Doing peoples taxes for free, because why not?
Last week I did my first shift volunteering for VITA/TCE(Volunteer Income Tax Assistance/ Tax Counseling for the Elderly). I spent all day filing people’s taxes, and I didn’t get paid. As one would expect, it was freaking awesome. Figured I’d jot down a few quick notes about the experience.
As I’ve mentioned before, I was inspired to get involved with this due to JL Collins talking about it. Seemed like a cool volunteer opportunity. Here’s what the program does:
The program is put on by the IRS, who provides all of the training to the volunteers, and pays for the commercial-grade filing software. The IRS coordinates with local non-profits, who supply the physical location where people who come to get their shit filed for free. The local non-profit also handles the scheduling of both clients and volunteers. And while I’d love to say I was doing it for purely altruistic reasons, I figured I would benefit in two ways:
- I wanted to learn how to file my taxes again. I used to file my own, but once I started working 60-80 hours and descending into a constant state of sleep deprivation, I acknowledged my attention span and math abilities were hampered. So I paid some dude to help us file. Awesome guy, but I missed doing it myself. Having left my crazy job, I now have time to do it myself. Instead of reading random blog posts on how to optimize my DIY income tax filing, I thought training that came straight from the IRS would help me not screw something up.
- I’ve been interested in becoming a professional tax preparer. Jacob over at ERE mentioned how his wife really liked the job because it was an interesting mental puzzle, the people who tended towards the profession were cool, and it was a flexible seasonal job. Seemed like a cool gig I could do part time in retirement to take the pressure off my investments, and give me a nice social outlet.
And here’s how that has panned out so far:
- The first part of training was as boring as it was thorough. Despite the headache I learned a lot; it was cool to read the IRS describe how to actually implement things that are popular in the FI space, like tax loss harvesting and Roth conversion ladders. The certification test was rigorous, which included some complex filing scenarios where you prepare multiple fictional returns along with precise knowledge checks. After getting the test done I felt more than confident with filing my own return, let alone anyone else’s. While my eyes felt like they were about to bleed after reading over a hundred some pages of tax code, I really enjoyed working through the training scenarios as preparing the fictional returns for the test. I suppose I’m weird like that.
- If the rest of my volunteer days are anything like my first day, I’m really interested in trying out a gig as a professional tax preparer. It was lots of fun! I got lucky and got to help with an unusually complex problem involving figuring out the cost basis of some real estate outside of the exclusion window. While the rest of the returns I filed were pretty vanilla, it was fun working the process. The whole time there I kept thinking “people get paid for this??!!!” while also kicking myself when thinking “I was paying somebody to do this???This is freaking easy!”
The (not so evil) IRS
There’s this idea that the IRS is some faceless organization bent on getting every last cent from poor old grandma. Having been part of various other government entities that some see in the same light, I was suspicious of the negative connotation the agency had. This experience has confirmed that suspicion and nearly turned me into an IRS apologist. Here’s why:
- You know what the most repeated theme is in the IRS training? It’s “use this information to help clients pay as little taxes as possible“. Another variation is “try to get people the biggest refund you can“. This theme was repeated so much it became annoying. The test had questions that asked things like “of these three filing options, which one will help a person in this situation pay as little in taxes?”. This went on and on. After a while I got the distinct impression the IRS truly wants people to pay as little in taxes as possible.
- Almost half of the volunteers are retired IRS employees. They are normal people, who actually seem to care about others. And they are fucking passionate about the above point-making sure people pay the smallest amount in taxes that is legal.
Helping people?
As a cop, I got to help people. And that was nice. What wasn’t nice was the typical situations in which I helped people. Like usually stuff had gone horribly wrong, we showed up, and we were able to make stuff a little less worse. But shit was still fucked up. For example, maybe some lady got abducted by an ex, beaten, and taken hostage. Neighbors would call 911 about said dude yelling about how he’d kill his ex if she tried to leave. We’d show up, negotiate, possibly conduct a tactical resolution, and the woman would be freed. Yay! We saved someone. But then the lady was still beaten and traumatized for hours. So it’s not like it was all unicorns and rainbows.
Preparing taxes for people for free is a whole different story. So far everyone has been super appreciative. And as much as I’d like to say I’m not vain or dependent on my ego, that ain’t the case. It’s really nice to have people genuinely thank me after I prepare their return. Several of our clients have had stuff like “This is free? Some other guy was asking $200 for this! Thank you!”. Awesome. If I do end up becoming a paid professional tax preparer, I’ll continue volunteering with VITA. I’ll make sure to refer eligible people to the free tax prep option instead of taking their money.
Social
Ok, so you know how in the FIRE space everyone nerds out about various ways to optimize financial stuff? This is great and all, but I’m rarely in the physical presence of such people-usually I just read these people’s blog posts in the ether. Volunteering at VITA was the first time I was in the same room of a bunch of people who not only knew what a Roth conversion was, but were actually doing it and freaking excited about it. I’ll reiterate: freaking awesome!
Week one is in the books with the VITA gig. And it’s been great. If you have a chance to do it, and are weirdly attracted to optimizing financial stuff like me, I’d highly recommend giving it a try. If you do, I hope you have as much fun as I have. Let me know in the comments below if you’ve had any exciting VITA experiences.
I’ve done 6 seasons of VITA and it’s easily been the best work of my life. It’s so interesting that your clients were doing Roth conversions — the sites I worked at were all very low income people, so many single mothers, people with section 8 housing, people that generally did not have enough income to be able to save anything. I’d sit across the table from someone and wonder how on earth they were making it in my expensive city on that income with that number of kids.
I found the parts of the tax code applicable to my clients to be very different than what applied to my own taxes. I had to learn all about head of household filing status, the rules for determining whether someone is a dependent of someone else, and how other complex household situations interacted with a tax return. Overall one of my lessons learned is that the lowest income Americans often have very complicated tax returns — for context, I am a CFA charterholder, and have an MBA in finance and accounting, so hopefully that means something when I say I found these tax returns challenging to correctly prepare. It makes me angry that our tax system, which everyone has to interact with, is often too complicated for an ordinary person to navigate with a reasonable amount of effort. I think it should be a system For The People. Maybe we need to give that some weight and worry a bit less about means-testing the s**t out of everything.
Yeah, I guess my communication skills suck as usual; the people that were doing roth conversions were the other volunteers. They were all amazing, and super knowledgeable. A bunch were retired IRS, and echoed your thoughts on the the giant complex mess that is our system. After just one season, I can’t agree more.
You’re right about it being a completely different type of complexity for low income people. That was most of our clients as well. Multiple 1099’s and one part time W-2s was the norm, but still not making over 20-30K. I wish I could have a few hours (maybe days) with each person, and try to help them with their finances.
I ran into one thing that gave me pause; we had more than a few people come in who had been recently homeless. New management took over their apartment complex, turned off the power and water, and then didn’t respond to complaints. With no choice, these people had to live in their cars or family, and when they tried to come back the manager told them they had been evicted. This story kept coming from multiple people who were seemingly unrelated except for the complex where they had lived. The more I heard, it sounded like whoever bought the complex was doing a value add, and the complex has since been remodeled with increased rents. From what these people said, it sounded like new management was barely within the law, but totally predatory.
Freaked me out and has kept me from pursuing such investments. I suppose it’s hypocritical; there’s probably plenty of companies I own within VTSAX that are doing worse. Not sure what to do but try to do the right thing when I can.
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Thanks for writing about VITA and referencing this post in your recent post. Training is coming up in January and I’m going to see if my family wants to do this together.
You’re welcome! That seems like a cool idea; will have to keep that in mind when the kiddos get older.