Wednesday, January 11, 2012
IRS ANNOUNCES TOP TAX RETURN ERRORS
The IRS has issued a report of the “Top Errors for Taxpayers and Paid Preparers on Return Submissions” for January 1, 2011 through December 28, 2011.
Regardless of whether the return filed was a 1040, 1040A or 1040EZ, was prepared by a paid tax professional or the taxpayer himself/herself, or was submitted on paper or e-filed, the biggest error in all categories was –
“Based on information provided on your return we have determined you are eligible to claim the Making Work Pay and Government Retiree Credit and have computed the credit for you.”
And, except for paper-filed returns prepared by taxpayers themselves, another top error was –
“We changed the amount claimed as Making Work Pay. There was an error in the computation of the total amount.”
First there were Dubya’s rebate checks, which caused massive confusion and error on tax returns.
Under BO the rebate morphed into the Making Work Pay Credit, which in many cases totally FU-ed withholding, especially on pensions for taxpayers who were not eligible for the credit, resulting in surprise balances due, and, as evidenced above, caused massive confusion and error on tax returns.
Thankfully the latest evolution of the rebate, the payroll tax holiday, did not involve the 1040 (or 1040A or EZ). Though I am sure it caused confusion and error by employers, especially so in its current two month temporary extension.
I do not recall ever seeing any concrete evidence that this political trick, basically a form of buying votes, did any good in boosting the economy, in whatever form it took. Please let me know if I am wrong.
As an individual I was thrilled to get the extra checks from the government, or pay less tax on my 1040, or withhold less Social Security from my wages. I can certainly put the money to better use than the federal government. But as a tax professional and concerned citizen I know that this was a mucking fess, consistent with the inability of the idiots in Congress to do anything right.
FYI - most of the IRS determined top errors concerned refundable credits. More evidence of what I have been saying for years – refundable credits are bad tax policy.