Worst Tax Season Ever!

Photograph by Camerique Close

Photograph by Camerique


Photograph by Camerique

March 22, 2013 - If you're feeling particularly stressed out this tax season, you're not alone. By waiting until early 2013 to settle many 2012 tax rules, Washington delayed the start of tax season. Taxpayers had to wait longer for correct paperwork, the IRS delayed processing returns and programmers scrambled to update tax software. "It's been chaotic, totally chaotic," accountant Marilyn Niwao says. Blake Christian, a partner at Holthouse, Carlin & Van Trigt, vents: "Legislators have no clue, and they really don't care" about the problems they've caused.

Meanwhile, the tax code has gotten more confusing as rules have tightened and the IRS is auditing more taxpayers. Your likelihood of being audited rose 11 percent from 2008 to 2011. If you made more than $10 million, your chances of an audit tripled.

The tax code is torturous even for experienced tax preparers, who find answering many questions off the top of their heads impossible now. A 28-year-old stepson living in your basement might qualify as your dependent for tax purposes, but your live-in mother-in-law might not, accountant Lori Kelley points out. Then there are truly tricky concepts like the alternative minimum tax, or AMT. "It is virtually impossible for a layperson to understand, and yet it's impacting a larger segment of the population every year," says tax preparer Shannon Daly. Her advice to bewildered clients hit by the AMT: "Just close your eyes and pay it."

Software can help handle some of this, though computers can introduce new mistakes that are nearly impossible to spot. "Things have gotten so complex that the software doesn't handle it all correctly," says CPA and wealth adviser Diahann Lassus.

In the end, most of this burden falls on the professional preparers who file 59 percent of individuals' tax returns. Get advice on how to pick a tax preparer here, and read more on how they handle the stress of jobs that get less pleasant -- and more necessary -- with every change to the tax code.

This essay originally appeared in Bloomberg.com's weekly personal finance newsletter, Wealth Watch. Sign up here.

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