My Life as a Volunteer Tax Preparer – Ch. 2.1
Season 2 of My Life as a Volunteer Tax Preparer has officially commenced. For those of you new to Tough Money Love, a brief history: Last year a I signed up to work with the IRS Volunteer Income Tax Assistance Program (VITA) and Tax Counseling for the Elderly (TCE). (More about those programs here.) In my case, the services were offered through the AARP Tax Aide program. After receiving training and passing three competency exams on tax laws and regulations, I worked one afternoon per week during tax season at a local senior citizens center.
This year I took more tests and went back to work for my first session yesterday afternoon. I had four appointments scheduled. One cancelled but he was replaced by a walk-in. Three of the four appointments were people I had helped last year. I guess that’s a good sign that I didn’t completely mess up their returns!
The first gentlemen was not a repeat client. He was retired, living alone in a paid-for house with a nice size government pension, making more than $60,000 yearly. He had worked with a different volunteer last year so his 2008 return was in our system. I asked him if any of his circumstances had changed in the past year. His answer was sort of sad: “No, and I don’t guess they will until I expire.” He said it in a way that made it sound like he had nothing to look forward to. It reminded me of something Bobby Bowden – the recently retired FSU football coach – often said: “After you retire there is only one big event left in your life.” I don’t agree with that but I can see how others might feel this way. When I told this gentlemen he would be receiving a refund, I learned something that might be contributing to his negativity. He told me that the refund would be taken from him by the IRS because he was still paying off an old tax obligation. Ouch.
The next appointment was with the walk-in, a school teacher who had the day off because the schools were closed due to bad weather. I had prepared this woman’s return last year. She was in her early 50’s, divorced and supporting her adult son who couldn’t hold a job. She had a decent income – close to $60,000 – but was not in good shape financially. Her only other income was a few hundred dollars in interest. She told me that next year she planned on having dividend income from stocks, etc. because she needed to start investing for retirement. (She will have a pension but not a large one.) She added “I’m waiting for the market to come back.” Not one to shy away from volunteering advice, I responded: “That means you will be buying high. Why not buy now, when the market is down?” She didn’t have an answer for that. I came to understand that although she was aware of the urgency of her retirement planning, she did not yet have the willpower to do anything about it. First, she had purchased a new car in 2009, costing more than $30,000. That was obviously a mistake for someone in her situation. Second, when I told her the size of her refund, she immediately announced that she would use that money for a vacation. OK then, see you next year. I may have planted a seed, though. As she was walking out the door, she turned and told me that the state government was offering a “teacher’s IRA” and asked whether that would be a good thing for her to do. I told her that IRAs can work for a lot of people and explained about the different kinds (ROTH and traditional). But I particularly warned her about studying the investment options and fees associated with this “teacher’s IRA” because there were lots of places where she could open an IRA. I hope that she takes some action.
The third appointment was perhaps the strangest. This was a 58 year old man who was receiving disability benefits from an annuity jointly funded by the federal government and his own contributions. For some reason, the tax statement from the government did not state the taxable amount of the annuity payments he had received. To calculate this myself, I had to know at what age he started receiving benefits. He told me he had no idea. That sounded weird to me until he explained that his disability was the result of a traumatic head injury which caused him to lose most of his short term memory. So I ended up guestimating. It got even more strange in a sad way. I noticed that he was married but he stated that he wanted to file separately because “my wife deserted me eight years ago.” Before I could say more, he then went on to explain that he remained married because his wife had cancer and he wanted her to be able to stay on his insurance. (I’m guessing that this was a continuing form of a federal government insurance plan.) Apparently, he still cared enough about her to make sure she had adequate medical care. A bittersweet sentiment but good for him.
My final client of the day was a cheerful woman in her 70’s. I don’t know how she lived on what little income she had. A small Social Security benefit and $6,000 in unemployment benefits. She paid no taxes at all. What will happen when those benefits run out? She didn’t seem worried. I wondered to myself if I could remain so calm and carefree under similar circumstances.
That’s a wrap for this week. Stay tuned for more as tax season progresses.