And I thought the presidential campaign tax talk was heating
up when I wrote last week’s blog …
The temperature soared over the weekend, though, when the
New York Times reported that Republican nominee Donald Trump took a $916
million loss on his 1995 tax returns. I deal with taxes all the time, and that
number makes even me shake my head. I
shook my head even more, however, when the Trump campaign issued a statement
saying that, “Mr. Trump knows the tax code far better than anyone who has ever
run for President and he is the only one that knows how to fix it.”
My shock was not because I think someone should not be
allowed to leverage the tax system to the greatest advantage allowed by law
(heck, one of the best parts of my job is helping clients find money in that
system that they did not know they were entitled to), but I think it’s naïve to
imagine that Trump himself and his personal knowledge of the tax code was the
driving force that helped him arrive at those numbers.
I don’t know how large an army of tax advisors/accountants
were needed to fill out such a tax return – and this was a 1995 return, when
technology was not as robust and helpful as it is now – but it was sizeable.
This isn’t a political statement, just a statement from someone who thinks tax
preparers do good work that should be noted.
Even if, yes, it is also a self-serving statement from a tax
preparer.
In the vice presidential debate Tuesday night, it took only
about five minutes for taxes to be first mentioned. Then it was only about 10
minutes more before taxes heated up again, including some pointed discussion
about Trump’s paying of taxes, or lack thereof.
Leaving the political issues aside from these recent events,
however, can help illumine a lesson for everyone. Even if the numbers on
Trump’s tax return induce head shaking, they appear legitimate as the campaign
has not denied the report. And even if the amount is mind-bending, there do not
appear to be reasons to believe it was arrived at through underhanded or
illegal means.
So although I will fight back and question how much Trump’s
personal knowledge of the tax code led to this outcome, knowledge of the tax
code still served him well. This is not a number that someone(s) without an
extreme level of tax knowledge could have arrived at, after all. Therefore, it
is also not a number that one would not want to deal with alone, or with
limited knowledge of the rules (or with over-the-counter tax software). Getting
help from someone who has expertise in the area is necessary to successfully
deal with such a situation.
But then is there any number that should make one
comfortable in a go-it-alone situations? Could professional assistance not help
everyone and also offer an increased level of confidence and support? This
story shows how complicated tax pictures can be, but it also highlights how
understanding all the workings of that situation could benefit someone. A
qualified and knowledgeable tax preparer can be worth more than their fee in
the money they can save you.
Even if, yes, that is a self-serving statement from a tax
preparer.
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