It is April, the time of helpful tax hints that permeate newspapers, magazines, radio and television. These hints are to guide you through the Tax Wonderland of carryback and carryover, sum-of-the-years'-digits and double declining balances, LIFO and FIFO, and ESOP's foibles.
In view of this, I humbly add my own eight tax pointers with the caveat that almost no one will find them helpful.
1) If you won a Nobel Prize in 1979, the prize money is nontaxable. But don't try to stretch this exemption to cover other, lesser prizes. In 1962, a taxpayer who won a prize fish in a contest sponsored by a brewery claimed that his $25,000 prize was exempt from taxation. sNot so, said the Court of Appeals, finding nothing "meritorious in a civic sense" in catching a fish. It was, with a twist, the story of the one that got away.
2) If you've lost money repeatedly in gambling sessions with the boys on Saturday nights, don't worry. You can deduct these losses -- but only to the extent of your winnings. Any excess winnings should, of course be declared as income.
3) that delicious ham or turkey that your employer gave you last Christmas is -- lucky you! -- nontaxable. But if your employer gave you cash instead of edibles, it's taxable.
4) If your house burns down, destroying your records of deductions, the deductions may be disallowed if you're audited. But look on the bright side. You can always write off the house as a casualty loss and deduct it on next year's return.
5) Ordinarily, gains are welcomed and recognition is good. Not so at tax time. Avoid recognition of gains. Seek, instead, appreciation. It may be less concrete, but it's not taxable.
6) This may come as a surprise, but according to Paul N. Strassels and Robert Wood, authors of "All You Need to Know About the IRS," the IRS sees little humor in literary license on your tax return. Therefore, taxpayers who scrawl across their returns -- "The Sixteenth Amendment is not constitutional," or "U.S. dollars aren't worth anything. Therefore, I didn't earn anything and have no taxes to declare" -- are not treated kindly by the IRS. In fact, in the words of the authors, the IRS "goes after those people with a vengeance."
At the very least, you could come up with a new excuse. Perhaps the IRS apreciates originality.
7) Cheer up. There's only one chance in 2,085 that you'll be audited. And even then, according to Strassels and Wood, the odds are better that "you'll be hit by a bus, and about as comforting if it happens."
8) Finally, if you can feel yourself age as you fill out your tax return, do remember that the best is yet to come: After you're 65, you'll be allowed another exemption on your return. It's the IRS' way of acknowledging that taxpayers, like their tangible assets, depreciate over the years.