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Posts Tagged ‘taxes’

Taxes Take a Holiday

January 4th, 2011 No comments

Tax HolidayHoliday! Celebrate!

Hey, maybe I could use Madonna lyrics for my blog post titles.  What do you think?  Material Girl, Gambler, Like a Prayer, Rescue Me, Causing a Commotion, Give It 2 Me, Don’t Cry For Me Argentina?  Hmm, maybe not.

But the holidays aren’t ending for us here in the US, because we now get to enjoy a Payroll Tax Holiday all year through.  That is what this temporary reduction in Social Security contributions is being called, at least. And I don’t know how much celebrating will be going on. Essentially, for the next year, you will pay 2% less of your gross towards Social Security, making it 4.2%, but your employer will still “match” the 6.2% that you normally pay.  Anything above $106,800 doesn’t pay on this anyways, so no gift to you people. The average American is going to see an extra $35-$50 on their paycheck, assuming you get paid bi-weekly.

This isn’t that big of a deal, because the Making Work Pay Tax Credit is going away. I don’t mind because it bit me in the butt by not having enough withheld again this year.

Hurry Up and Wait

Because Congress didn’t pass this legislation until the 11th hour, the IRS is giving companies some extra time to get it together, according to Don’t Mess With Taxes.

Companies will be able to delay adjusting the withholding down to 4.2% until January 31st, but they must make that amount up to you before March 31st.  Meaning your first paycheck might not change.

The One About Estate Taxes

December 15th, 2010 No comments

Lovey...

What is the Estate Tax?

The estate tax is tax that is levied on the transfer of the taxable portion of a deceased person’s estate.  It is levied on the estate as a whole, and is not dependent upon portions given to different individuals.

One of the items that is being negotiated for the current tax cut package is the estate tax.  It’s one of those hot button issues that everyone gets up in arms about, along with abortion and gay marriage.

The thing is, the estate tax doesn’t affect the majority of tax payers.  In 2000 only 2% of estates were levied estate taxes.  In 2010 there was no estate tax. If the proposed changes are approved, the estate tax won’t kick in until $5 million.  If nothing is done, estate taxes come back into play starting at $1 million and with a top rate of 55%.

Why are people against Estate Taxes?

It’s a double tax

This is true.  But then again, so is property tax and sales tax.  You pay for those with money that you earned and already paid income tax on.

It punishes success

Why should you work hard just to give your hard earned dollars to the government?

Why are people for Estate taxes?

It helps prevent a perpetuation of wealth

Wealth that is transferred from generation to generation with no tax just grows and grows, consolidating the wealth of the nation into a  smaller and smaller group.  We see this happening already.  90% of the wealth of the nation is held by 10% of the population.  The estate tax helps (in some small way) slow this down.

It prevents the lack of incentive to work

If someone just handed you a boatload of money, why would you bother to do anything? Why work or innovate?

Something that I ran into while reading about estate taxes are what is known as death elasticity.  This would be lengthening or shortening your life based upon the current estate tax laws.  Would you consider giving up treatments and dying during the current tax year if it would mean your survivors would keep more of the inheritance?  Pretty Morbid.

The median inheritance is $60,000 currently.  It isn’t going to be taxed.  So why do so many people get upset by it?  Do you?

Go Democrats

December 10th, 2010 No comments

Brass BallsAs much as I don’t want to have a smaller paycheck come January 1, I applaud the Democrats for giving the Republicans a taste of their own NO policy. You don’t say that you won’t approve extending unemployment benefits without having a way to pay for it, or give health care assistance to 9/11 survivors without having a way to pay for it, then all of a sudden say that you will, but only as long as people making over $250,000 a year get a tax break and estates worth less than $5 million don’t get taxed. Is there a word more strong than hypocritical? How can you run on a platform of reducing the deficit and reducing spending, and then make a deal that guarantees the deficit will grow and hurt Social Security? And kudos for telling the President the same thing.

I think the President would be better served if we had some sort of vision as to what his plan is.  His decisions so far seem to mostly be stop gap, fix the problem now.  If he could say “We propose doing this because, even though it is a step back today, it will put us here in 5 years,” people be more supportive today.

Do I want an extra $50 a paycheck this year?  That would be really nice.  Do I want my taxes to not go up next year?  That would be really nice.  Do I not want 2 million jobless, broke people with nothing left to lose surrounding me?  I would really, really like that!  But I would like it better if all these charades could end first.

The tax breaks were put in place to do two things: return the budget surplus to the people, and stimulate the economy.  The surplus has been returned many-fold.  There is no surplus. We have an extreme lack of surplus, an anti-surplus.  And as far as stimulating the economy, that policy doesn’t seem to have been very successful so far, now has it?

So there’s my rant.

It’s Like a Tax Refund, But In Reverse…

March 6th, 2010 No comments

Last year I resolved to quit letting the IRS hold onto my money and give it back at the end of the year, and instead to have access to that money right away.  So I adjusted my withholding so we should have gotten about $200 back after filing our return.  You can probably see where this is going.  Last weekend I sat down and started on our taxes using TurboTax Online, which works really well.  Our taxes are not to complicated, but needs more than a 1040A.  So, cutting to the chase, we owe $510.  I’m confident I can come up with that amount before April 15th without dipping into our current savings, but any sort of set back is a little disheartening.

Oh, and I adjusted my withholdings again this year.  We’ll see how good my figurin’ and cipherin’ is once again.

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Maybe Charitable Contributions Will Add Up

January 17th, 2009 No comments

I resolved this year to track our charitable contributions better, for taxes, and decided I would try using It’s Deductible to track these.  We took our first container of donations to Goodwill today, and I figured it would be about $20.  I had no idea how they would give us a receipt, and it turned out to be just a checklist, with one bag of clothes and two boxes of household items.  So I logged into It’s Deductible and entered the items that we took, and it ended up being $95.50.  Incredible.  Now I could kick myself for not bothering to get receipts all of last year.  Since we plan on doing massive decluttering this year, I’m excited to see how much it will add up.

What Form Do You Use To Declare the Pennies On Your Eyes?

January 14th, 2009 No comments

Last week I tried to estimate our tax return (boy, do I know how to have fun…) and it came out to where we would get back just enough in Federal to cover what we owed in State.  I was aiming to not owe or get anything back, but for some reason, I owe State income tax every year , except for last year.

But when I got my W-2, and our real mortgage statement, we’re going to end up getting almost $1000 back.  I’m pleased with this even though it’s not the result I was aiming for, and happy I don’t owe tax, like Quicken kept warning me all year long.  My wife seems to be all for getting that tax return money, sort of as a bonus, but I’d rather have the money throughout the year, as nice as that surprise income is.

Now I have to decide if I make any withholding adjustemts this year.  My wife now works part-time, and her gross is just under the threshhold for having Federal withholding taken out.  So we will likely end up owing this year unless I remove a deduction from my W-4 and things stay the same.  But who knows what is going to happen to “stimulate” us this year?  Do I go tinkering now and then again later?  I think I will leave it alone until we get our credit card debt gone, then revisit the issue.

Another thing I intend on doing this year is to keep better track of our charitable contributions.  I have our tithe, but other things like donations to Goodwill I never bothered to get receipts, and I now regret it, because those could have really added up last year.  With our goal to get rid of junk this year, it could be even more.  I’m going to try out It’s Deductible this year to see how easy it is to use, especially since it alleges to import directly into TurboTax.

How do you track your contributions?