Sad but true, amazing tax rules  

By Mike Fak

[MARCH 18, 2004]  It was a rite of passage with me. Learning to do my own taxes, that is. My father did his own taxes, so it was handed down to me that I should do so as well. My father was a complete do-it-yourself kind of guy. He taught me how to throw a curveball. He showed me how to wire a room and fix a leaky water heater. He had me help him turn a nasty attic into a two-bedroom loft, all the time instructing me on what we were doing.

As he would sit on the bed with tons of paper receipts piled on the quilt, he would explain to me that a person should always do his own taxes. No one, my father perceived, was more interested in finding every deduction for the family than he was. More than I would be someday.

In this day and age my father's thinking is Neanderthal at best. So many tax laws, so many loopholes waiting to be penciled in just beg for professional assistance with filling out the 2003 1040 form that sits on my desk. I truly recommend that all of you who have any complexity to your taxes seek professional assistance. I am hypocritical, of course, because I will not. It's not because I shouldn't. It's just that my birthright compels me to do otherwise.

Every January, I revel in getting the latest tax preparation books. I find myself searching the Web for some little-known fact that keeps me from owing and rewards me with a payback instead. I spend time reading IRS brochures and pamphlets that I would bet have never been read by any IRS agent, including the dolt who wrote the ambiguous passages in the first place. Every year I have a diatribe with myself when I find something so ridiculous, so incredible that I find it hard to believe such a rule exists. This year, as always, I found several.

You may receive a college tuition credit if you are a student or the parents of a student.

These credits listed under IRS Publication 8863 are the Hope Credit or the Lifetime Learning Credit. As with all IRS deductions, there are several circumstances that make you or your child ineligible to receive this tax credit. This is where it gets weird. The student or the parents of a student cannot take this tax credit if the student was, and I quote, "ever convicted of a felony for possessing or distributing a controlled substance."

It seems a country that professes a penal system that is devoted to rehabilitation doesn't really mean it. A child dumb enough to get caught with a bag of illegal pills cannot go to college and receive a minuscule amount of tax relief for the burden of tuition and board. Amazingly, a convicted mass murderer or pedophile has no such problem receiving the $1,500 to $2,000 credit. Only someone convicted of being dumb enough to get involved with drugs is ineligible. Isn't it strange that someone who wipes out a whole town with an M-16 can get this credit, while dumb Johnnie caught and convicted with a bag of "something" is ineligible?

The next point is so bizarre that after reading it a hundred times I cannot believe the conclusion I am making as to the words.

Look at the tax code and you will see that someone who has had the bad fortune to lose a spouse during the year can still file as married filing jointly rather than single. This saves a person just over $3,000 in taxes. Losing a spouse should be terrible enough in one's life, but look at what the IRS says if you happen to be incredibly unlucky:

"You may be eligible to file as a qualifying widow(er) with dependent child, even if the child who qualifies you for this filing status has been kidnapped. You can claim qualifying widow(er) with dependent child filing status if all the following statements are true. … Point 2: In the year of the kidnapping, the child lived with you for more than half the part of the year before the kidnapping."

I have to ask all of you if that means someone who lost a spouse and then has a child kidnapped before July 1 cannot take the dependent deduction? That seems to be what they're saying, isn't it? Are we so in need of taxes that we cannot let a widow(er) who has been destroyed with the loss of a child receive a meager $3,050 deduction? Is there really an IRS agent who will tell someone that, darn the luck, the most important person in your life, your child, was kidnapped in May -- so sorry, no deduction?

I'm not sure of my interpretation because I have never heard the phrase "half the part of" before. What the heck is a "half the part of"?

Compounding the issue is that the wording for married filing jointly is different. Again on Page 9, part two for married filing jointly states: "The child must have qualified for your dependent for the part of the year before the kidnapping." You tell me if that means they can claim the child. It is obviously worded differently than the qualifying widow(er) point is.

Then again, why can't the government just say that in the event your child was kidnapped, you can claim them, period? Do we need someone's taxes so badly that we can't just say a person has had enough grief this year without now being subject to the scrutiny of the IRS?

I would love to ask an IRS agent if I have the correct interpretation of the rules on Page 9 of Publication 501. I doubt an inquiry would do me any good, of course. The latest U.S. Treasury audit showed a 67 percent failure by IRS auditors to interpret rulings correctly. If a person starts out getting two out of three questions wrong, how the heck can you expect them to explain "half the part of"? 

[Mike Fak]

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