A nasty surprise awaits the middle class come tax day

Seattle Post-Intelligencer ^ | January 31, 2004

[leadpenny]

I understand all of that. Not the C and S corporation stuff, but everything else.

[blackdog]

Find those who originally sponsored the AMT bill, put them in the pot and turn on the stove. Find every politician who has enabled the AMT with patchwork amendments to save this or that group from it's bite, unwilling to fix it. Put another pot on the stove for them.

But that won't happen, it's superbowl time, valentines day, groundhog's day, memorial day, kids to camp, laundry to fold, taxes to prepare, christmas shopping........no time for anything to be done.

[petercooper]

deduction for home day-care? That's crap. Don't make me pay for your kids to be taken care of.

[GregoryFul]

So the average tax payer is aware of the 87000 pages of the tax code?

[Trust but Verify]

The average taxpayer does not need to know what's in 87,000 pages of the tax code.

[Arkinsaw]

deduction for home day-care? That's crap. Don't make me pay for your kids to be taken care of.

Make you pay? How does someone reducing their tax liability take money out of your pocket. Do you think that the money is yours and that they are stealing it? You're Ted Kennedy just lurking here amongst conservatives aren't you.

[Semi Civil Servant]

Anyone who spends 12 hours preparing their household income taxes doesn't have a clue what they're doing in the first place.

If you only have a coulple of W-2s, do not itemize deductions, have nothing but simple interest to report on Schedule B, have no Schedule C business loss or income, have no Schedule E income, and have none of the thousands of other complications that send you to the bog of law and IRS regulations, you might be right.

But if you have more than the simplest return, if you spend a miniscule amount of time like 12 hours to prepare your taxes, they will be wrong and you will be paying Uncle Greedy way more than you need to.

[lewislynn]

Their tax is just passed on to their customer in the costof their product or service.

The same is true of your wages, paid vacation(s), sick leave, matching retirement funds, medical, and other benefits....Be careful what "business costs" you choose to expose.

[Trust but Verify]

We itemize. We have most of the common types of deductions. We do not own a business, but we're not talking business taxes here, anyway, we're talking AMT for individual taxpayers.

I think that the people who are worried about getting caught up in AMT are the ones who figure out a way to deduct the ink for their computer printers, etc.

[TruthShallSetYouFree]

Anyone who spends 12 hours preparing their household income taxes doesn't have a clue what they're doing in the first place.

About fifteen years ago, I invested some money in a few limited partnerships. The general partners used the money to fund some real estate ventures in Brooklyn, New York. They purchased some rental property (apartment houses) and converted them into co-ops, whereby the apartments can be sold to individuals. Each year, I get a K-1 form, which summarizes the year's activity. I live in New Jersey, the apartments are in New York, and both are in The United States.

Until I started getting these K-1's, I always had done my taxes by myself. I am a pretty smart guy (honestly) with a background in finance. I wouldn't have a prayer of translating the deductions, depreciations, carry forwards, carry backs and all the other arcane accounting calculations, into correct figures for the tax forms in New York, New Jersey, or on the federal form. I pay an accountant (a lot of money) to do it, and the resulting paperwork weighs more than The Yellow Pages in a medium-sized town. On top of this, the deductions that come about due to the arcane real estate transactions make it necessary to run the Alternate Minimum Tax calculations to determine if it is higher than the tax computed in the standard manner. The higher one must be paid. My accountant uses some professional tax software, and it takes him several days to generate my returns. Well, he charges me for several days, anyway. :)

[Arkinsaw]

For most people that means 7.65 percent of their paycheck is withheld and their company pays another 7.65 percent on their behalf.

Translation:
For most people that means 7.65 percent of their paycheck is witheld and their company lowers their pay by another 7.65 percent so the government can double its take quietly by hiding behind the skirts of the employer.

[GregoryFul]

Then how does he know whether or not his income or expense falls into a situation described in some section of the tax code?

Oh, I see, trust the tax form...

Have you read the articles that frequently turn up around tax time, that describe the significant dollar differences in the same individual's tax liability determined by the various professional tax services using the same data?

The "experts" do not agree on a typical individual's tax liability.

[Cacique]

btt

[alrea]

nasty surprises everywhere:

http://www.fortune.com/fortune/articles/0,15114,582229,00.html

[petercooper]

oh you mean someone with a day care business?

[Trust but Verify]

The point I'm making is, MOST people do not have the type of return you are talking about. Very few, I'm sure. The article makes it sound like millions of people have this situation. I don't think that is true.

Anyone who has the types of investment gains/losses/ etc you do is crazy to try and do the return themselves.

[FLAMING DEATH]

"The average taxpayer does not need to know what's in 87,000 pages of the tax code."

Frightening statement.

[going hot]

For most people that means 7.65 percent of their paycheck is withheld and their company pays another 7.65 percent on their behalf.

Which sucks when you are a small business person. I would much rather have that 7+% to offer as a carrot/raise for my employees, or use for capital improvements.
The only reason they have the employees pony up the half is because the worker feels less of hit that way, and is more likely to swallow the theft.

[Arkinsaw]

oh you mean someone with a day care business?

Your post indicated that if someone took a deduction for home-day care that it was somehow making you pay for taking care of their kids.

My response was simply to point out that the money is not yours. Your complaint about someone paying less of THEIR money to the government because of how it might effect YOU is about as liberal as you can get.

[MarkL]

When I talk about 12.4% in FICA I'm talking about contributions - I'm not talking about benefits. That is on the other side of the ledger as far as I'm concerned. We should deal with benefits on their own. It may mean means-testing. I don't know. I do know that on the contributions side it's not fair the way it is now.

And that's what I mean by "buying into" the leftist's "social security vs payroll tax" scheme.

Try to remember that until recently, SS was promoted as a "pay as you go" scheme... That you were to get out of it what you put in.

Since the leftists have tried to seperate the two, as you are doing, they can claim that a) not everyone is paying in their "fair share," and b) that "the rich" are going to get too much out of it.

Like I said, when you do place to two on different "sides of the ledger," you're buying in to their scheme.

Why would it be "fair" that someone who contributes 12.4% on $80,000 can get the same back (assuming that SS is still around, which I'm doubtful of) as someone who contributes 12.4% on $8,000,000? Or with means testing, why would it be "fair" that someone who contributed 12.4% on $16,000 should get more back than either of the other two?

I'd really like to know what your definition of "fair" is.

Mark