At their maturity, I had to go and physically close the CD at a local bank branch. Waiting in line, sitting around. Not allowed to close it out using the Interwebs (or even the telephone) technology. And of course I actually went in a few weeks after their maturity, because who has time? Counter-intuitively, closing a CD out a few weeks late results in a monetary penalty--in fact, to clear things up, this penalty is accounted for as an "early withdrawal fee."
Result
- Interest: +$32
- Fee: -$21
- Net gain: +$11
Except of course that interest is taxable. I know, the bank sent me an official-looking form and everything. And I thought it would be fun to deduct the fee. But there wasn't a space for it on the 1040EZ...was there?
Comparison
- 1040EZ: 13 lines. Taxes the interest, won't let you deduct the fee.
- 1040A: 48 lines. Same problem.
- 1040: 76 lines...and the fee is finally deductible.
Ah but that's not all. My state cares about this interest income as well. Does it have a space for it? Why yes it...doesn't. Turns out my bank is actually based in a nearby state, not this one. So I need an extra schedule to correctly claim my interest income. The schedule is a few dozen cryptic lines big. After some consternation, I determine which lines matter. There are 5. In them each, I fill the exact same number: $32. I believe I'm also directed to a separate worksheet to determine one of these lines. In this worksheet, I enter a bunch of numbers, calculate some adjusted gross income figure that's special for the state, do some other gyrations. Perform some min/max reasoning which I would have instantly deduced in one line with the right placement of carats and parens (but actually took quite a bit of decoding: "If line 6 less than line 5 is greater than line 2, but less than $1500, skip lines 7 and 8 and enter line 3 on line 9...").
So much for claiming my apparently out-of-state interest income. The deduction is less work: An additional schedule, and I only have to fill 3 of its 40 lines with the number: $21.
Result
- Net extra financial numbers (compared to 2007): 2
- Net financial gain from these numbers: $11
- Net extra work: over 60 extra federal lines to figure out to skip, two additional state schedules to enclose, scads of additional instructions to decode enough to determine that I can skip them. And the repeated application of the numbers $32 and $21.
- Net tax impact of my CD experiement: $0
NFK
I know that our mutual friend (pseudonymously known as "Martini" on my blog) considers it a gross moral lapse to pay a penny more tax than required, but I am baffled that you decided that your time was worth so little.
ReplyDeleteOh, apparently there's a captcha for commenting. Joy.
But I sign something that says "Under penalty of perjury"! How can I not make it accurate and complete to the best of my knowledge? If I attest to something that I don't have any intention of taking seriously, it better be a EULA.
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