Technology and Your Tax Return

In 2017, Donald Trump proclaimed that, with the changes he proposed to the tax system, most Americans would be able to file their 1040’s on the back of a postcard.  I decided that I would, in fact, file my 2017 return on the back of a postcard. 

The key element of the simplification was the result of substantially raising the standard deduction to the point where most Americans would no longer have to itemize their deductions.  For nearly everyone, the standard deduction was a lot larger than their itemized deductions.  In fact, for the 2017 tax year, nearly 90% of all federal returns used the standard deduction. 

I was in the 90%.  This did greatly reduce my record keeping.  For example, I no longer needed to track all of the charitable contributions in a complex spreadsheet.  Some were straight forward. $200 to the Society for Preservation and Promotion of Barber Shop Quartet Music.  Others were more difficult to determine. What percentage of the 56 boxes of Girl Scout cookies can I deduct?  How much of my season tickets to the University of Michigan Fencing Team program is deductible?  What about my tickets to my grandson’s Rollins College Choir concert? 

Perhaps the best example of complexity for itemizing deductions is tracking the possibility of deducting medical expenses.  I could deduct all of my healthcare costs that exceeded 7.5% of my Adjusted Gross Income (AGI).  What in the world is Adjusted Gross Income?  It is a number that appears on line 11 of my federal tax return after I have entered all of my revenue information for the tax year.  So I can’t know what this number is until I am half finished with my tax return.  As a result, I need to track at least three different Medicare premiums for my wife, three different Medicare premiums for me, all of our doctor charges, all of our prescriptions, and all of our over the counter drug charges.  I collected this data for an entire year aggregating hundreds of transactions. Sometimes I blew away the 7.5% and got a nice deduction.  Other years it was a total waste of time.  Because of pure volume and because I never knew when I could have a very expensive medical event, I tracked all of this information as it occurred each month. I believe that all of the legislation for the Medical Deduction was designed to ensure that very few people would actually go to the trouble required to claim it.

The itemized deduction malaise ended in 2017.  All I needed to focus on was my revenue.  The lion’s share of this is reported to me on thirty different tax reports that I receive from my investment managers and Social Security. 

So I licensed Turbo Tax, input all of the tax documents, and answered all of the weird questions.  “Did you invest in any crypto currencies?”   “Are you hording precious metals?”  “Did you profit from any sports or concert ticket sales?”  “What is your shoe size?  What is your spouse’s shoe size?”  “Did you have passive income?  Usually this is generated while you are binge watching streaming services from your recliner.”  “Did you also have aggressive income?”

After feeding all of the required revenue information into Turbo Tax, the software pumped out a nice, 18 page tax form.  It turns out that I could not fit the filing on a single postcard.  So I reworked the margins with my word processing software and created 87 sequential postcards for the entire return.  Even so, I had to use oversized cards.  I shopped for peaceful nature scenes hoping that they would have a calming effect on the highly stressed IRS workers.  

I put all of the cards in a certified mail package and sent it to the IRS.  Mission accomplished, I completed my form on the back of postcards.

For many years, Turbo Tax Technology has been very impressive and very helpful.   However, in 2025 we can augment Turbo Tax with an Artificial Intelligence tool.  My preferred AI tool is CHUCK.  Acme Technologies developed a very user friendly product that can access all of the digital information in the world and replicate the rationalization processes of the human mind. It responds to most inquiries in a few seconds. They dubbed it “Channeling Hyper Utilization of Computer Knowledge or CHUCK”.

So I asked one simple question.  “CHUCK, do you have any recommendations for minimizing the amount of federal income tax I will have to pay for tax year 2024?”  In eight seconds, CHUCK analyzed all of the digital data in the world and returned the following response.

“Michael Jay, (somehow CHUCK knows my favorite nickname) I have a few ideas:”

You need to claim Harlin Sanders as a dependent.  Harlin is the fried chicken chef at the Jacksonville Beach Kentucky Fried Chicken outlet.  Based on the volumes of your purchases in 2024 you provided more than half of Mr. Sanders support for the entire year.

All of the money you spent on golf should be classified as a Casualty Loss.  All of your greens fees, the new set of TaylorMades you purchased, the thirty four dozen Titleist golf balls should all be included in the loss.  Your club membership and golf lessons should also be added to the amount of loss.  A bit aggressive, but you should also include in the tally, travel to and from all of your golf outings.  A quick review of emails circulated by your playing partners and your golf instructor all say that your golf game is an unmitigated disaster.  Hence the deductible Casualty Loss.

You need to deduct losses for a small startup business on Schedule C.  You sold eight World Class Barbecue Cookbooks in 2023 aggregating royalty income of $24 dollars.  You are in the Barbecue Business.  Research and development for this promising venture include developing two barbecue sauces and a raft of new recipes to accommodate high technology barbecuing tools (especially pellet smokers).  Valid expenses for the enterprise include the two Traeger Pellet smokers you purchased, the cost of all the barbecue feasts you prepared in 2024, all of the meals you consumed at barbecue restaurants, mileage to and from the restaurants, 37 bags of pellets and all of the cooking paraphernalia you acquired.  It is very common for brilliant startups to be in a loss position the first few years.  Notwithstanding, Michael Jay’s Barbecue Company is a legitimate business.

You nearly qualified for a child care credit as the result of listening to distraught Ohio State fans bemoan their loss to Michigan.  You did not qualify because child care was only required for the final month of 2024.  Almost certainly you will be entitled to the child care credit in 2025 after listening to the infantile fans complain for, at least, another eleven months.

For your convenience, I am attaching spreadsheets that fully document all of the information you need to support all three of the above claims. One thousand fifteen transactions have been documented including transportation charges at the allowed IRS mileage rate, where appropriate.

Hope you find this helpful, CHUCK.

Wow!  That was a lot of work in eight seconds.  It appears that Artificial Intelligence saved me a little more than $11,000 in federal taxes. 

Should we love or fear AI?  I am loving it today!  The best job of tax research I have ever experienced and it didn’t cost me $3,000 in accounting fees.  When the three of us celebrate the tax savings at the Chop House, my wife and I won’t even have to pay for CHUCK’s dinner. 

Isn’t technology wonderful!