Rewards for a good life

‘Tis the season. No, not for Ho Ho Hos and mistletoes, but W-2s and tax-time blues.

What is distressing is what the working poor pay. It is a pathetic exercise to watch someone who is trying to do everything right prepare his/her taxes. For example, let’s look at one real-life example from a few years ago.

A resident of Hawaii worked a full-time job and earned $30,298. This resident had $2,781 withheld in federal taxes and $1,702 withheld in state taxes.

Anticipating a modest refund, the resident went out and bought a software tax preparation program for $59.95 (includes FREE federal e-filing and one FREE state tax download!). The resident excitedly began the preparation of state and federal tax returns.

After 15 minutes of checking the “none of the above boxes” for tax credits and deductions as the program walked the resident through a federal return, the verdict was in — the resident owed $2,781 in federal taxes. The exact amount withheld. Federal refund — $0.

Ready to start the state return? Download the Hawaii add-on to the program. Whiz-bang, the software is added to the computer. The return begins.

After checking items in the federal return, the state return comes up with an initial computation of a $92 refund. Now, let’s check for additional state deductions or credits. Five minutes later, the computer still says a $92 refund.

It even asked if there was a tax preparation fee. When the resident put in the $59.95 cost of the program, it came back and said, “Sorry, if it wasn’t more than $167, no deduction is allowed.”

Resigned, the resident agrees to file the tax forms electronically. Oops, there is a $19.95 fee to file the state form electronically. Only the federal e-filing was FREE — the second FREE, for the state, was only for the program. Gotcha.

Wham, another credit card charge to file the state form. Let’s see. A $92 state refund, $0 from the feds. A $59.95 charge for software plus $19.95 for filing your state taxes. Net to resident — $13.

Congratulations, you are a hardworking, law-abiding citizen. And, as a reward, here’s $13 for paying and filing your taxes on time. Pathetic.

* Editorials reflect the opinion of the publisher.