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TaxSpeak refers to the language and meaning of words used
by employees of the taxing authorities which differ from PeopleSpeak (American
Standard Regular English in everyday usage). TaxSpeak is so similar and yet so different
from PeopleSpeak that it confuses not only those to whom English is a second
language, but also those to whom it is a first language and to those graduating
from Universities in the US where proficiency in English is a requirement. In
general, most people practice PeopleSpeak for everyday communication, using a
dictionary for clarification, whereas TaxSpeak clarification requires reading
though 1040 instructions, Pub 17, or calling the toll-free 1-800-829-1040 where
the helpful customer service agent will patiently search for and read out the
relevant sections from these publications.
Employees at the IRS are so immersed in tax forms, tax
form numbers, and tax definitions that they sometimes use the same in
communication with non-immersed volunteers and taxpayers. At the beginning of
each season, many volunteers need to refresh themselves about what 8879, 8453,
8821s and other form numbers refer to. VITA Volunteer Tax Preparers and Site
Coordinators get a quick course in it every year when getting certified. While
we look for natural language translators each season to translate to and from
English to non-English, we forget that one important requirement of a successful
volunteer is ability to translate between TaxSpeak and PeopleSpeak.
Here is a satirical, irreverent and tongue in cheek
attempt to demystify some of the lingo and point out differences. Please take it
in that spirit.
Relationship Manager: The IRS employee responsible for
communicating and working with Site Coordinators. The strange part is that they
do not have this in their title when they send out emails, but the term is used
in both oral and written communication as referring to some mystical mythical
third person, especially when blame needs to be assigned. We have never seen any
official document stating who is the Relationship Manager for Santa Clara County
Sites, but rest assured that there is one (or several) who is (or are) watching, watching, watching
that Santa Clara Sites tread the straight and narrow path without deviating, and
the title of the person may be something like SPEC Relationship Tax Consultant
or Tax Specialist. Furthermore, when there happen to be multiple
Relationship Managers in an office, they each may be responsible for different
Vita Sites, but who is responsible for which site appears to be very well hidden
secret information. And if the sites that they are responsible for
change, do not be at all surprised if you are not informed. One
characteristic of Relationship Managers appears to be to bombard site
coordinators with
information which has little or no relevance, and not getting out information
that is directly relevant and can help your operations. If the term Manager refers to someone with subordinates in
the pecking order of an organization and who at least one other person calls
"boss", then usuallythe Relationship Manager is not a Manager!
Territory Manager: The IRS employee in charge of a
territory. A territory is usually, but not always, a contiguous area of multiple
counties whose edges
seem to line up with parts of State boundaries; this manager appears to be a
true manager, and is "boss" of Relationship Managers.
Qualifying Child: In PeopleSpeak, usually a person below a
certain age, usually 21 and sometimes 18, and in the stage of life before
becoming an adult. When used with the term "my" in front as in "My Child" or "My
Children", it usually reflects a parental relationship, or one between an elder
- younger relationship. In TaxSpeak, it refers to someone not providing more
than half his or her own support for living expenses, and may refer to adult
siblings, nephews, and certain in-laws. Sometimes the Qualifying Child may
actually be an adult. A person can be the Qualifying Child of only one Taxpayer;
if the person could be the Qualifying Child of a non-taxpayer, then the Child is
not a Qualifying Child (poor non-qualifying child!!). Since a person is
permitted to be the Qualifying Child of only one TaxPayer, if multiple taxpayers
who could qualify this child can agree peacefully who is the beneficiary of the
Qualifying Child, can duke it out using strong language, boxing gloves, and
sticks and stones until there is only one taxpayer left standing, or let the IRS
sort it out using well defined tiebreaker rules. Needless to say, the subject
of all this attention, the Child, has little or no say in the matter.
Qualifying Relative: In PeopleSpeak, a person with a
familial relationship usually through blood or marriage. In TaxSpeak, sometimes,
but not always, Qualifying Relative may be an unrelated person in the same
household and but not a PeopleSpeak relative. Since this may cause confusion -
why not call the person a Qualifying Non-Relative? Is there such a thing as a
Non-Qualifying Relative? It would be fair to assume that just as there is a non
Qualifying Child, there should/could also be a non Qualifying Relative that is
not the Qualifying Relative of any taxpayer.
Qualifying Person: In TaxSpeak,
usually but not always, a Qualifying Child or a Qualifying
Relative even if the person is neither a child nor a relative. So what is the
opposite of a Qualifying person? It may be a non-Qualifying Person, a Qualifying
non-person, a non-Qualifying Non-person, or a combination of some or all of the
above three.
Single: In PeopleSpeak, a person without a
current spouse, significant other, or domestic partner. Somewhere in between being
Single and being Married is being Engaged. A TaxSpeak Single
is a person who is considered not married. So what does being not married
mean? Well if two married PeopleSpeak people live apart after June 30 of
the previous year, they can consider themselves unmarried in TaxSpeak, and the
IRS will agree with them - but only some of the time and only under some
circumstances. They could choose to be considered married in TaxSpeak and the IRS will also agree with them. But the courts, the
churches (if appropriate) and PeopleSpeak consider them Married. What if
they lived together on July 1 then did not see or meet each other the rest of
the year, and/or planned to get divorced the following year? In TaxSpeak, they
are married at the end of the year and for the whole year. What if they did not
live together under the same roof any time after June 30, but saw each other and
enjoyed the other joys and tribulations of Marriage? This situation does
not appear to be addressed in TaxSpeak. What if they are
legally divorced on or before December 31? In both TaxSpeak and PeopleSpeak they
are not married to each other on December 31, but in TaxSpeak they are
considered unmarried the whole year. But wait, what if they re-marry the
following year? Well, in that case, TaxSpeak says they were always Married and
never unmarried (unlike PeopleSpeak). What if they get married right after their
returns had been filed as unmarried? In that case, they probably would
need to file an amended return explaining that they were married TaxSpeak-wise
the whole time, but PeopleSpeak-wise they were not. On the other hand, if the TaxPayer is
married, and the spouse is not in the US and does not have a Tax id, then for
TaxSpeak only (not PeopleSpeak), the spouse does not exist, and TaxPayer could
file as Single. (Or the spouse could file with the TaxPayer, but getting a TaxID
would be difficult because the spouse cannot appear before the IRS, and sending
originals to the IRS has its own problems - remember the news story several
years ago about an office manager unable to keep up with the number of returns
and applications who solved the personnel problem by quietly shredding the
documents in the quiet of night so no-one would notice, except the spouse several months later when he/she realized he/she had no tax id, no
original legal documents, and the the IRS did not recognize the TaxPayer as
married (in TaxSpeak) because the spouse did not have a Taxpayer ID). By
the way, Engaged appears non-existent in the vocabulary of TaxSpeak.
So what if two unmarried people are living together (in
sin, as it were) as a couple without the recognition of church or state, and
enjoying (or suffering) the privileges, joys and tribulations of marriage? In
PeopleSpeak, they are considered unmarried - no ands, ifs or buts. On the other
hand, in TaxSpeak, they are considered unmarried except in a couple of
interesting situations....
If they are of the same gender, not close relatives, and are registered with the
Secretary of State as Registered Domestic Partners (RDP) in California, then in
California TaxSpeak for purposes of State Income Tax they fall into the category
of RDP, and the rules and tax tables and rates relating to MFJ or MFS apply to them..
.. except that for Federal TaxSpeak purposes they are considered unmarried. This
appears to save them from the "marriage penalty" of married couples for Federal
Tax purposes. But wait, doesn't the California return rely on the Federal
return? Yes, it does! So what federal return should be used? Not the return of
one or the other, but a hypothetical return or returns of a hypothetical married
couple filing MFJ or MFS which is hypothetically filed with the IRS and which
the IRS will hypothetically never see. In yet another wrinkle, if the two people
are of different gender, and one or both above the age of 62, and otherwise not
legally prohibited from marrying one another (such a prohibited situation might
be brother and sister, or parent and child), and they register with the
Secretary of State, they could be RDPs (why not just simplify things by getting
married in this case?) Point to note - dialects of TaxSpeak may at times be
inconsistent with one another; e.g. the Federal TaxSpeak is different from
California TaxSpeak.
So how does one become Head of Household? Not by being
King of the castle (PeopleSpeak) or being the only one in the house, but by
having at least one dependent. (Guess this means that a person may be Head of
Household only if there is one or more non-Head(s) of Household.)
Having a dependent and being considered unmarried is necessary but not
sufficient for becoming Head of Household, since some additional conditions
must be satisfied. The standard deduction is larger than for a single, allows the TaxPayer to take a personal exemption of the dependent, and the tax rate tables
are also different. If the person who could help qualify the taxpayer to be head
of household is an unrelated Qualifying Relative, the taxpayer must file as a
single, but can take the personal exemption for the unrelated dependent.
So let us consider the following situation.
Suppose John and Jane Doe are married but have lived apart after June 30.
Then they each need to file MFS or file as MFJ. Now suppose they had one
child Johnny who lives with John. The John and Jane could file MFJ, or
John could file as HoH, with Mary as MFS. No, Mary can't file as Single.
What if they had two children, and the second Jenny lives with Mary. In
this case, both John and Mary can file HoH for both Federal and State.
So what if a person is below the age of 24, goes to
school, lives at home with the parents, and makes more money than the parents
and but lives off the parents (e.g puts all the earnings into investments but
has the parents feed, clothe, and board him/her/it)? Well, in TaxSpeak, the
person is still a Qualifying Child of the parents.
How does this affect the Earned Income Credit (EIC)? Also
sometimes referred to as Earned Income Tax Credit (EITC), it is a credit a
taxpayer gets for earning some, but not too much income. It increases as earned
income increases...up to a point.. and then decreases as the earned income
increases, and finally goes to zero. The Credit is higher with 2 qualifying
children than with 1 qualifying child, which is higher than with no child.
The EIC does not recognize more than 2 qualifying children. The taxpayer could
choose to forgo the EIC. It could actually give some money
back to the taxpayer beyond what is withheld in taxes during the year. What if
the taxpayer also has unearned income? Then it depends on how much unearned
income there is. Beyond a certain amount of unearned income, the taxpayer does not qualify
regardless of how little, how much or how non-existent the earned income. What
are some examples of Unearned income? They include interest, dividends, capital
gains, Unemployment Compensation, Alimony payments received, and possibly
winning the lottery.
AMT: TaxSpeak term which stands for Alternative Minimum
Tax. It is computed in a way which makes it more meaningful and easier to think
of as Additional Minimum Tax. In PeopleSpeak, Alternative usually means "instead
of", but if you look at a tax return with AMT, you will note that Total Tax is
the regular Tax Plus the AMT, so in TaxSpeak, Alternative appears to mean "in
addition to" for purposes of AMT.
So who or what is a Qualifying Widow or Widower? In
TaxSpeak, a person whose spouse passed away in the previous tax year or the year
before that, but only if there is a dependent. Without a qualifying dependent,
the surviving spouse transforms from married into single across the end of the
year without ever become widowed or widowered. In one situation a taxpayer at
the VITA site argued long and hard that since the spouse passed away 6 years
ago, and she had been a qualifying Widow the first two years, since the marital
status had not changed, the status should still apply to her. It took a long
time and a lot of energy to explain that though she was a PeopleSpeak Widow,
she definitely was not a TaxSpeak widow.
Child Tax Credit: A credit towards the
income tax for a dependent Child who is 16 or
younger during the tax year. Well, in this case the Child is definitely not an
Adult, so TaxSpeak and PeopleSpeak agree,.... except that a
PeopleSpeak adult is 18 or 21 and above. Some taxpayers insist on their right to
the Child Tax Credit when their son or daughter turns 17 because in PeopleSpeak, he/she is not an adult, and therefore still a Child.
Finally, for Economic Stimulus Payment (aka
Tax Rebate) purposes, SSA (Social Security Administration) Benefits are
Qualifying Income whereas SSI (Supplemental Security Income) - which has the
word income prominently included in it - is not Qualifying Income! Go Figure! It
would appears that the President, Congress and Senate have succumbed to TaxSpeak!
Note: that was for 2008. In 2009 these non-qualifying income gives them
the right to receive payments.
Amused? Bewildered? Confused? Distraught? So is the
author! Call 1-800-829-1040 toll-free for help!
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