One example of a business I would burden with oppressive taxes is a tanning bed salon. Tanning under the lights is universally recognized as dangerously unhealthy. Dumb-ass bronzers with skin cancer cost us all money. If they are insured, our premiums are higher to compensate. If they are not insured, we end up paying more taxes and/or higher medical costs to provide the free care.

You might ask if I would be in favor of simply banning the sale and use of all tanning beds. I won’t go that far. I just want the taxes high enough so that the only people who might go to tanning salons are both stupid and rich. Let them fill the tax buckets with huge personal donations while they slowly kill themselves.

There are other businesses I would target, if possible. Any retail store that relies on cigarette sales to survive needs to be gone.

If I could find a way to target the worst 25% of my fellow lawyers with killer taxes, I would. Do I need to explain why? I didn’t think so.

My fellow blogger Kyle at Amateur Asset Allocator also suggested that “junk food” be taxed to death. That would difficult. First, some folks would classify 75% of the products in a typical grocery store as “junk food.” Second, some people would starve to death if they couldn’t eat junk food. That’s harsh, even for Mr. ToughMoneyLove. Also, what would happen to the pharmaceutical industry if we wiped out diabetes?

What would you tax to death?

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The other lady in a walker was “only” 83. She told me that she was only using the walker because she had recently tripped and hurt her knee. I asked her if she expected to be rid of the walker soon. That’s when her daughter spoke up, suggesting that her Mom would indeed get better. She explained that her Mom has had one knee replaced, both hips replaced, both shoulder-joints replaced (one twice), and recently recovered from a broken pelvis. A twisted knee was nothing in comparison. I liked that attitude.

My day ended on a down note. A 66-year old single gentlemen arrived with a 6-inch think stack of financial documents. His income consisted of $8800 in Social Security payments and a small amount of bank interest. He was so broke he could not even afford the premiums for Medicare Part B coverage. The rest of his papers pertained to failed investments, most of which appeared to be Ponzi schemes that some broker in Texas had gotten this fellow into. Originally they were paying the promised 11% returns but that money dried up and his principal balances disappeared. He suffered 6-figure losses.

After quickly determining that he did not have enough income to file a return, I tried to make suggestions about pursuing claims for compensation on the fraudulent investments and getting help from the state because his income was so low. Luckily he owned his home but he needed to be on food stamps and get help with no-premium Medicare.  He looked like he was one more piece of bad news away from jumping off a bridge. I asked if he had family. He said he had two brothers in Ohio but they hadn’t spoken in several years. Wow. At that point, I asked the folks at the senior citizen center to connect this gentlemen with a social worker. I hope he finds the help he needs.

Count your blessings, folks, and if anyone ever offers you a guaranteed 11% return, run away as fast as you can.

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The first couple I met with was a long0time retired couple (since 1989) with a moderate retirement income. Most of it was from a government pension because the husband had worked 41 years for as a civilian employee of the Army Corps of Engineers. This couple was just as happy and pleasant as they could be and for that reason, I was determined to engage them in conversation to pick up some “happy retirement” tips.

A little more backstory is relevant. Both of these folks are native Tennesseans and love living in Nashville. In the middle of the husband’s Army Corps career, he was required to move to Mobile. Alabama to help build the Tennessee-Tombigbee Waterway. (Google it – it’s impressive) They didn’t want to leave Nashville but the only other option was to be out of a job. They told me they “cried all the way down.” They ended up staying 18 years.  They finally decided they had to get back to Tennessee.  The husband had some friends in the Corps who had moved up the ranks after he had transferred to Mobile. He was able to leverage his friendship to get a transfer back, under the condition that he work at least one more year. He told me he enjoyed the work so much he stayed another five years. That’s what friends are for.

I asked this man if he retired cold turkey – at work full time one day and no work at all the next. He said that he did and never looked back. I asked for a tip on how to make my retired life as pleasant as his seemed to be. His advice was simple but it is something that will I have to remember. He said each and every day you must try something different – even just a little bit. He added this about retired life:  A lot of what you might try to do each day might turn out to be “wrong” but at least some of it will turn out to be “right.”  It’s that “right” part that makes it a good day and makes you forget the wrong stuff.

Finally, I could tell this 85 year old couple really loved each other. I complimented the husband on the work he had done in preparing a draft tax return using pencil and paper. His numbers were very close to mine. He said that he did that every year but thought he needed help because he just wasn’t “smart” like his son, who had a college degree. His wife immediately slapped him on the wrist (gently) and lovingly scolded him for even suggesting that her husband wasn’t “smart.” God bless her.

My second taxpayer was a retired woman with not much income, only a small Social Security benefit and a small pension from her husband. She was struggling a little financially and asked if she knew if she was entitled to any help.  I couldn’t offer her any advice.  She also worked occasionally at a local Hampton Inn, during catered functions. When her husband retired in 1998, he started working at the Hampton Inn part-time and later encouraged his wife to join him. This is where her story touched me.

In 2008, her husband suffered a heart attack and had to undergo open heart surgery followed by cardiac rehab. But he wanted to go back to the Hampton Inn. Finally, he was able to return to work. He died – at work- the second day back. She told me that after the funeral she started receiving dozens of letters from people she did not know. It turns out they were all travelers who had stayed at the Hampton Inn. They wrote that the reason they always came back to that Hampton Inn when they traveled to Nashville was to see her husband. She told me that her husband was so outgoing and friendly that everyone he met felt like he was their friend. Those letters really brought comfort to her.

One of this lady’s last conversations with her husband also brought comfort to her. She was worried about him going back to work after his heart attack and surgery. He said “Honey, don’t worry about me. If I die on the golf course or while I’m working at the Hampton Inn, I’ll be a happy man.” (I swear I am not making this up.)

My final topic of conversation with this taxpayer was about her plans to travel to Arkansas and watch her grandson compete in a college track meet – as a decathlete. When I heard “decathlete” my ears perked up. It turns out that her grandson and my middle son (also a college decathlete and two-time state high school decathlon champion) know each other because they were coached by the same former Olympic decathlete in town. Small world.

My third taxpayer was an older retired couple with whom I had worked last year. Their big news was the flood. During the disastrous Nashville flood of 2010, they had two feet of water in their house. They had to move out for five months but lived separately. The wife and their disabled adult daughter went to live in another town, in a house they inherited from the wife’s mother. The husband lived in town with their son. They did not have enough insurance but were saved by members of their church, who helped rebuild their house and contributed over $5,000 for the purchase of new appliances and other supplies. You have to respect a church that steps up to the plate like this.

Another interesting tidbit: I asked if they had last year’s tax return to look at. They did, but apologized because it had been damaged by flood waters. They said they would never again store important papers at floor level!

My last taxpayer was a young woman and student. She was not yet a U.S. citizen, as she had immigrated with her family from Iraq two years ago. This was her first time having to file a U.S. income tax return so I had to explain a lot of basics to her. Her income was so low that she did not have to file except that she needed to present a copy of her tax return to apply for college financial aid. When we were done, she seemed very proud that she had completed an important civic responsibility. She asked if she could bring her mother in for her tax return. Her father had died a few months ago and her mother was completely confused about what to do. Of course I agreed.

Gosh I love this job.

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My first taxpayer was new to our program. She was in her late 50′s, working as a server in a private club, and living alone – except for her 14 year old niece, whom she supported. I asked about the parents of the niece, trying to determine if this nice lady could file as a head of household. She said that the father had disappeared and the mother (her sister) was unemployed and unable to care for her.  There were no complaints about this.  Unfortunately, the lack of specifics and complaints made me a little skeptical of the story I was given. She was able to produce the niece’s SS card so what else could I do?

The second taxpayer was another woman, age 61, living alone and working as a drug store clerk. Total 201o income: $12,050. Who can live on that and be happy about it? When I asked her if she had any other income, her answer included a question: “That’s it – not very much is it?” I dodged the question. I just hope she has a sizable Social Security benefit coming her way at age 62. She’s gonna need it.

Taxpayer three was a hoot. Female, 81 years old, maybe 5’2″ and 100lbs.  Slightly confused but very chatty on a wide variety of topics. One topic she was not confused about:  The Senior Olympics. As I was finishing her return, she remarked that she needed the weather to warm up so she could “get to the track.” I asked why she wanted to get to the track, thinking maybe she liked to walk there.  Her answer was that she needed to train for the Senior Olympics. She was a long time competitor. Her specialties were badminton, javelin, discus, and shot-put.  Can you imagine a diminutive 81 year old lady throwing the javelin, discus, and shot-put? I couldn’t. But she was very serious about it. She said she had won a gold medal in doubles badminton. Good for her.

Taxpayer four was a woman I had worked with for each of the prior two years. A public school teacher, divorced, with an adult son who was severely bipolar. The son now lived with his Dad, which seemed to make Mom happy or at least relieved. I was glad to see that this taxpayer was now contributing to a 403(b) plan to supplement what will be a decent teacher’s pension. She still spends way too much on her mortgage. She asked me whether we (the volunteers) ever did tax work for “young people.” I said that most of our clients were retired but we did not turn anyone away. I didn’t add that she was among the youngest we work with.

My final taxpayer was a nice older gentlemen who came in with a giant stack of papers, hoping that the stack included everything he needed. Sadly, it did not. He was missing a pension statement. So I had to send him home to return another day. That didn’t seem to bother him. Coming to the volunteer tax office was an activity that he seemed to enjoy.

Stay tuned for more stories from our senior taxpayers.

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Most of the VITA volunteers are already retired. I am not so I have never had time to attend any of the yearly training classes. I learn by reading the training materials published specifically for VITA volunteers and practicing preparing returns using fake taxpayers. This year the program has moved from a locally installed PC software application to a web-based system, which I like.

Last night and early this morning I finally completed the three certification exams (basic, intermediate, and advanced) that all of our volunteers must pass yearly. Now I am ready to schedule myself for appointments at the senior center, which will probably start next week. I am looking forward to it and hope to see again some of the taxpayers that I worked with in prior years.

The past two years I have written posts that discuss my experiences preparing returns and talking to the taxpayers. Many readers seem to have enjoyed reading them, almost as much as I have enjoyed writing them.  I intend to write similar posts this season as well, so please stay tuned for those.

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Mrs. ToughMoneyLove and I always seem to owe the government tax money. It’s a combination of (a) not withholding enough from my paychecks; (b) decreasing mortgage interest deductions;  and (c) increasing amounts of taxable self-employment income from my online ventures. I don’t mind owing taxes at the end of the year, as long as I am not penalized for owing too much. Lending money to our federal government at 0% interest is the worst option of all.

Until last year, I compensated by having large chunks of taxes withheld from my final two paychecks. Last year I opted to write a separate check on the final estimated tax deadline. I then mailed a smaller check for the balance when we filed our return in April.

To avoid paying an under-withholding penalty, a taxpayer in our bracket must meet one of two tests: (1) withhold/pay 90% of the taxes owed for 2010 or (2) withhold/pay 110% of the taxes we actually paid for 2009. I ran a quick calculation of our estimated 2010 tax obligation. It was smaller than 110% of our 2009 taxes so I wrote a check to meet test (1). We may get hit with a small penalty if the government decides we should have made estimated payments earlier in the year. I’m too lazy to figure that out now.

Although writing a large check to the government is no fun, it serves one purpose: a harsh reminder of how much work a lot of us have to do each year to support the government and those who don’t pay taxes but receive tax credits anyway.

So did any of you pay taxes today?

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The first was with a retired man who came in without his wife. She was at home, disabled with diabetes and related maladies. The husband was in his late 60′s but still working full time as a patient transporter at a hospital. He said he was about worn out with the physical nature of the job. On top of that, he was quite unhappy with his wife, telling me that she was warned during her last hospitalization that when she returned home, she needed to get active or her health would decline further. According to the husband, she did not follow that advice. They had good insurance but were still spending lots of money on medical care. This was on top of first and second mortgages. He was the only truly unhappy “retiree” I worked with this year and it was all because his wife was a health care burden with no motivation to improve her lifestyle. The guy was just beat down physically and mentally.

My second last minute filer was remarkable in how unprepared he was for our meeting. He had enough medical expenses and charitable contributions to justify itemizing but he neglected to bring documentation. He spent most of our session attempting to gather the information by phone.

My third taxpayer was fascinating. He was 90 years old, living by himself in a home he bought 55 years ago. (His wife died 3 years ago.) He had two government pensions, one from the military. I inquired about his military service. He served 23 years active duty, then joined the National Guard, and then the Army Reserve, for total service of 35 years. He was a paratrooper and – get this – was jumping out of airplanes on training exercises at age 58! The other pension was from the Post Office. The final amazing fact related to his limp and cane. Last November he broke his hip. That’s not unusual for an older man, except for how he broke it. He told me that he installed a chin-up bar in his garage 40 years ago and used it regularly. On this occasion, he slipped dropping off the bar, causing the break. Chin-ups at 90? Can you imagine? Oh, and he contributed over $50,000 to his church last year. (Yes, I saw the signed letter.) When I told him that he couldn’t deduct all of it because it exceeded 50% of his income (meaning he still paid taxes), it didn’t bother him in the least. That is one tough guy, all the way around.

My final taxpayers were a retired married couple. They had minimal income from Social Security, did not pay any taxes, and did not need to file a return. They came in wondering if they were entitled to any refundable credits because they had cared for and supported two of their grandchildren for ten months last year. In November the two grandchildren were returned to their mother. This couple had cared for them for 14 years (one was 13 and one was 14). I asked if it was difficult to have them leave after all of that time. The grandmother said she thought it would be but then “peace broke out” in their house. She was enjoying a peaceful retirement, finally.

So that is the end of my volunteer taxpayer stories for 2010. I will be having lunch with the other volunteers next week as sort of a wrap-up party. If asked, I know I will return next year. There is so much I have learned from the folks I have assisted. I want to continue that education.

Thanks for reading. I hope that sharing these stories has benefited you.

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