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P1000824

Now that we have entered the month of April, we rapidly approach the deadline for filing our personal income taxes. I believe there is a direct correlation between how you file your taxes and the overall type of person you are. This is strictly a theory, but my life experience has taught me that people can be grouped into one of three general categories, and how you choose to file your taxes might be a sign as to your makeup.

25% of the general population are what I call the “naughty” people. These people will always understate their income, doing cash jobs or creating bogus expenses for the purpose of reducing their tax bill. They generally have little regard for the law, will take advantage of social programs, and will always try to manipulate any relationship to their benefit.

25% of the general population are what I call the “nice “people. These people report all their income and only claim legitimate expenses. They are god-fearing people, giving much of their time to assist others, work hard and carry their share of the load. They volunteer, hate a world of injustice and are admired by those whose lives they touch.

50% of the general population are what I call the “average” people. These people mean well, aspire to be nice people and try to do what’s right. They generally report all their income, but will not report an odd cash job or sale of an asset, because there is a small chance of getting caught. They are on their best behaviour when being watched, but might slip when temptation presents itself.

Let’s review how each group might respond in this scenario:

“You have booked a one week vacation in a sunny location. Just by coincidence you see that a motivational speaker is speaking in the same town during the week, so you book two tickets for you and your spouse”

The “naughty“ people will write off the entire cost of the vacation as a business trip, using the argument that the sole purpose of their visit was to attend the seminar. The “nice” people, even perhaps against the advice of their accountant, will not write off any of the expenses of the vacation, as the seminar was for purely personal entertainment. The “average “people will ask, what can I get away with, without running afoul of the tax department?  Can I write off the cost of the tickets, part of the airfare and accommodations, etc?

There you have it: One scenario and three possible outcomes depending on who you are. We welcome your comments.