My Life as a Volunteer Tax Preparer – Ch. 2.7

March 23, 2010 by  
Filed under Taxes

I returned to the volunteer Tax-Aide office this week. Last week I was in Las Vegas. Talk about contrasting money environments!

I had three interesting taxpayer experiences today. The first involved a widowed woman in her late 70’s. Her arm was in a sling so her daughter drove her to our volunteer office. She lived on a very small pension, Social Security, and some CD and bank interest. Not much income in total. It helped that she owned her home, mortgage-free.

We were about finished with her return when I asked about property taxes. Yes she paid some – over $3,000! In our part of the country, that is a significant amount. I was shocked because most of my older, low income taxpayers had received significant property tax abatements from the city. I inquired about that. She said she had not asked. That surprised me also, further considering that her daughter lives in town as well. Those property taxes ate up most of her pension income.

What’s even worse about the size of the property tax bill is that she lives in a two bedroom, one-bath house. The problem is that her house sits on some very valuable real estate near one of our local university campuses. I encouraged her to get to work on an abatement on her 2010 tax bill. It may be too late because most of the tax abatement programs are “freeze” programs. This woman should have frozen her property taxes years ago. Note to self: Always be on the look-out for property tax abatement programs for senior citizens.

My second experience was with a retired couple. The husband was a retired fire fighter. He had a city pension and, at age 58, was receiving a Social Security disability benefit. They had significant tax problem. The wife had inherited a unit in some oil and gas rights in Texas. She received a five-figure royalty in 2009. Unfortunately, this couple spent it all and did not hold anything back for payment of income taxes. Now they have a four-figure tax obligation and have three weeks to find some cash to pay their taxes. Not smart.

My third experience did not feel right. This was another elderly woman with a very small Social Security benefit and a part-time job as a home caregiver for an older man. First, her W-2 from the older gentlemen was handwritten. Also, nothing was withheld by her employer for anything. That was the first head scratcher.

Second, she told me that she was supporting her five year old grandson in her home. I asked about the boy’s parents. All she could tell me was that the boy’s mother did not live with her and had no income. She didn’t say how or where the mother survived with no income. Anyway, based on these facts, she was entitled to significant refundable tax credits, resulting in a four-figure tax “refund” to someone who didn’t make enough to pay any taxes. This is income re-distribution pure and simple. I don’t have any problem with that in some cases but I’m not sure about this one. A younger man brought her to our offices. I never did find out who he was but I’m very curious.

The final issue with this woman was that she told me she never actually finished up and filed a return for 2008. At her reported income level she did not have to file, unless she wanted to claim those same refundable credits. She didn’t seem concerned when I suggested that she could file a return now. Weird.

I continue to enjoy the learning experiences from my interactions with senior taxpayers.

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3 Responses to “My Life as a Volunteer Tax Preparer – Ch. 2.7”
  1. Snowy Heron says:

    Mr. Tough Money Love – you should write a book. You couldn’t make this stuff up!

  2. Kacie says:

    The handwritten W2 sounds weird, especially for the type of work involved. Would it have been more appropriate for a 1099-MISC form instead?

  3. Greg says:

    One of my co-workers, an elderly man, had some financial problems last year regarding his mortgage (you would hope he would be living in a paid for house) – I helped him with the paperwork for his mortgage adjustment and when I learned he was going to a store front tax preparer I offered to help him with his taxes. Pretty straightforward process (TurboTax), and he was happy with a small refund. He needs to do a better job of recordkeeping!

    Just an atta boy to you TML for providing a valuable service to those who need a break from those who might otherwise take advantage of them!

    It is sad but I’m continually amazed by the financial ignorance of people and also the lack of self control by those who know better and still choose to hamstring their future!

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