Death and Taxes

Actually, this post has nothing to do with death and everything to do with taxes, but aren't they the same thing anyway?  Warning--I am going to whine.

So, way back in the beginning of February I did our taxes and Abby's and I helped Ellen with hers.  I didn't send ours or Abby's in because I had a question I had to resolve, but Ellen submitted hers and got a quick return.  Fast forward two months.  It's April 14.  Time's a runnin' out.  I finally got on the IRS website and discovered that the instructions in the tax booklet regarding dependents is misleading. Even though Abby was only a full-time student for parts of 4 months (the instructions say she has to be a student for 5 months) I can still claim her as a dependent, thank goodness.  I think this is because she made less than $3700 last year, but I couldn't find that exception anywhere.  It's just one of the questions Tax Cut, Turbo Tax and the IRS asked when I entered her as a possible dependent.

With that resolved I could file the taxes.  I took care of Abby's fairly quickly, but an hour after submitting them I remembered a scholarship she received that is counted as income because it did not go towards tuition or books.  Also the money was received in 2011 and Abby's Winter semester school expenses were all paid in 2010.  The extra money didn't change her federal return since she had so little income, but it did affect her state return because Indiana is cheap and swipes every dime they can from hard-working students, as I'll explain.

I got on the Indiana website to see if the scholarship money could be applied to Winter 2011 expenses that were billed in 2010.  That's when I discovered Indiana's money grab.  Abby didn't file returns in 2010 because she didn't make enough money for the feds or Utah to bother with her.  The refund was so small that she decided not to go after it.  HOWEVER, because she was legally an Indiana resident in 2010, they require her to file a return every year she has income, no matter where the income was earned.  They specifically state that this applies to college students who live and work out-of-state.  This means that while Utah will refund the $17 withheld, Indiana expects her to PAY $77 for the money she made in Utah, plus interest and penalties.  Filing the 2010 return involved preparing a federal return and an Indiana return. The Indiana return involved seven, yes seven, schedules for a kid  who had less than $4300 in income.  I was so mad about the whole thing that I asked Tom to do it.  By the end he was ticked too.

But the saga is not over.  The evening of April 17 I prepared Abby's amended return.  It can't be filed electronically so even though I had it done by the deadline I still had to pay the $5 penalty.  Then I had to submit our taxes.  Tax Cut and Turbo Tax had two different refund amounts.  I spent 90 minutes trying to figure out where Turbo Tax was finding an extra $620 in taxes paid before giving up and submitting the returns at 11 last night.  I am done thinking about the taxes until next year.  If there are mistakes--TOO BAD!  And, after 21 years of doing the taxes by myself, I think I am done with them.  John Galt, come and get me!

P.S. I just discovered I accidentally posted this on Abby's blog.  It figures! (Don't worry, I got it all switched around.)