Yesterday was the day that many Americans had been dreading since the joys of Christmas and the hangovers of New Year’s Eve began to fade. It’s Tax Day in America, the bleakest day of the year.
It’s the day on which many of our fellow citizens realize they are not the financial planning wizards they imagined they were. For some, carefully managed exemptions and itemized deductions still result in the need to write a big check to the U.S. Treasury, or, in Massachusetts, to the Department of Revenue as well.
Those who find themselves due a hefty refund should not pat themselves on the back excessively. They’ve been giving Uncle Sam, the biggest spendthrift in the history of creation, an interest-free loan for the better part of a year. And that nice state refund they’re waiting to spend? Under certain circumstances, the feds may consider that taxable income for next year’s return.
Those who spent Monday night frantically scribbling out figures with pencil and paper before finally giving up in frustration can take comfort — the Internal Revenue Service will kindly grant them a six-month extension to file. But they’re not off the hook for the cash — the IRS expects a check right now for the amount they estimate they’ll owe.
It shouldn’t be this painful or costly.
Income tax reform has been a staple of political discussion for years, but little has been done to simplify the tax code in the past 30 years. The Tax Reform Act of 1986, supported by congressional Democrats with the backing of Republican President Ronald Reagan, reduced the number of tax brackets and eliminated many deductions. But as Dallas Morning News columnist Carl Leubsdorf noted, since that legislation was enacted, new deductions and credits have slipped back into the tax code, making it more complex than ever.