Interview with John Wilhelm, Your Accountant
Community Building in the Washington, DC area!!
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<SFP Editor: What do you find exciting about taxes?
John Wilhelm:
I don’t even know where to begin! When most people think of taxes, they think of the federal and state taxes withheld from their paychecks. They might even think about the social security and Medicare taxes also withheld from their paychecks. These taxes are all examples of personal income taxes, but personal income taxes are only the tip of the iceberg! In addition to personal income taxes, there are real estate taxes, car taxes, sales taxes, luxury taxes, gift taxes, estate taxes, corporate income taxes, value added taxes, commuter taxes, gasoline taxes, and many others.
You may think I’m demented to find all of these taxes exciting. The truth is, I don’t find these taxes exciting in and of themselves. The exciting thing is studying why each tax is levied. Often taxes are used for political posturing. Watching that posturing evolve is extremely interesting.
Increasingly, taxes are playing a major role in world politics. Excise taxes are often used to give domestic firms advantages over foreign firms. Right now the EU and U.S. are at war over the foreign tax credit available to U.S. firms. The EU feels the credit gives U.S. firms an unfair advantage. It’s terribly interesting to see how the World Trade Organization deals with these issues – especially as we become more of a global economy.
I think it’s also interesting to compare how different societies tax their people. A society’s tax system tells you a lot about that society’s values and resources. For example, who pays the majority of the tax burden versus who reaps the majority of the benefits? When you compare the U.S. tax system versus that of Germany, Russia, or Japan, you see some very fundamental differences.
SFP Editor: What is the best advice you can give regarding preparing taxes for the Spring?
John Wilhelm:
Find a good accountant. I’m being very serious. A few years ago there was a huge push for tax simplification. It was quite possibly the most ineffective cause in the history of man!
The tax bill last year brought with it a great deal of complexity and opportunity, so it’s an excellent time to hire an accountant to prepare your tax return. I’ll give you two changes that may affect some of the visitors to your website.
The first example applies to teachers. This year teachers can claim a deduction (technically this particular type of deduction is known as an adjustment) for school supplies they paid for with their own money and were not reimbursed. The teachers don’t have to itemize to take advantage of this tax break. The second example applies to individuals who pay interest on student loans. In the past, you could only take a deduction for interest paid during the first 60 months after graduation. Though the income limitations still apply to student loan interest, the 60-month rule is now gone. This means many more people will be able to deduct interest on their student loans.
As a general rule, I suggest people take their tax return to a tax professional at least once every three years to see if they’ve made any mistakes that can, or should be, corrected. A good accountant will explain what deductions apply to you and what records you need to keep to substantiate those deductions. A good accountant will also alert you if you’re heading into potential tax traps like the alternative minimum tax and the phase-out limits on your itemized deductions or personal exemptions.
SFP Editor: What do you think of filing taxes online?
John Wilhelm:
There’s no use in fighting this trend. The IRS, for many good reasons, is encouraging online filing. Online filing cuts down on IRS errors, it’s cheaper for the government, and it’s much more efficient overall. Some CPAs and other tax professionals are disappointed in the way the IRS is offing free online filing this year. The proposed system favors certain software companies and hurts many CPAs and other tax professionals who are sole practitioners. This is a very sensitive area for many accountants.
SFP Editor: What are tax pitfalls one should look out for?
John Wilhelm:
I’d say to avoid RALs (refund anticipation loans). If you make a Roth contribution or conversion, make sure you qualify. Correcting a mistake on a Roth item can be very time-consuming! Finally, make sure you are keeping adequate tax records.
SFP Editor: Can you explain the tax benefits of property ownership?
John Wilhelm:
In general you get a deduction for real estate taxes paid and home mortgage interest. Real Estate professional get additional benefits and should consult a professional.
SFP Editor: What do accountants do for fun?
John Wilhelm:
We count beans. How did you think we got the nickname? I enjoy playing golf, tennis, and softball. I also like to take hikes and go whitewater rafting. When it’s not nice outside, I lift weights, go to a museum, or catch a movie. I also like to socialize with my friends!
SFP Editor: There is a sterotype that accountants are boring. How do you challenge that myth?
John Wilhelm:
I can’t challenge that myth. The sad truth is that many accountants are boring. What can you say for anyone who counts beans for fun? The good news is that some accountants have a great sense of humor – a few are even funny! Did you know Bob Newhart was once an accountant?
SFP Editor: What do you find the most exciting about Washington, DC?
John Wilhelm:
I absolutely love Washington D.C. It’s difficult to choose one thing as the most exciting. We have the Smithsonian. We have the Kennedy Center. We have Georgetown, Adams Morgan, and DuPont Circle. We have great restaurants. The list goes on and on.
If I were pressed to choose one thing, I’d say the people. I’m not talking about the famous political, entertainment, and sports figures you can see in D.C. I’m talking about D.C.’s ordinary denizens.
There are so many intelligent and interesting people in this city, and there’s so much diversity! I’ve lived in the D.C. area since August of 1990. Since then I’ve met and developed great friendships with people from all over the world. Some of these individuals had to leave all of their possessions behind when they came to America – whether it was to escape political persecution or war. They literally came to America with nothing more than the clothes on their backs and a few dollars in their pockets.
When you hear their stories, you begin to realize America is truly the land of opportunity. It’s nice to be in the city that serves as this America’s capital.
SFP Editor: How would you like to see your tax dollars used to improve the city?
John Wilhelm:
Wow, this is another tough question. I’ve grown attached to the potholes in the road, exploding manhole covers, and water leakages. I’d hate to see any of those great things vanish! Perhaps we should add a few more traffic circles and double the number of steel plates on M Street.