I have always done our taxes. I'm pretty confident with my abilities to understand tax lingo. I have successfully been able to do our taxes for the last 10 years or so. Even after acquiring an investment property, I know what I am doing. So…come late February of this year I worked our taxes using a software program I have used for years. Once I was done I thought to myself "Gee, that seems awfully high." I proceeded to do it again and got the same number. Okay…. Did it a third time and nothing changed. I kept trying to tell myself it was right due to Doug being deployed the entire year of 2012. For those of you not familiar, his income is non-taxable while deployed to certain areas such as Afghanistan. His W-2, box 1 literally had zero in it. We also took a large loss on our rental property. I rationalized the large income tax return to these circumstances and submitted our return on March 3rd.
Low and behold…about 3 weeks later we received a letter from the IRS stating our return was being reviewed. Not an audit, but a review. I wasn't surprised. I believe that letter was dated March 15th and we had to give them 60 days to review it before we could respond. And they literally mean 60 days! We tried to call 2 days early and they wouldn't even talk to us until that 60 day mark. Have you ever tried to call the IRS? If you haven't, make sure you have at least an hour to spare while you are on hold.
It took them the whole 60 days to come to the conclusion that we need to send in all our tax paperwork (W-2's, receipts, 1099's, etc…) Remind you, it is mid-May and we are getting ready to move in 3 weeks when Doug was going to Germany and I was going to my parents house until August. I explained our situation and we were given a tax advocate. This tax advocate was a gift from God…truly! No more waiting on the phone for an hour, she was kind, prompt, and explained everything in the process.
This lovely tax advocate explained to me the reason why they are reviewing our taxes is because of our withholding. I asked, what is wrong with our withholding? Well she said…for your taxable income it is really high. Once she went over the numbers with me I saw exactly what I did. I should have entered 108.28 as on my W-2 but instead entered 10828 which the software program I used turned into $10,828. Don't get me wrong, it was my fault and not the software.
BIG SLAP ON THE FOREHEAD!!!!
I was so embarrassed as I am good at numbers. Especially numbers having to deal with anything accounting or finance!
All we needed to do was file an amended return and that should have been the end of it……BUT NO……we opened the doors to the IRS and they did not want to give us our money without a fight. It took them 3 months to look at our amended return and decide we needed to verify that Douglas and Cameron were indeed our children we could legally claim on our return.
WHAT?! I could understand if Doug and I had been married less than how old Douglas was, or if there was previous marriages. But seriously, we had been married for 18 years, Douglas is 18 and Cam is 11 and they are NOW going to question if we are indeed the legal parents. This was a nightmare! They were giving us a 2 week time limit to provide a letter from the schools they attended in 2012 on official letterhead stating we were their parents and they lived with us. Mind you, their previous schools are in NC and we are in Germany. My wonderful tax advocate said, well gather up what you do have and I will plead your case. So, I had report cards, attendance reports, Dougie's final HS transcript and a copy of our orders to Germany showing that the boys belong to us. I'm surprised they took it, but they did.
So I have been sitting here patiently waiting for the next shoe to drop. Then the government shut down, and I really thought we may not see this tax return until tax time next year. Then….Low and Behold…I log onto our bank account yesterday and there it is! Our tax return!
After this disaster I have to sit back and reflect on what I did wrong and how I can prevent this from happening again:
- Take your time!
- Do not count on software programs. It should have red flagged the whole return as it made no sense.
- When a friends mother who is a retired tax accountant offers to look over your return for free…DO IT!!
- Don't put your savings into investments you can't touch until your tax return money actually hits your bank account. Otherwise you are left with nothing to bounce back on and it makes moving overseas that more difficult.
- If possible, which it wasn't last year due to Doug's deployment, set up your withholdings so you don't get a tax return. Seriously…think about it…the IRS had my money tax free that whole time. I could have put that away and earned some interest with it.
I'll stop there. This was a big learning experience and a test of my patience. Doug and I handled it pretty well. Although, Doug was none to happy to find out the whole mess started with my one little decimal point!
