The Next Big Income Tax Scam
By Anthony Rivieccio, MBA, PFA
Have you seen enough of the income tax commercials yet? Get your simple taxes done for free, they say! Absolute zero, they call another program. “Pay nothing, file for free!!!”
Really? Really?
What is really simple? That sounds like another come-on we heard twenty years ago: “Walk in to get your taxes done and walk out with your Income Tax Refund!”
Simple, in the income tax world? Yeah, right.
Yep, that’s a great sales pitch. Ninety-nine per cent of the people you ask will tell you their taxes are simple.
But in the compensation factor of income tax world, simple- is really Very complex!.
Most tax companies (including our firm), including H & R Block, have a scaled fees schedule — from very simple to very complex.
The four classifications generally are as follows: from easy or simple, hard and complex.
Level 1- SIMPLE
- For no itemized tax deductions, just to file Single only and the standard deduction.
Level 2- NOT THAT SIMPLE
- Taking your itemized deductions instead of the standard. Medical, real estate taxes, home mortgage, charity. job expenses , etc.You would now be including a “Schedule A” with accompanying worksheets that can now make your 2 page tax return, easily into 6 pages
Level 3- IT’S NOT GETTING SIMPLE AT ALL
- Rental and investment income deductibility. Now, you would be Including your rental and investment worksheets, now making that 6 page tax return, possibly 11
Level 4 – COMPLEX
- Self employed income and deductibility. In this area, again, additional worksheets could add up to an additional 4 pages of worksheets, now making it 15 pages, or larger.
Now, not only did I put them in the right order, via complexity, I also showed it to you , via the level of price, with the simple plan being $0 to Level 4 , which H & R Block is charging this year around $400- $500. You can’t blame them really, after the number crunching and time involved for the paperwork (figure 15 minutes , min, per page) a level 4 person would take , 15min x 14 pages, 210 minutes or 3 hours and 30 minutes to properly file. A Level 1, up to 30 minutes.
And remember, we have not counted the State returns yet, which, the basic one State alone is an additional 6 pages or 90 minutes.
This great marketing trick however — “ITS SIMPLE”– in our opinion, is no different than the Rapid Refund scandal some tax companies were involved in in the late 1990s.
First, wheel them in with a FREE false promise- then charge them appropriately when the FREE product does not apply to them.
In the late 90s, Rapid Refund, was introduced as a way to walk in and walk out, getting, supposedly, your tax money back. We found out through later investigations, that this was really, a Rapid Loan, charging up to 400% interest.
This new scheme, in our opinion, will do the same. Make you call or run in to the perceived FREE companies , to quickly find out, it does not apply to them and will now be part of an endless seasonal scheme of call back follow-ups, mail promotions and free appointments.
Taxes, as we show above, are cheap and simple, for up to 15-20% of Americans according to the IRS. For the 80% of us, don’t be mad, be happy. Now is the time to gather your receipts and talk to your tax person about both your lifestyle and tax deductible eligabiities. Now is the time to realize that for most Americans, if eligible, you can deduct , up to your tax bracket, for deductible items. For the majority of Americans, that will be 25% .Sadly, to do that, your tax return ( via worksheets) will get bigger. The bigger the book, the larger the price. But depending on the contents of the larger book, you could be reading a tax deductible best seller.
Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 20th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.
For financial assistance or a FREE COPY of a 2015 Income Tax Guide, Anthony can be reached at (347) 575 5045 or at advisorsgroup@ymail.com.
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