Friday, March 20, 1998

Sleep and Taxes
By Ted Fuller ([email protected])

For years I used to do the taxes whenever I felt like it, usually one rainy weekend after all the paperwork had come in.

Then we had kids.

Now we have two. The five-year-old understands that sometimes Mom and Dad have work to do on the computer, so we get to take our turn now and then. The eighteen-month-old is a bit more determined. If we're at the keyboard, he's on our lap helping. The other day at work I had to move fast before he took down the server.

Now the best time to do the taxes is in the evenings after the kids are asleep. I can spread out all the paperwork, and there's no one on my lap trying to help. The biggest adjustment, though, was shifting gears from a get-it-all-done-in-one-big-push mentality to doing pieces at a time over a week or two. Since most evenings I have to go to work the next day, I can't afford to spend twelve straight hours doing my taxes.

That's where the software comes in. (Depending on how stingy I feel, I'll buy it direct from the publisher at an early tax-season special price, or wait for an even better price when the office supply stores run them as loss leaders with rebates.) Before the kids, I used to push it all through the software at once because I needed to stay focused. With itemized deductions and various stock sales and capital gains, I'm right to the point of saying, "It's getting too complex; I have better ways to spend my time; I'll pay someone to do this for me...."

But with the software it's easy to stop after an hour or two and pick right back up the next evening. I generally try to stop at a logical breaking point, but if I can't, to start the next session I just click the back button and review where I am.

This year it paid off, both the strategy of doing it in the evenings and spreading out the work over several days. I was struggling with the 28% capital-gains tax rate for a mutual fund. The paperwork from the fund said the 28% rate would apply to 7% of the capital gains reported. Our brokerage, where we switched the fund in our quest for Fooldom, reported the gains much differently -- 75% at the higher tax rate. I couldn't figure out why.

And about 10 p.m. the eighteen month old woke up crying and wouldn't settle back down. I tried going in, getting him back to sleep, and sneaking back out to the taxes, but no luck. (My wife wanted to help, but was up to her elbows cleaning the aquarium, another great task to do in the evenings, without help from the kids).

So I just closed down for the night and got Ian and myself to sleep. In the morning I gathered up the relevant paperwork and dropped by the brokerage at lunch hour. It's the headquarters, just around the corner from where I work. I talked to the grand poobah of 1099s and within five minutes I had my answer: They goofed up and a corrected 1099 would be in the mail forthwith.

Now if I'd been wanting to get it all done in one day, this would have been a showstopper. Just like other years when I started too soon and found I was missing some 1099 or another that left the East Coast at 11:59 AM, or didn't have the oddball form needed for that year's return. Who can you call at the brokerage, mutual fund or IRS on a weekend? But since I wasn't trying to get it all done NOW, it was no big deal to stop where I was and deal with it after a good night's sleep.

[For more tips on tax preparation, visit this week's Family Fool and our Tax FAQs.]

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