‘Nothing is certain but death and taxes’, according to Benjamin Franklin, but in saying that he was perhaps too pessimistic, particularly for seniors. Although taxes can be a major burden for the young, seniors often benefit from the breaks that society wants to give them. However to so benefit it is important to complete a tax return. Even for that, help is often available to elders.
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Taxman puts mathematical quirk to work in spotting fudged returns was the way the Vancouver Sun more eloquently described it.
The Canada Revenue Agency is using a little-known statistical phenomenon named after the late American physicist, Frank Benford, to help identify which tax returns to examine more closely. Benford’s “law” holds that in a series of naturally occurring numbers, the number 1 will appear as the first digit more often than other numbers. Whether the figures are street addresses, expense reports or tax deductions, the “loneliest number” leads off about 30 per cent of the time.
This is how Frank Benford stumbled on his law.
Frank Benford was a research physicist at General Electric in the 1930s when he noticed something unusual about a book of logarithmic tables. The first pages showed more wear than the last pages, indicating that numbers beginning with the digit 1 were being looked up more often than numbers beginning with 2 through 9. Benford seized upon this idea and spent years collecting data to show that this pattern was widespread in nature. In 1938, Benford published his results, citing more than 20,000 values such as atomic weights, numbers in magazine articles, baseball statistics, and the areas of rivers.
In recent years the value of this and similar patterns as an auditing tool has been recognized by forensic accountants, in part because faster and cheaper computers allow first-digit analysis to be performed easily on large amounts of data. The CRA says it is now using the first-digit rule in certain circumstances to combat what it politely calls “non-compliance” in tax returns. The agency has shown particular interest in using it to analyze corporate tax returns.
Perhaps Benford’s law could become even more useful as more Canadians file their tax returns electronically. Make sure that your numbers do not look too funny if you are rushing to complete your tax return online before the deadline.
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Tax Return time is upon us and reminders on this are coming up almost every day. Although the specifics depend on which country you live in, there is often merit in looking over lists to see whether it sparks ideas on tax deductions that may be overlooked.
One US article that offered Tax Tips for Senior Citizens pointed out that if anyone needs a little extra tax know how, it’s retired senior citizens, more and more of whom are just trying to make ends meet. You should not forgo completing your tax returns since there may be benefits to which you are entitled.
Another US post today mentions 25 Easily Overlooked Tax Deductions. As is pointed out, if you are one of the millions of Americans who throws all their receipts, credit card and bank statements into a box, you are likely to overlook hundreds of dollars in tax deductions when preparing your tax filings. Here is their list of deductible expenses:
The Internal Revenue Service of the United States Department of the Treasury has a useful tutorial giving Tips for Seniors in Preparing their Taxes. As it explains:
Current research indicates that individuals are likely to make errors when preparing their tax returns. The tax tips included were developed to help you avoid some of the common errors dealing with the standard deduction for seniors, the taxable amount of Social Security benefits, and the Credit for the Elderly and Disabled. In addition, you’ll find links to helpful publications as well as information on how to obtain free tax assistance.
One Canadian website, TaxTips.ca, provides Canadian Tax and Financial Information with links to a large number of resources on Income tax information items such as:
The Canada Revenue Agency of the Canadian Government also has a website offering Tax and benefit information for seniors:
As a senior, you may be entitled to claim numerous credits and benefits on your income tax and benefit return. You have specific information needs when it comes to completing your return, and various resources are available to help you file your return accurately and on time. Here you will find much of the information you need to make filing easy, and to get all the tax savings and benefits to which you are entitled.
If you wish to complete your tax returns yourself or are looking for assistance in getting someone else to assist you, then the above links will give you the necessary information. Remember too that the government offers a free IRS efile service that will save you a few more dollars in addition to the deductions listed above. Since you may possibly be receiving a check for tax credits owed to you, it is better to complete your tax return earlier rather than later. We hope you appreciate this additional reminder.
If there are other sources of assistance for seniors on their tax returns that you have found useful, then why not add these in the comments. You may make someone extremely grateful.
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