Taxing situation

Well let's see. We had dinner with four friends last night and ended up at one of their houses playing dominoes. Had a great time and stayed up later than I have in a long time. Tonight we went to dinner with my sister and her husband, had a great time, and finished off in a small coffee/sandwich shop enjoying a warm drink and dessert. I'm stuffed. I may hop in a hot bath later and try to warm up my core because the weather turned cold again and we received a couple inches of snow. Since it was 70-ish last week, the snow was disheartening (although we need the moisture and it was actually very pretty snow).

I worked in my office today and finished up R's books and another tax return. I only have two left: my mom's (almost done) and ours (barely started).

I'm busy at work again and am still enjoying it. I did have a little head to head with my boss this week (do we see a pattern here?) but when he's wrong and I'm right, I feel it's my duty to bring it to his slow-to-comprehend attention. I thought it was pretty funny actually and my co-workers were high-fiving me for going a couple of rounds with him. Seriously, I don't know where I get off sometimes.

It started in our meeting on Wednesday of last week. He was talking about the 1098-T's that the university provides to the students as verification of tuition billed for the year (or incurred for the term depending on the university's reporting method of choice). He was explaining to the cashiers how to tell students what the numbers meant and how they should be interpreted. He was going at it all wrong because the students were asking what goes on the tax return and he was trying to tell us that the number on the 1098-T is what is claimed for an education credit. I said to him in the meeting, "The amount the students report on their return is what is actually paid in that calendar year, right?" and he said no, it is what is on the 1098-T. I was puzzled because that's not how I understood it when I used to do taxes or even as recently as the tax preparation for my kids. I kept quiet though and let him bluster.

Then I went to the IRS website and my suspicions were confirmed -- the reporting amount is what is paid or what loans are incurred for tuition and fees less any amount received for grants or scholarships. The 1098-T doesn't provide that information but does provide a student a starting place to determine what was paid. The IRS is almost always more concerned with cash in / cash out numbers rather than receivables or payables.

I decided to sit on that little bit of information because it wasn't going to do me much good or change anything if I just pointed out his error in thinking. The real concern (and joke) is that he prepares tax returns on the side and he doesn't understand this basic part of tax law. I figured that I'd wait until it came up again and then go for it.

Well, it came up again. He was talking to a student, pontificating on the use of the 1098-T for her tax return, and advising the cashier that was helping the student how the number is used. Of course he was wrong. He finished up and was ready to head back to his office when I called him over to my desk. I told him I had heard him discussing the 1098-T again and mentioned that when we were in the meeting the week before and I had suggested that what the IRS figured into the education credit was the amount the student paid, he had disagreed with me. He said yes, he disagreed because that isn't how it's done. I told him that is what the IRS wants and he should check the IRS website. He then said in a very know-it-all tone, "I do taxes for a living and I know that I'm right." Mary the hard-ass said, "I do taxes too and I know I'm right. Look it up on the website." He told me that he had downloaded the entire tax code in 1997 when it first came out and I told him that I had been doing taxes with the education credit since it first came out and this was how it was always done. Look it up.

He began to crack. I could see that a seed of doubt was planted and he then said they may have changed it since he first downloaded the information in 1997. I told him I didn't think so because my daughter started college in 1997 and it has always been the same way. Hard ass! I told him that the 1098-T was much like the 1099-Misc in that it just gives information to the IRS but the taxpayer is then required to come up with the hard and fast numbers that actually make up the claims for deductions that year. The individual income tax return is pretty much cash basis and I used the example of a doctor's visit done in December 2006 but not paid for until January 2007 would only be eligible to put on a Schedule A on the 2007 return. Cash in / cash out.

He said he was curious and would have to check it out sometime (which I knew meant as soon as he could get back to his desk). I said something to the effect that it wasn't our job to be giving tax advice to students anyway but we should only be advising them to visit with their tax professionals. I said it in such a way that it indicated he hadn't been doing anything wrong since he was following that common sense rule all along. He said, "Yeah, it really doesn't matter since we don't give that advice anyway," which wasn't true because I've heard him do it but whatever.

When he left my desk to go to his office, the staff came to congratulate me for standing up to him. It was all high-fives and way to go. A few minutes later (I knew it!) he was back at my desk, telling me that it turned out I was right after all. He figured things must have changed since he first downloaded the tax code in 1997 (note how he completely ignored what I said earlier).

I said, "Yeah, that's possible." As if.

Hard-ass Mary's lesson of the day: doing something for a living doesn't make you an expert. If you're going to pontificate, be correct.