Tax season has just ended, and odds are you're feeling a little sad about that right now. Yes, you're probably wishing you had another good reason to make scores of calculations, fill out tax forms again, and mail off some more checks to Uncle Sam. Well, sorry. April is finished. Get over it.
Still, that doesn't mean we can't learn about and think about taxes throughout the year. In fact, that's the best way to minimize your taxes -- by being well-informed and applying various strategies throughout the year. (You can learn a heck of a lot in our Tax Center.)
Look to lawmakers
One issue to watch is tax reform. Every now and then, our tax system is changed for the better. It was only in 2004, for example, that the tax code adopted a uniform definition of "child." Prior to that, there were six different definitions applying to various issues and taxes.
One major catalyst for reform is our National Taxpayer Advocate, Nina Olson. She works inside the IRS, but she works for us, the taxpayers.
A big tax issue that's been in the news lately is the degree to which taxes are underpaid in America. An estimated $290 billion in taxes due are never paid. So who's doing the non-paying? Well, a big chunk of the sum has been tied to small businesses and sole proprietors who underreport their income. Olson has expressed concern about this, because other taxpayers end up footing some of this bill. She has said, "We calculate that individual households pay $2,700 more than they should each year because of the tax gap, the amount of taxes that we know about that go unpaid each year." There are various proposals afoot to try and increase compliance -- if they succeed, most of us will be better off.
Free e-filing?
Another issue is whether the IRS will soon allow everyone to file their taxes electronically for free. Nina Olson has noted that since it costs so much more to process a paper return, it makes sense to permit direct, and free, filing. Others have pointed out that otherwise, many people will simply not file electronically, since they won't want to pay a preparer or won't trust such companies. They're not reassured to know that some franchises of Jackson Hewitt
Fixing the AMT
One of the biggest concerns in the tax world is the Alternative Minimum Tax or AMT, which was designed in 1969 to help ensure that various deductions and credits didn't enable the wealthy to avoid paying taxes. Nearly 40 years later, though, the tax is starting to hit the middle class hard. Olson and others have called for it to be removed or improved, and the outcry is growing. Still, with the tax estimated to bring in some trillion dollars over the coming decade, the government unfortunately may have trouble letting it go. (In that case, at least adjusting it so that it applies to its originally intended few, instead of the masses, will be a big improvement.)
Spend a little time learning about the world of taxes. You may find yourself slightly interested, and at the very least, more informed and better able to save money. Another good resource for learning more, besides our Tax Center, is the IRS itself.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.
