Income Tax Mini-Manual

Don't let tax forms and the reputation of the IRS intimidate you. We've compiled a mini-manual of income tax information to help you get a leg up on paying no more than you have to.

| March/April 1985

  • income tax mini manual - cartoon of man and IRS monster at birthday party
    Paying income tax makes many people feel like they're feeding their cake to a monster that always wants a bigger slice.
    Illustration by Jack Vaughn

  • income tax mini manual - cartoon of man and IRS monster at birthday party

Over and over again the courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands; taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

—Judge Learned Hand

No other single annual event causes so much anxiety among the U.S. public as the arrival of April 15. Let's face it: Income tax strikes fear into the hearts of most people. It's not so much the actual paying of the taxes that brings on the sweaty palms and chewed fingernails; it's coming face-to-face (or, rather, face-to-form) with the awesome Internal Revenue Service and all its confusing directives and instructions. Intentional or not, the complexity of the tax system — not to mention the autocratic nature of the IRS itself — can intimidate. As a result, many people tend to avoid the subject altogether and because they're not aware of their options, end up paying more income tax than they're obliged to.

Granted, it's our duty as citizens (or as resident aliens) to file and pay income taxes each year. But that doesn't mean that anyone should pay more than his or her fair share. The U.S. tax system leaves it to each of us to assess our own taxes based on our income, adjustments, and deductions. This is cause for neither anguish nor celebration; it's just the price we pay, in effort and dollars, to live here. The annual question we all wish were more easily resolved, though, is, How much do I have to pay?

One answer to that question can be calculated with relative ease by using either of the "short forms": 1040EZ or 1040A. But for someone actively making the switch to a life in the country and self-employment, those short forms, though seductively simple to prepare, may not be the best route to a fair share. Besides, by its very nature, attempting to live a more self-reliant lifestyle fuses your personal and business lives and can make reporting your income and expenses a considerably more complicated process. What if you sell eggs to your neighbors? Or what if you trade those eggs for a bushel of corn, a pickup load of firewood, or help on your taxes? We may call it a back-to-basics, simpler lifestyle, but that's not the way the IRS sees it.

We urge you not to look at this situation with too much frustration. The lifestyle you've chosen to pursue — as well as the changes you may go through on your way to it — can involve more complicated tax-filing procedures than most, but it may also afford you numerous deductions from and adjustments to your income, as well as credits against the tax you must pay. So we hope that, instead, you'll view the situation as an opportunity — one that can keep more cash in your hands and make your transition to a self-reliant lifestyle all the more rapid.

sherry majors
12/29/2010 6:14:12 PM

I read this article with interest it says in the following pages you'll find helpful information. What following pages? The article just ends, where is the helpful info?


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