Just did my taxes

[Scott P]

Just did the taxes. I didn't do them earlier because I suspected we would have to pay again. This time we owe $11,370 ($8471 Federal and $2899 State). No matter what we do, there is never enough taken out of the checks. Kim has two jobs and still claims zero exemptions, but they never take enough out of her check, even with zero exceptions. They don't take enough out of mine either, even though I reduced the reductions.

If you have more than one job it messes things up because it is assumed that one of your jobs is your only income.

We all have a civic duty to pay our taxes, but to vent I think it's BS that people can get more back then they pay. If you really can't afford to pay, I can see paying zero, but it doesn't seem right to get a bigger refund back than you pay (unless you are disabled or something), especially if you only have one job.:angryfire:

[jman]

Ouch. That's a big one! I feel ya...a little...

I too work two jobs, and I did both 1040s separately just to see what my tax refund would be. First job is about $1500 back, and second job is about $1200.And for the Utah refund I'm getting about $100 each from both jobs.

However, if you combine the two jobs for that year - instead of thinking $2700 dollars I would be receiving, I am now getting $30 back from the Feds and I owe the state about $130.

Go figure.

[ahansen60]

I totally agree you should not get more back than you pay. Total BS that some people get a free ride courtesy of everyone else. Oh and if claiming zero is not taking out enough you can setup your w2 to take out an additional amount.

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[BruteForce]

I totally agree you should not get more back than you pay. Total BS that some people get a free ride courtesy of everyone else. Oh and if claiming zero is not taking out enough you can setup your w2 to take out an additional amount.

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Yes, you can have additional tax deducted. I am in same boat as Scott. I will likely owe $12k or so again this year!

[Sun Dance]

It's all about government incentivizing certain societal behaviors. If your wife is a stay at home mom and you have lots of kids, you pay less and depending on how you set things up, might get a refund. I hate the idea or refunds though, because that means the government got to make interest off my money for a year, and I didn't.

[ratagonia]

Just did the taxes. I didn't do them earlier because I suspected we would have to pay again. This time we owe $11,370 ($8471 Federal and $2899 State). No matter what we do, there is never enough taken out of the checks. Kim has two jobs and still claims zero exemptions, but they never take enough out of her check, even with zero exceptions. They don't take enough out of mine either, even though I reduced the reductions.

If you have more than one job it messes things up because it is assumed that one of your jobs is your only income.

http://www.irs.gov/pub/irs-pdf/fw4.pdf

line 6 - have more taken out.




We all have a civic duty to pay our taxes, but to vent I think it's BS that people can get more back then they pay. If you really can't afford to pay, I can see paying zero, but it doesn't seem right to get a bigger refund back than you pay (unless you are disabled or something), especially if you only have one job.

What do you mean? Do you mean the Earned Income Tax Credit? https://en.wikipedia.org/wiki/Earned_income_tax_credit

Perhaps you are not aware that poor people pay a higher percentage of their income in taxes than rich people:

[Scott P]

http://www.irs.gov/pub/irs-pdf/fw4.pdf

line 6 - have more taken out.

Yes, I fixed it today. My employer and I checked my old W-4.

I had one exemption for A, two for D, and four for G. I reduced the exemptions for G. The instructions say to claim two exceptions per child for the income we expected to make. That was a mistake (even though the instructions say to do it) and it is now reduced. Further, my wife only worked one part time job at the time I filled out my W4. So, yes much of it was my fault for not changing the W4 earlier. Still, my wife claims zero exceptions and you would think they would take more out (they only took something like 2% out for Federal).


Do you mean the Earned Income Tax Credit?

Yes. I have family members that get quite a bit of money back from the EIC; much more than they pay in taxes.


Perhaps you are not aware that poor people pay a higher percentage of their income in taxes than rich people:

Well, yes. I was speaking of income tax. A teenager making $2000 a year and having a car might pay around $200 for his car registration (property tax), which alone is 10% of his/her income. It's really not a fair comparison though.

Anyway, my wife doesn't really make that much more than minimum wage. She makes $9.10 an hour at McDonalds and ~$12.00 an hour at the school. She's working two jobs to pay off some big medical bills. We still owe $33,250.91 on the medical bills (it used to be a lot more than that), so she's working two jobs until it's paid off (and yes, we did use them as a deduction in the years that they occurred).

Are we poor? No. In fact in many ways we help the poor. We have even opened up our house to those in need. We are capable of paying off our bills. We have lots of nice things. I don't go to concerts, or have TV, never go to sporting events, seldom to movies, etc, but we do lots of hikes and get to do fun stuff.

Still, I have some family members that pay no taxes and get big refunds. They take trips to Disneyland with their refund. They always get their medical bills waved. They had five children, most of them when they were unemployed. They live in place someone else pays for so have no real bills. I've seen a lot of abuses which I won't be specific with on a public forum.

Another family on my wife's side just filed for bankruptcy (one reason I was leery of buying a business). Still, just before they filed, they went on a trip to Disneyland. They go to concerts and movies. They have Netflix. They go out to eat. They use secret Santas to pay for their own kid's presents while insisting of being in charge of family Christmas drawings where people have to buy presents for each other (in the past they insisted that we buy gifts for everyone). Perhaps it might be getting too judgmental (on the other hand they are judgmental as hell against us), but they grew up wealthy and it doesn't seem that they know how to live frugally.

I actually like to help the poor, and am for helping them, but some things I see aren't right. Not all poor people are like that and many need the help. I hope that I can help them.

On the other hand, if really are in need, you shouldn't be taking trips to Disneyland, have Cable TV, go to concerts, have a ridiculous amount of pets, or have a bunch of kids while you are supposedly in need. You should be trying hard (and many poor people do) to find work (if able) and be doing all that you can to help yourself in whatever situation you are in. If you are trying hard, but just can't make ends meet, then you should be helped. In fact, I will even do all I can to help you. As said, we have opened up our own house on multiple occasions for people to live in and we've even offered to share vehicles with those in need. As long as you are trying, that's what matters. Some things I've seen in my own family though just don't seem right to me.

On the other hand, maybe I'm just grumpy right now for having to pay more than I expected.

[Sandstone Addiction]

Scott, sorry if this is a stupid question, but have you ever had a CPA or pro tax preparer look at your return?

I'm not at all saying that you've done a lousy job with your return, but sometimes it doesn't hurt to have a second opinion. I know that in the past, H and R Block has offered a free review of anyone's return and will not charge for the service unless they do find undiscovered money for you and you opt for them to amend your return. Of course, if you let them amend it, it isn't cheap. I let them look at ours once and ended taking the prior 2 years returns to them and we ended up with about $1200 that we had missed.

[2065toyota]

Perhaps you are not aware that poor people pay a higher percentage of their income in taxes than rich people:

You must obviously be referring to pre refund status. 93% of the taxes are paid by 5% of the population

[2065toyota]

From the IRS 2013 tax table

income of $20,000 taxes are $2366 = 11.83%
income of $99,950 taxes are $19,496 = 19.51%

I do believe that 19 is higher than 11

In 2010, according to one analysis, 60 percent of Americans were receiving more in government benefits than they paid in taxes. That's according to this analysis (http://taxfoundation.org:81/article/accounting-what-families-pay-taxes-and-what-they-receive-government-spending-0) from the conservative Tax Foundation.That year, the report notes, the bottom 10 percent of the population received about $10.44 in benefits for every $1 they paid in taxes. Those in the middle received, on average, $1.15 in benefits for every $1 they paid in taxes. And those in the top 10 percent received about 43 cents in benefits for every $1 they paid in taxes.

[Scott P]

Perhaps you are not aware that poor people pay a higher percentage of their income in taxes than rich people:

You must obviously be referring to pre refund status. 93% of the taxes are paid by 5% of the population

Both yours and Tom’s quoted statistics could be (and probably are close to) true. They are saying completely different things.

Tom’s statistic refers not to income taxes only, but to all taxes including property (car registrations is a good example), sales tax, employer taxes, social security tax, etc. vs total person income. A higher percentage of something small isn’t as big as a lower percentage of a larger amount. Tom's isn't a percentage of total amount of taxes paid by each income group, but as the amount of total taxes paid by each income group vs their income.

Using my example, a teenager working part time and making $2000 a year, but with a car registration of $200, pays 10% of his/her income in property tax alone. Someone making a low or no income still pays sales tax, etc. It doesn’t mean he/she pays more taxes than someone making more money though. Technically using the calculations in Tom's chart, someone with a zero income (food stamps and most welfare, for example, aren't considered to be income) who buys something and pays sales tax on it has an infinity percentage tax rate.

Your example refers to income taxes and is also probably true (or very close to true), but is comparing something different. It is the percentage of income taxes paid by the richest 5% of the population.

It’s easy to “prove” either side using statistics or percentages.


Scott, sorry if this is a stupid question, but have you ever had a CPA or pro tax preparer look at your return?

I have before, but I can do at least as good of a job at filing a return than they can do. It isn’t the return that’s the problem; it was how much was deducted out of our checks throughout the year. For Federal taxes, just over 4% was taken out of my check and around 2% was taken out of my wife’s check (which is ridiculous because she claims zero exemptions), which is way too low for our income brackets. Our real rate calculates out to be about 13.6%. I knew we were going to have to pay; I just didn’t realize it was that much. Much of it was my fault as well for not making an adjustment to the W-4 earlier.


From the IRS 2013 tax table

income of $20,000 taxes are $2366 = 11.83%
income of $99,950 taxes are $19,496 = 19.51%

I do believe that 19 is higher than 11

In 2010, according to one analysis, 60 percent of Americans were receiving more in government benefits than they paid in taxes. That's according to this analysis (http://taxfoundation.org:81/article/accounting-what-families-pay-taxes-and-what-they-receive-government-spending-0) from the conservative Tax Foundation.That year, the report notes, the bottom 10 percent of the population received about $10.44 in benefits for every $1 they paid in taxes. Those in the middle received, on average, $1.15 in benefits for every $1 they paid in taxes. And those in the top 10 percent received about 43 cents in benefits for every $1 they paid in taxes.

This all could be true as well and is probably the most meaningful statistic to look at.

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Anyway, to be clear, I do believe it is a civic duty to pay your taxes and I am in favor of helping the poor. I have seen (first hand) quite a few of abuses to the system though and don't like those. It is even possible that because I have two kids in the public school system that I may (so many taxes are hidden) even be receiving about the same as I put in.

Truth be told, I am not happy about paying for things like the Iraq War either, which was a disgusting waste of money and lives, even though it is calculated as a "benefit" in many statistical charts.

There are actually some things (highways, national parks, things that support physically healthy recreation, helping those who are really in need who don't abuse the system, education, humanitarian aid, etc.) that I wouldn't mind seeing a little more spent on. I'd rather see money spent on that then things like arming people hostile to the US, regime changes lacking forethought, excesses of programs that discourage self sufficiency, or to people who abuse the system.

So, yes, I'm going to pay all my taxes honestly. I may vent a little at times though.

[ratagonia]

Yes, I fixed it today. My employer and I checked my old W-4.

I had one exemption for A, two for D, and four for G. I reduced the exemptions for G. The instructions say to claim two exceptions per child for the income we expected to make. That was a mistake (even though the instructions say to do it) and it is now reduced. Further, my wife only worked one part time job at the time I filled out my W4. So, yes much of it was my fault for not changing the W4 earlier. Still, my wife claims zero exceptions and you would think they would take more out (they only took something like 2% out for Federal).

Yes. I have family members that get quite a bit of money back from the EIC; much more than they pay in taxes.

Well, yes. I was speaking of income tax. A teenager making $2000 a year and having a car might pay around $200 for his car registration (property tax), which alone is 10% of his/her income. It's really not a fair comparison though.

Anyway, my wife doesn't really make that much more than minimum wage. She makes $9.10 an hour at McDonalds and ~$12.00 an hour at the school. She's working two jobs to pay off some big medical bills. We still owe $33,250.91 on the medical bills (it used to be a lot more than that), so she's working two jobs until it's paid off (and yes, we did use them as a deduction in the years that they occurred).

Are we poor? No. In fact in many ways we help the poor. We have even opened up our house to those in need. We are capable of paying off our bills. We have lots of nice things. I don't go to concerts, or have TV, never go to sporting events, seldom to movies, etc, but we do lots of hikes and get to do fun stuff.

Still, I have some family members that pay no taxes and get big refunds. They take trips to Disneyland with their refund. They always get their medical bills waved. They had five children, most of them when they were unemployed. They live in place someone else pays for so have no real bills. I've seen a lot of abuses which I won't be specific with on a public forum.

Another family on my wife's side just filed for bankruptcy (one reason I was leery of buying a business). Still, just before they filed, they went on a trip to Disneyland. They go to concerts and movies. They have Netflix. They go out to eat. They use secret Santas to pay for their own kid's presents while insisting of being in charge of family Christmas drawings where people have to buy presents for each other (in the past they insisted that we buy gifts for everyone). Perhaps it might be getting too judgmental (on the other hand they are judgmental as hell against us), but they grew up wealthy and it doesn't seem that they know how to live frugally.

I actually like to help the poor, and am for helping them, but some things I see aren't right. Not all poor people are like that and many need the help. I hope that I can help them.

On the other hand, if really are in need, you shouldn't be taking trips to Disneyland, have Cable TV, go to concerts, have a ridiculous amount of pets, or have a bunch of kids while you are supposedly in need. You should be trying hard (and many poor people do) to find work (if able) and be doing all that you can to help yourself in whatever situation you are in. If you are trying hard, but just can't make ends meet, then you should be helped. In fact, I will even do all I can to help you. As said, we have opened up our own house on multiple occasions for people to live in and we've even offered to share vehicles with those in need. As long as you are trying, that's what matters. Some things I've seen in my own family though just don't seem right to me.

On the other hand, maybe I'm just grumpy right now for having to pay more than I expected.

I see we agree on many issues.

There will always be people who "work the system". I think we can agree that their actions are immoral, and we would not do the same.

It is possible to make a system that does not allow people to "work the system". But the consequences of setting up that kind of a system are worse than the problem. So there will always be some "leakage". The leakage at the bottom does not bother me too much, because in the grand scheme of things, it does not amount to much total leakage. The leakage that bothers me is the leakage at the top, which DOES amount to huge amounts of money, and is charity for people who very much do not need it. While we can perhaps agree that paying taxes sucks (which people have agreed since before the Roman Empire), in the USA the VERY rich seem to pay the least taxes, because they OWN the political system and get themselves exempted.

Such as the "Carried Interest" Loophole: http://www.businessinsider.com/hedge-fund-tax-loophole-is-outrageous-2012-1

That's about 1.3 billion dollars a year: http://www.nationalmemo.com/its-time-to-get-rid-of-americas-most-indefensible-tax-break/

And there's a ton more like it, often cloaked in "helping family farmers" and other sheep's clothing.

Tom

[ratagonia]

From the IRS 2013 tax table

income of $20,000 taxes are $2366 = 11.83%
income of $99,950 taxes are $19,496 = 19.51%

I do believe that 19 is higher than 11

In 2010, according to one analysis, 60 percent of Americans were receiving more in government benefits than they paid in taxes. That's according to this analysis (http://taxfoundation.org:81/article/accounting-what-families-pay-taxes-and-what-they-receive-government-spending-0) from the conservative Tax Foundation.That year, the report notes, the bottom 10 percent of the population received about $10.44 in benefits for every $1 they paid in taxes. Those in the middle received, on average, $1.15 in benefits for every $1 they paid in taxes. And those in the top 10 percent received about 43 cents in benefits for every $1 they paid in taxes.


Liars, Damn Liars, and Statisticians

There is no agreed-upon method for figuring out what benefits accrue to individuals from the government. Since there are about 10,000 different things that can be included, a careful analysis can come up with pretty much any result desired. The conservative Tax Foundation came up with exactly what you would expect: the poor are getting a free ride; Obama is paying off the Middle Class; and the Rich are paying for it all! I could search the Mother Jones archive to come up with the exact opposite conclusion... but I gotta make a living.

One of the reasons that Scott got gob-smacked is that the Federal Income Tax is highly-progressive. Partly to make up for the other taxes being highly-regressive. Using Kody's analysis above, if you had one part-time (I hope) job that pulled down 20k a year, you'd pay 2366 = 11.83%

If you had 5 part time jobs that paid 20k, each employer would take out 11.83% (depending on how the W-4s are filled out), and you'd be left with a whopping tax bill at the end of the year.

The tax charts are set up for the typical 1960's family: 2.3 kids, one mom, one dad; dad has a full time job. Once mom gets a part-time job (or other complications ensue), the automatic deduction system kinda breaks down.

As an employer, Kody, I'm sure you are aware that HALF the Social Security and Medicare tax is hidden from your average worker. They are stated as the "employer's share", but really they should be counted as paid by the employee. (see "Statisticians", above). They make up 35% of total fed revenue, somewhat less than the Federal Income Tax.

http://www.cbpp.org/cms/?fa=view&id=3822

Of course, I could go on for hours... if I did not have a living to make.

Tom

[hank moon]

in the USA the VERY rich seem to pay the least taxes, because they OWN the political system and get themselves exempted.

Yes...and isn't that the American Dream

[2065toyota]

Numbers can always be used to justify or prove anything anybody wants them to for sure. I remember writing a paper in a college stats class that proved cucumbers caused cancer just based on the numbers of people who had cancer compared to the average number of cucumbers eaten. My number were correct and prove somewhat a point, but at the same time are pretty pointless.

One thing for sure is that people what make more money should and do pay more taxes just by the shear fact of volume of money.

I also did a paper on an increased flat sales tax rate. The overall jist of it was that people who make more money also spend more money and would therefore contribute more tax money. There would be no more tax accountants (which would make my degree pointless even though I do support it), no more tax lawyers, no more IRS and no more loopholes to deal with. It could never happen because of the amount of money and influence the above mentioned group has on our economy

[stefan]

Numbers can always be used to justify or prove anything anybody wants them to for sure.

I know it's natural to think this but if you can use numbers to prove anything anyone wants then you're not really proving anything. typically one isn't proving something but instead stating evidence to support a claim. if there appears to be evidence to support two opposing claims, then to resolve it one may need more information, or the right way of looking at it, etc. but it's not uncommon for someone to think that one can prove anything you want, when in reality they don't understand enough of the issue to effectively support a claim one way or another.

[2065toyota]

"Prove" Definition 3 a : to establish the existence, truth, or validity of (as by evidence or logic)


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[stefan]

"Prove" Definition 3 a : to establish the existence, truth, or validity of (as by evidence or logic)




and ... ?

[2065toyota]

The same thing I thought when I read yours :)


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[stefan]

The same thing I thought when I read yours :)


ok. for example, I'm pretty sure your paper in college did not "prove" something about cucumbers and people as you seem to assert (perhaps it was tongue in cheek?) your use of the word "prove" is exaggerated here. unless you have a different interpretation of the definition you just posted above.

[stefan]

my point is simply the word "prove" has a pretty high bar, and often when people use the word "prove" they're misusing it in that they've fallen very short of meeting that bar.

[2065toyota]

Statically proofs
Mathematical proofs
Logical proofs
Legal proofs

Definition of proof: "The evidence or argument that compels the mind to accept an assertion as true".

It's all in context. I do see and understand your point though.


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