Steps for Preparing an Income Tax Return

    Triallogs.com - Written by djahn - April 8, 2007

We thought we would offer this helpful guide to everyone confronting the April 16th deadline.  We aren't attorneys or CPA's so the insight offered by the following should not be considered legal or income tax advice.  

Steps for preparing an income tax return.

Hopefully, you were documenting all of your incomes and expenses throughout the year while you were enjoying all of your freedoms or risking your life spreading democracy in Iraq or clinging to life in an assisted living facility. You are going to need those receipts now that tax time is here.

Here are some things to consider. If a friend paid you for helping them last year or giving them a ride across town, that might be income. Money you find on the street might be income (or is that a gain?). Any 50/50 drawings you may have won throughout the year may be income (or is that a gain?). Any money you earned through your business is probably income or…maybe a gain. Don’t forget any lucky days at the horse track, casino or playing the lottery are probably income or gains. Some of those may have already been reported to the IRS. Any sizable deposits or withdraws from your bank accounts were also likely reported to the IRS along with any interest bearing accounts. God help you if you made any deposits or withdraws that give the appearance of structuring…well, it’s

probably a little late to worry about that now. 

Assemble your deductions.

Some of your business expenses may not be deductible if the IRS deems your business a hobby.

You might be able to deduct the cost of any body armor you bought for yourself in a war zone as long as it wasn't something you also wore off duty.  If you had your parents purchase body armor for you, it's possible neither of you may be able to deduct it.

We're not sure about the cost of assisted living facilities.  They may or may not be deductible.  Make sure you consult someone who knows about that.

Please remember, if you have a loved one who is suffering from a debilitating disease such as Alzheimer's, they may need your assistance filing this year.  It would be ashame to see them drug through the legal system.

We also hope you remembered to segregate business and personal expenses and mileage.

Once you have gathered all of your shoe boxes with receipts, you’ll need to locate a 1040 form for 2006, then

Locate the instruction booklet explaining how to complete the 1040 form.

Read the instruction booklet and gather any additional forms, schedules, booklets or IRS publications you’ll need.

If you still have questions after reading the instruction booklet, forms, schedules, publications and additional materials, you can call the TeleTax line for pre-recorded messages addressing a number of frequently asked questions.

If, after that, you still have questions, you can call the IRS directly and ask a representative for assistance.  (Caution: Even the government recognizes the advice you get from trained IRS representatives may not be consistent or reliable.)

If you still have questions, you can contact a competent tax professional.  (Caution: How you determine if the tax professional you consult is competent or not is anyone’s guess.  Bad advice is not uncommon, be careful.  You are ultimately responsible for the accuracy of the information on your tax return.  If the government finds fault with any the information you provide, they may punish you while the experts you consulted go unscathed.)

If you still aren’t satisfied with the answers you’re getting, you can look into the tax laws yourself…it is your duty to comply with them after all.  You may need to read the regulations, codes, treasury decisions, IRS bulletins and rulings, tax court opinions and, if all else fails, case law in your circuit for further interpretations which may contradict some of what you have already read in the previously mentioned documents.  (Caution: Make sure the cases you rely upon are from the circuit court for your jurisdiction as the various federal circuits have reached differing conclusions on certain matters involving the income tax laws. So, they may or may not apply in your circuit.)(Caution Two: Many people who read the income tax laws for themselves conclude it doesn't apply to them.  Apparently, there is a right way, wrong way and government way of reading these laws.  Make sure you read them the government way.)

Don’t rely upon the Constitution or Supreme Court rulings.  The government frowns on that and such reliance often leads to frivolous claims and penalties.

Remember, many of the legitimate questions you may have after reading the law have already been declared frivolous by the government in its zest to continue enforcing the income tax system. Apparently, all of the supreme interpreters of the income tax laws work for the government. Many people make the mistake of thinking words mean what they say.  According to the government, citizens are not able to interpret these laws.

Remember, time is up on April 16th whether or not you understand the income tax laws.  At that point, you must sign your 1040 income tax return asserting under penalty of perjury your complete understanding of the law and the accuracy and completeness of your 1040 form.  That is a pretty bold assertion for one signature.

If you need additional time, you’ll need to submit for an extension.  (Caution: Some find the form used for requesting extensions of time more complicated and confusing than the 1040 form.)

Steps after you file your income tax return

Try to let go of the stress.  Convince yourself that submitting to this intrusive process is the price Americans must pay for freedom.  Remind yourself about how great it is to live in a free country.  If you don’t feel free, compare your life here with the life others live in more oppressive nations.  Surely there are more oppressive nations you can point to and take comfort in knowing we are freer than they are…perhaps North Korea.  There has to be others.  Maybe a friend can help you identify them.  If not, ask a tax attorney or CPA.

Try not to be too offended by the discriminatory aspects of the tax system.  Someday, you too might be able to afford a house, move out of your rental unit and enjoy the benefits of mortgage deductions.  Someday, you might attract a mate and marry, so you too can reap the benefits afforded those married filing separately or jointly.  If you are real lucky you might earn enough money to justify hiring the best accounting firm to show you all the loop holes you need to virtually eliminate your income tax burdens.

Meanwhile, don't throw anything out.  Remember you are required to maintain your records for the benefit of the government.

Try to remain calm while waiting to see if the government finds fault with your return.  (Perhaps you forgot to report a lucky day at the casino or one of your deductions has caught someone’s attention at the IRS.)  We are certain one of the reasons God gave us alcohol was to help us get through tax time.

Try to remain calm while waiting to see if the government selected you to participate in this year’s income tax audit program.  Take sedatives if necessary.  We are sure tax time is one of the reasons God gave us sedatives.

Keep your mouth shut.  The IRS has a rat our your neighbor program. Reporting you for forgetting to mention an item of income or claiming a deduction to which you weren’t entitled could put money in your coworker or neighbor’s pocket if your correction exceeds the $2,000,000 threshold.  That 's more money than most of us will ever see, but a simple line item error for some congressmen or high paid CEO’s.  Maybe they will lower the threshold in the future so more neighbors and coworkers can participate and benefit from this tattle tale program.

Remember to willingly submit your houses, papers and affects for inspection and scrutiny when instructed to do so by any IRS employee.  (Caution: The income tax laws apparently void the fourth and fifth amendments to the constitution.  You’ve gotten this far.  You might as well cooperate.  Don’t try asserting your rights now.)

Be prepared to throw yourself at the mercy of the government in the event you forgot to report an item of income, claimed a deduction to which you weren’t entitled or otherwise misinterpreted the law.  Sometimes they show mercy and forgive you, especially if you can prove the error was the result of bad advice from one of their employees (Does anyone know how you would do that?).  If not,

Gladly accept any interest and penalties they profess you owe.  Resistance is futile.  The courts frown upon anyone who challenges IRS determinations. The extent to which federal courts must go to rule in favor of the IRS is often unconscionable.  It’s best if you avoid putting yourself or them through that.

Watch what you say.  The courts have had to abolish the first amendment and ordered some folks to take down their web sites showing the language of the income tax laws and not speak of such things.

The best advice is to not earn any income in the coming year, but if you must earn income, start compiling all of your records now for next year.  Don't make the mistake of assuming you will be competent and prepared to file your return next year. You might want to identify someone now who can assist you then in the event you find yourself overseas risking your life to spread democracy or suffering here in some assisted living facility or intensive care unit.  We would like to believe it would be un-American for the IRS to harass your family while you are risking your life in a war zone overseas or suffering in an intensive care unit here in the states, but we can't guarantee that.

We hope you find the above helpful. Please use our discussion forum to let us know if we missed any other important aspects regarding the income tax process.

The sooner you complete your forms, the sooner you'll know how much of your earnings the government will permit you to keep. 

Make sure you save some of what they leave you.  Government officials may not be as generous regarding how much of our earnings we get to keep next year.  It looks like the Democrats may have to raise taxes to pay down some of the debt incurred as a result of President Bush's big government Republican spending.

Good luck to everyone.  April 16th is just around the corner.