Taxes

People think I’m totally old-fashioned and retro because every year at tax time I go to the post office and mail my returns instead of filing them electronically. Sure, it might be nice to get my refund faster so that I can spend it faster. But the fact is that I haven’t gotten a refund back from the IRS since I was back in high school working summer jobs. I’m self-employed so it goes with the territory.

Even if I did get refunds by filing estimated returns with early payments or deductions from a paycheck I might still wait for my return instead of filing electronically, because I love to put extra bonus savings in a place where I cannot get to it to spend it. That eliminates the temptation to blow on something worthless instead of socking it away in a saving account, piggy bank, or IRA.

But the real reason I go old school at tax time has nothing to do with refunds. I do it because I met a guy once a long time ago who filed his taxes on time but couldn’t prove it because he just put a stamp on the envelope and mailed it to the IRS. Later that year he got one of those dreaded letters from the feds, saying that he had to come in for a friendly audit because he failed to file by the April 15 deadline. He argued that he had filed, but he couldn’t prove it. They said “we never got anything in the mail from you.” Since he had not owed anything and just filed a zero return there was no canceled check to show the IRS. But even if you earn nothing you have to file.

It was his word against theirs, and guess who won that battle?

So he told me that whenever he files a return he sends it through the postal service with a signature required. I have done that ever since, and a few weeks after I file I get a card in the mail signed by someone at the IRS saying that they did, indeed, receive the mail. I have to pay about two bucks for certified mail with a return receipt, but that’s worth a lot more to me in terms of no worries about unexpected calls from the tax authorities.

This year I may file electronically, actually, breaking with my old springtime tradition. But I will be careful to save a copy of the confirmation. I’ll print one out and stash it in a safe, secure place, not relying on keeping one just in my email inbox or on my computer – since computers can get stolen or destroyed along with all the documents inside them.

The point I’m trying to make is this: always retain hard copies of original signatures when mailing important legal and financial documents. Hold on to copies of checks for critical payments like those to the IRS. Don’t take chances when the risk on the downside could involve something as stressful and potentially expensive as an IRS audit.

Also keep in mind that if you pay municipal bills for things like license fees, property taxes, and so forth then those may be deductible from federal taxes. That’s because there are laws to protect citizens from being taxed by both state and local governments and the federal government. It has something to do with our constitutional right to not be taxed twice. Each year I whittle a few valuable dollars off my IRS taxes because I itemize these kinds of tax deductions paid to state, county, and city government agencies.

When in doubt, consult an informed and up-to-date tax planning and preparation professional. But just to be on the safe side also remember to preserve hard evidence that you followed the rules and fulfilled your obligations as a taxpayer. You’ll sleep a whole better at night.

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