Income Taxes

[Gavin Allan]

TurboTax helped me figure my income taxes last night. Luckily, I am getting $800 back from the feds. :banana:



Unluckily, I owe the state $875 plus a fine for inadequet withholding. :cry:



Wife's career changes, retirement checks got my withholding all out of whack this year. :smack:

 

[Richard L]

Gavin,

Every time an individual has multiple sources of income, they generally wind up owing more taxes, either to the Feds or the State....:angry: And it is also very hard to predict or how much you will owe when tax time rolls around.



As a military retiree, I have been dealing with this issue for nearly 30 years. The military looks at your monthly retirement as your sole source of income and takes out very little federal taxes, and probably no state taxes? ( I live in Texas and we don't have a State Income Tax). When I was working I had to ask my employer to withhold an additional $200 a month in Fed Taxes so I would not get stuck owing money to the IRS at the end of the year.



I remember back in the late 1980's or early 1990's when George H Bush reduced the amount of withhold taxes so that you would get a little more take-home pay, but did not actually lower the taxes. That really hit me in the wallet when I got ready to do my taxes. I think that happened just before George's famous quote "Read my lips, No New Taxes"...and then he went ahead and raised taxes anyway....:angry: I still think that's what cost him the election to Bill Clinton.



....Rich

 

[Mark K 2]

I've e-filed Federal and state tax returns as long as e-file's been in existance. Never a problem until this year.



The state's rejected my TurboTax-prepared return three times so far, each time for a different reason. Most recently, they say Schedule H (homestead credit form) cannot be e-filed before February 8th. OK. I'll wait. But if it's rejected one more time, I'll have to file by mail. And we all know that sucks majorly.

 

[Richard McAlister]

Feds won't accept mine until early March. Rejected the home energy credit form.

 

[Thomas Rogers]

eFiled our fed return then realized 30m later I made a mistake in entering college tuition deductions. Now I have to file by hand an amended return (1040X) once I get the original return's refund. But it will be worth it. The mistake nets us another $2,500 in refund. Anyway, would have been nice if I could have backed out the eFile before it was processed, or at least eFile the amended return. Neither is an option. Oh well.

 

[Thomas Rogers]

Dupe removed

 

[Richard L]

TJR

I agree. It would be nice if you could go online and Cancel your eFiled return if its still in the que and they have not begun to process it yet. Odd that they don't allow that since they are not processing eFiled returns yet.



Last year the IRS did not start processing eFiled returns until after February 14th, and this year they said it will even be later? In fact, they claim they will not be processing any returns until later this month?? I think I heard that the IRS got some new computers/software updates and they are still working out some bugs...now that really sounds scary



...Rich

 

[Gavin Allan]

Just give the IRS your debit card numbers and let them take care of you automatically... :fire:

 

[Mark K 2]

Just give the IRS your debit card numbers and let them take care of you automatically

That all but happened to mom and dad. Mom filed railroad retirement stuff incorrectly and they audited everything they could and found other errors. They strongarmed their way into mom and dad's checking account and started withdrawing penalties. I kick myself now because I KNEW I should have done their taxes for them, but mom insisted.



They both died within the past 18 months and the IRS closed their file. Believe it or not, the IRS was the easiest group to deal with once they died.

 

[Richard L]

UPDATE:

I just eFiled my 2012 return via TurboTax only minutes ago and I was immediately informed that my return would begin processing for Acceptance by the IRS on Saturday, February 9, 2013.



That's much faster than had been reported earlier by the media?



Once my return is accepted I will be given an estimated refund date. Last year this worked to perfection and my refund was in my account on the date the IRS said it should be there....That date was only about one week after my return was accepted by the IRS.



WOW...That was fast !!! :banana::banana:

I just got an email from TurboTax on the status of my tax return that I eFiled just a few minutes ago...My tax return was already accepted by the IRS!! :banana: I checked on my return and I am scheduled to receive my refund by February 28th! :supercool:



...Rich

 

[Mark Stadnicki]

E-filed with turbo tax yesterday, state excepted this morning. I'm retired military also and this year will be my biggest return ever (F-$5,800 S-$1,600). My rental property lost value, volunteer FD credit and I have the max taxes taken out of me just in case. I know, I should adjust the taxes but I'd rather be safe then sorry. Who knows what this goobement might do to us...

 

[H D]

When you overpay taxes (basically anytime you get a return), it means you loaned that amount of money to the government at zero interest and you actually lose money as a result of inflation. Even if you have to hire a tax pro, you would do better to pay the correct amount of taxes, get no return at all, owe nothing to the government, and be able to invest say, $7,400 into something with even minimal returns and you come out way ahead over an interest free loan to the IRS.



Some people, or a majority probably, like the forced savings, though, even if it has negative growth, so that they have a lump sum of income at the beginning of the year.



I have neither enough money to invest or loan out as a loss, so I pay the small fee for a tax attorney. We haven't filed yet but I believe we will be getting a small return because it's hard to estimate my wife's income as she receives commission and bonuses every month as well as a yearly bonus.



Not knowing what the federal government is going to do with finances is all the more reason to ensure you haven't loaned out free money to the government, IMO. Give to Caesar what Caesar is due, and nothing more.

 

[Richard L]

Hugh,

I disagree...to some degree. I know that is what all the tax experts say, but I think it depends upon each individuals tax situation. I personally think it's better to get a very small return than end up having to own anything. I say that because you never know where Obama will strike and try to squeeze out more taxes, and the tax laws continue to change every year so what you paid or were refunded last year is subject to change the next year even if your income did not change. This year my income dropped slightly, even though I got Cost of Living increases on all my pensions? The issue was that Medicare-B costs went up and now Tricare Pharmacy charges have also gone up. Also, the bank interest rates are so small that you are not getting enough interest by keeping the money to make much of a difference, unless you are in the top 1% and many banks continue to lower their interest rates or the maximum balance they will pay the higher interest rate on. This year I am getting a $1300 refund, and last year it was $1500+.



I even used a tax accountant years ago and he could not do any better to predict what taxes I would owe at the end of the year...his recommendation was to trim my expected refund to as little as possible but leave just a little for a cushion, just in case, so I would not get hit with owing taxes or additional penalties.



Currently I pay the minimum legal amount of withholding taxes on my Military retirement pension and cannot legally justify paying less withholding taxes. I am retired military, so I get a taxable Military pension. I am also have a 70% Combat Related Disabled Vet which is a tax-free pension, and I also collect Social Security, which a portion is taxable because military retirement pension exceeds the limit of other income I can receive..



Most of my Tax deductions comes from Property Taxes and Mortgage interest....This year I also had $5600+ in landscape work done to my new home and that entitled be to an additional $460+ additional deduction in State Sales Taxes above the normally allowed $760.





That's why I said that it is difficult to predict. If you underpay your taxes buy more than $500 the IRS wants you to pay a pentalty in addition to the extra taxes owed. They even wanted me to pay quarterly estimated taxes one year because I had an unusually large income that year from cashing in a $63,000 pension account.



...Rich

 

[H D]

Oh believe me I understand how hard it is to predict taxes. I just know I'm not as good at it as a someone who specializes in tax law.

his recommendation was to trim my expected refund to as little as possible but leave just a little for a cushion, just in case, so I would not get hit with owing taxes or additional penalties.

That's basically what we've tried to do. Our tax accountant certainly does a better job than us, though. Maybe with some years practice and more wisdom, or a predictable income, I'll be able to do that myself. Our income has doubled every year for 3 years now (we started off very, very broke), so basing one year on the previous has been impossible. But to be honest, I don't even know yet how close we came. Still haven't filed. Won't get to until my wife and I get a day off together but right now she's working 60-80 hours a week until she fills some positions. We very well could have way overpaid, or even underpaid which would suck. Still trying to figure this tax thing out.



I agree that erring on the side of caution and ensuring a small refund is the best way because it gives you some cushion from underpaying and owing taxes along with fines. That's the plan for now at least.



I really wish we could just have something really fair, something where I would know exactly how much I pay in taxes. Something simple and transparent and perhaps even within my control. I'm not going to say the buzz word and maybe I won't have derailed the thread, lol.

 

[TrainTrac]

I really wish we could just have something really fair, something where I would know exactly how much I pay in taxes. Something simple and transparent and perhaps even within my control. I'm not going to say the buzz word and maybe I won't have derailed the thread, lol.

Then I'll say it, Hugh. :grin:



The FairTax

--Keep Your Entire Paycheck

--Get a Tax Refund in Advance on Purchases of Basic Necessities

--Everyone Pays Their Fair Share

--Social Security & Medicare Funding

--Pay Tax on Only What You Spend

--The IRS is No Longer Needed

 

[Richard L]

Hugh,

In my case I cannot get the military to reduce the taxes they are withholding as my status of Single with one exemption (me). I don't pay any taxes on my Social Security because it is non-taxable unless I have other income that year that exceeds about $5,000. Of course we can always have more taxes withheld, which I have had to do in the past, but to have less withheld you have to have some positive proof that you will not owe taxes at the end of the year, or you will have to pay the taxes and the penalties for underpaying your tax withholdings



i'm sure there are other people like me who cannot reduce the amount of taxes withheld and are forced to get a return.



TrainTrac:

I agree with you that a Fair Tax is a better, more practical way to deal with taxes. I'm not sure why we cannot get some politician to push for a flat tax. A few years ago I saw a TV reporter ask some Senator or Congressman about why nobody in Washington wants to talk about a Fair Tax alternative to the current Income Tax system..... The politician said nothing but just smiled with a broad grin ??



I think it may require a grass roots push by voters on both sides to vote out politicians who don't support a Fair Tax.



...Rich

 

[H D]

I'd vote for any presidential candidate, and I do mean ANY candidate, that would swear they would not sign any legislation until the Fair Tax, or something similar, gets passed. That fixes so many of our societal ills and financial issues that any other positions they hold would be trivial in comparison, IMO. Heck, if Obama offered that, I'd vote for him for a third term.



I'd apply almost the same position but with a little more caution to a candidate that backed term limits for congressmen.

 

[Richard L]

Hugh,

It's still going to be very tough to get anyone elected who promises or favors a Fair Tax or a Flat Tax. The problem is that there are so many people who do not pay any taxes that a Fair Tax, or a Flat Tax is going to mean they have to pay some taxes.



I suspect that if you paid some people a refund in advance, there would be so much corruption with that program that it would be impossible to tell the crooks from the truly needy.



Also, how do you pay someone a refund in advance without knowing how needed they will be the rest of the year? People will just make up any excuse to claim the tax refund in advance, and if there is not income tax to file, who knows if they are really needy?



I think a Fairer form of Tax would be a simple rule: Everybody pays 10% of their income that exceeds $10,000, No exceptions and No exemptions. Even the Millionaires and Billionaires pay 10% of their earnings and the first $10,000 is exempt, be it from wages, interest or other investments. Only that first $10,000 per individual and $20,000 for married couples, would be exempt. Throw out all the other exemptions and deductions for dependents, real estate taxes, mortgage interest, capital gains/losses,



The current problem we have is that they continue to want the wealthy to pay a higher tax rate but they also have all the loopholes that can shelter most of the money they earn.



I remember back in around 1969 or 1970, I was an E4 in the military, and Richard Nixon was President, and the news reported Nixon's tax return, and he paid less in income taxes than I did and he easily made 100 times more money than I did. Later it was revealed that the IRS did not allow all of his deductions, so he eventually did end up paying more than I did. It just shows that it's not how much you make it's how much taxes you can avoid that makes the system so unfair. Most people who make less than $100k per year cannot take advantage of may of the tax loopholes that the wealthiest people have available to them.



...Rich

 

[H D]

I could support that but I still think a consumption tax is more progressive and fair. It also captures those whose "work" isn't exactly reported in any records. Poor people don't consume, so they pay less tax, unless they choose to consume and pay taxes above their means. If it's a voluntary tax, as a consumption tax is, nobody can claim to be taxed unfairly.



Thread derailed, lol.

 

[Richard L]

Hugh,

My biggest objection to a consumption based Fair Tax is that it instantly raises the cost of goods by 10% to 15%. I don't think our ecomony can handle that now, or necessarily at anytime. That's just to big of a jump in what consumers pay for items. That could be softened if the 15% Federal consumption tax would eliminate all other State, county, and city Sales taxes, and other taxes like the tax on gasoline. The Federal government would keep 10% and give 5% or more back to the states where the tax was collected.



The Federal Government might find that attractive, but I doubt that most states would, since they are already collecting much more than 5%



I think it would also create a huge Black market for selling items without paying the taxes. Already the states are trying to figure out ways to have other states collect sales taxes for them on Internet sales.



With a Flat Tax there is nothing to hide except income, which is harder, but already being done with cash tips, and other under the table transactions. By eliminating all the deductions and exemptions from income taxes, you are already eliminating 95-98% of the confusion filing taxes and Tax fraud.



As far as derailing this thread, the subject is "Income Taxes", so I don't think we have gotten too far off track...:grin:



I also like the fact that Social Security taxes are paid separately and for the most part, kept separate from the general tax revenue



....Rich