allot specific amounts of time to each expenditure, it drives the point home a little further.
Speaking of taxes, according to the Internal Revenue Service, so far this year the dollar increase in personal income tax refunds is up only about 1.8% from early March of last year. This is way down, and may have to do with the troubles in the stock market. In contrast, for example, refunds grew 18.4% in the year 2000 over 1999 and by 16.2% from 1998 to 1999.
In other tax news, an IRS spokesman said that e-filing and direct deposit particularly have dramatically sped up the processing of returns, saying that in some cases refunds are reaching tax payers as soon as 10 days after filing, while the average for electronic filing is 21 days, and 40 days for those of us who still file by paper. When asked why the amount of total refunds was down so far, the IRS guessed that first there is a substantial decline in the number of returns received by them so far, and secondly because of all the volatility in the stock market, the buying and selling can effect a person's ultimate refund.
Just as a piece of advice; if you can't make the April 16 deadline this year, you can, under certain circumstances, get an extension until August 15, and then again until October 15. Please check with a tax attorney or CPA to make sure of the dates and what those certain circumstances are. However, I can say that even if you can't pay your taxes because of hard times, don't ignore them! Perhaps you'd be surprised, but Uncle Sam is fairly understanding if you just let them know that for whatever reason you can't make the payment. The person who really gets in trouble, I'm told, is the person who just fails to file. That person is looking for real trouble, and you do not want to be that person!
(Tom Butenhoff is a First Vice President with J. E. Liss and Company, Inc.
in Milwaukee. The views are his, and not necessarily those of Liss
Financial Services or the Job Connection/Hiring
Network.)