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Tax Season Blues


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84 replies to this topic

#1 of 85 OFFLINE   Eric_L

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Posted March 30 2007 - 09:58 AM

Feel free to share your experience being bent ov.. er I mean, taxed this year.

I had the pleasure of seeing my income tax bill increase 300% this year! The inexperienced may think "Hey - that just means your income went up 300% too! W00T!". I once thought that. I found out though that is not correct however. This year I broke through the ceiling income where I lose eligibility for all tax credits. My actual income increased about 40%. (Much of that due to my wife working p/t now that the kids are in school) Still not bad, but hardly worth a 300% increase in tax paid! And some people think that's still not enough!!! Get a rope! (before they get a barrel!)
Maybe if I were getting 300% more government service this year I wouldn't complain so much. But then, I really do appreciate the, um, er, um, hmmm. Just what DID I get for my income tax paid?? Nearly everything I use is funded by taxes other than income tax.

I hear that there are two other times when it really hurts - when you lose deduction eligibility and when your best deductions (children) move out. I look forward to neither. At least one won't happen for another eight years. The other in about two.

So tell me - how hard did Uncle Sam slam you this year?

#2 of 85 OFFLINE   Jay Taylor

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Posted March 30 2007 - 10:48 AM

Those of us who are self-employed don’t have an employer to share the Social Security/Medicare tax. So there goes 15.3% right off the top for Self-Employment tax (12.4% for Social Security, 2.9% for Medicare) before even beginning to figure Federal & State Income tax. Ouch!

I think I’ll start a new business bartering with the Amish. Posted Image
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#3 of 85 OFFLINE   Eric_L

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Posted March 31 2007 - 01:35 AM

I've been maxing out my social security tax for years. I found this website;
http://www.heritage.....alcWelcome.asp
which determines your effective rate of return on your maximum benefit. Mine is -1.32%. Yes - that is NEGATIVE 1.32% every year. I may have an employer who "pays" half of it for me - but - well - lets just say their generosity does not come without a cost. I'd much rather they paid it to me so I could invest in something with a positive return rather than have it confiscated by social security to invest at their "generous" rate.

Ironic - that letting the government invest for you results in a negative rate of return. Seems so apropriate...

#4 of 85 OFFLINE   Chris Lockwood

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Posted March 31 2007 - 03:51 AM

Eric, how can that be? I thought rich people like you didn't pay taxes and that only the poor and middle class did. At least that's what the media has been saying for years.


> I hear that there are two other times when it really hurts - when you lose deduction eligibility and when your best deductions (children) move out.

But you don't have the expenses of the kid that year- wouldn't that cost more than the amount of the deduction?

#5 of 85 OFFLINE   nolesrule

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Posted April 01 2007 - 04:40 AM

We're getting a nice refund. Thank heaven for good tax accountants.

I'm self employed, so I make quarterly estimated payments and it's hard to predict how much our tax bill will be each year since there are so many variables that go into calculating self-employment income.

#6 of 85 OFFLINE   Mort Corey

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Posted April 02 2007 - 07:45 AM

Well, you're not done yet....IIRC, "tax freedom" day doesn't come until April 19th this year (unless you're lucky enought to live in a high tax state and then it's early May).

When I add up all my "contributions", I figure it's pretty darn close to 60%. In my next life I'm coming back as a sharecropper so i can at least keep 50%.

Mort

#7 of 85 OFFLINE   bobbyg2

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Posted April 02 2007 - 07:52 AM

Don't you get tax relief if you send money to charity? Maybe we should all start giving money away! Posted Image
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#8 of 85 OFFLINE   Chu Gai

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Posted April 02 2007 - 08:37 AM

Yes, but it's not in proportion to what you give. Still, it's nice to give. If the wife put you in a new bracket, you could do what some people do. Get a divorce and live together.

#9 of 85 OFFLINE   Jason L.

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Posted April 02 2007 - 09:17 AM

For those of us who work overseas, we got hammered on changes to the Foreign Earned Income Exclusion.

#10 of 85 OFFLINE   Eric_L

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Posted April 02 2007 - 12:20 PM

Quote:
Originally Posted by Jason L.
For those of us who work overseas, we got hammered on changes to the Foreign Earned Income Exclusion.

Please tell me more about it. I'm only familiar with the IRS tax barrel.


Quote:
Originally Posted by Chris Lockwood
But you don't have the expenses of the kid that year- wouldn't that cost more than the amount of the deduction?

LOL. You are either very funny or don't know anyone who has children in college, or out of college, or getting married, or buying their first home, or having their first baby, etc. etc. ....

#11 of 85 OFFLINE   Jason L.

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Posted April 03 2007 - 08:15 AM

Quote:
Originally Posted by Eric_L
Please tell me more about it. I'm only familiar with the IRS tax barrel.
If you work outside the USA [like us contractors in Afghanistan, Iraq, etc.] and meet certain conditions - you can get a portion of your income excluded from taxes. The stipulation usually is that you have to be outside the USA for 330 days out of a 365 day period.

To get the full exclusion [currently about 82,000] you have to be outside the USA for 330 days during the calendar year. At this point, it is like you are not even a US citizen.

Quick Breakdown:

2005 Tax Law: Make 110k, exclude 82k, pay taxes on 28k - at the tax rate as if you made 28k

2006 Tax Law: Make 110k, exclude 82k, pay taxes on 28k - at the tax rate as if you made 110k

There is now a big difference in the tax rate, and subsequently, the taxes you have to pay.

#12 of 85 OFFLINE   Eric_L

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Posted April 03 2007 - 09:37 AM

DANG!! You got hozed pretty well too - and you used even fewer taxpayor services than I did!

Amazing that they still can't balance the budget...

#13 of 85 OFFLINE   Mort Corey

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Posted April 04 2007 - 09:15 AM

Quote:
Originally Posted by Eric_L

Amazing that they still can't balance the budget...

If they did that there wouldn't be enough left over to buy votes.

Mort

#14 of 85 OFFLINE   Dan Keefe

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Posted April 10 2007 - 09:22 PM

we got money from my father in laws estate. We were told that the money shouldn't be taxable...H & R Block just told us that we owe 17K...yes that is 17,000 dollars. Unfortunately, we put most if the money into a down payment for our house last June. So we don't qualify for a home equity yet...so I need to find 17 grand before the 19th...sweet

#15 of 85 OFFLINE   Gregg Loewen

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Posted April 11 2007 - 03:33 AM

dan, why the heck are you going to H and R block ??
find an accountant and get some real advise.

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#16 of 85 OFFLINE   Jay Taylor

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Posted April 11 2007 - 04:20 AM

Quote:
Originally Posted by Dan Keefe
H & R Block just told us that we owe 17K...

Was part of the inheritance an annuity? Inherited annuities really get hammered on taxes.
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#17 of 85 OFFLINE   Malcolm R

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Posted April 11 2007 - 05:21 AM

Quote:
Originally Posted by Gregg Loewen
dan, why the heck are you going to H and R block ??
find an accountant and get some real advise.
I agree. H&R Block is the last place I'd ever go for tax assistance.

This is the first time in three years I've got a refund, so it wasn't a bad year for me.
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#18 of 85 OFFLINE   Jay H

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Posted April 11 2007 - 07:15 AM

My first mortgage so I got $6k from federal back in March (I filed in early february once I got my W2 and I got about $700 back from my state so I guess I'm OK. Normally I get back a few hundred from federal but I guess paying an outrageous mortgage gets you some taxes back...

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#19 of 85 OFFLINE   Eric_L

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Posted April 11 2007 - 10:44 AM

Yeah Dan - I'd like to know more about your fathers estate also. Seems to me the estate should have paid the tax in his final return. What is it that hozed you?

My tax bill went from about $7000 in 05 to over $21,000 in 06 - my income only went from $110,000 to $150,000 - mostly due to my wife.

Here's the kicker - I still got a refund.

#20 of 85 OFFLINE   Dennis Nicholls

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Posted April 11 2007 - 12:10 PM

You guys are a bunch of crybabies....wait until you hear my story.

I retired in 2005 and had absolutely no income from "wages, salaries, tips, etc." for 2006. My 2006 1040 line 7 is ZERO, NADA, ZIP.

I paid federal taxes of over $31K for 2006...... Posted Image And this is purely a "single person" PENALTY. Had I been married, my federal tax for 2006 would have been ZERO. Posted Image
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