That depends on the error. If it’s something that the IRS would have knowlege of, like an incorrent amount of withholding claimed, then they will just send you the money. But if you forget to deduct the amount of contribution you made to a charity, they would have no knowledge of that.</p>
<p>MaineLonghorn–I haven’t heard about taxing health care benefits outright. I think some people may be confusing that starting next year it will show up as a line item on your W-2 but that is your proof that you have coverage under the heath reform. Companies that are supposed to offer plans and don’t will get fined, maybe that is what you are thinking??</p>
<p>Busdriver–we got a check from the IRS once without an audit. It wasn’t much, $20 or so, it just showed up one day with a note saying there was an error on our taxes and whatever the error was. This was about 20 years ago. I think we transposed a number or something.</p>
<p>dstark–you have a loss this year–meaning you have no income and you think you are still going to pay taxes???</p>
<p>Look at that list, that is taking 711 BILLION dollars out of circulation. That is 711 BILLION that won’t be spent on new houses, refrigerators, new cars, vacations, etc. That will cripple our economy. It’s not just the upper middle class that will get hurt by this either. Anyone that has health insurance, lives in a home or apartment, contributes to any retirement plan. All the charities that receive donations are going to see a drastic drop in donations because many people donate for the deduction, not for the good deed.</p>
<p>MaineLonghorn–I stand corrected-that list does show taxed health benefits–all the more reason to get these fixes passed, rapidly.</p>
<p>I have income. I have losses. Subtracting the losses from my income, I have a net loss. However, for tax purposes, I can’t deduct all the losses. I show net income so I have to pay federal and state income taxes.</p>
<p>SteveMa, do you want low tax rates, or do you want these deductions?
These deductions skew economic activity. They also raise taxes for people who don’t get these deductions. If we want a free market economy, why do we have so much government intervention of the economy by the use of the tax code?</p>
<p>The healthcare tax breaks cost the fed government more than the earned income tax credit, food stamps and pell grants combined.</p>
<p>The mortgage tax deduction costs more than the eitc, or food stamps or pell grants.</p>
<p>Look at how much those retirement account tax breaks cost the government. A lot of money, right?</p>
<p>Who gets the above tax breaks? Those that complain about taxes.
If we get rid of tax breaks, we an have a freer economy and we can lower tax rates. I thought that is what people want. ;)</p>
<p>We don’t have to take 711 billion out of circulation by getting rid of tax breaks. We can cut rates.</p>
<p>dstark, I am not sure about all the possible scenarios, but do you have longterm capital losses and wage income? I think it was 2001 (you remember the tech bubble) they limit the annual loss you can deduct to $3000 but you can carry forward the balance. I thought I was going to be deducting $3000 annually for the rest of my life! I think I used it up the year we sold our house and had a big long term capital gain. Anyway, I guess I can see how you can have a loss but still owe taxes. My least favorite way of doing that was owning a mutual fund that went down in value, but at the end of the year they would still distribute a big TAXABLE capital gain! One more reason I don’t own mutual funds.</p>
<p>“The healthcare tax breaks cost the fed government more than the earned income tax credit, food stamps and pell grants combined.”</p>
<p>I’d think that healthcare tax breaks are there because we have decided it is beneficial for companies to provide health care for their employees, along with wages. It is a very desirable benefit. I can see the consideration of not allowing companies to deduct it (and then they can lower benefits or shed the health care as they choose, unfortunately), but I can’t see taxing people on that benefit. I’m sure my company doesn’t get a 39.6% break vs what I would soon be charged (I’m assuming that rates will go up).</p>
<p>And that break isn’t there just for the upper middle class, it’s for any worker who gets provided health care. Look at my company, who has tons of part time, lower wage workers. And they get health care benefits. Great, tack 15-20K onto their reported income, and they’ll be paying much of their wages of $8/hr to pay for health care taxes.</p>
<p>dstark–complaining, not really, SHOCKED it more like it. I’ve said several times in this thread I am all for a flat tax rate, get rid of the deductions for individuals but everyone whines that it’s not fair for the “lower income people”. Is it fair that we pay for them? It works both ways. The 711 Billion is from the link you provided of what will go away if they don’t fix the tax law by next week. That’s a lot of money to lose in one year. Who exactly can’t take advantage of these deductions? These deductions are there for everyone—except those that make too much money I guess. These deductions benefit those making under 100,000 more than those making over that.</p>
<p>Businesses should get breaks for benefits offered to employees because they are for the good of the entire society. Health care and disability insurance keep costs lower for everyone. Do away with those credits and a LOT of businesses will drop health insurance…</p>
<p>Another thing–looking at our numbers now, we would have been better off had I not worked at all last year, but at the beginning of last year, the numbers were different and I guess people just assumed the tax cuts were a given…right or wrong. My working I earned just enough to create an additional tax liability that has wiped out everything I made…how is that right, ever?</p>
<p>My issue is that the economy is so bad right now that the business my husband and I own (we are the only employees) is barely hanging on. I mean BARELY. There is very little work. If we have to pay more taxes, we won’t make it. And I don’t think we’re unusual. See what happens to the economy when lots of people like us CAN’T contribute!</p>
<p>^^ exact example WHY the government needs to start worrying about the $100,000-300,000 income earners. There has been so much focus on the sub 100,000 earners and the breaks and credits received that it has wiped out the breaks/credits for those that make enough money to SPEND money. We’ve been in that low income range, made $16,000 at my first job and what an absolute TREAT it was the year our company rented the movie theater for a Disney flick because I hadn’t been to a movie in over a year because I couldn’t afford to go. Those tax breaks in those income levels go to pay bills, not buy new products that stimulate the economy.</p>
<p>What will really be a shocker for many is when they find out that their employers no longer get a deduction for providing health insurance and if they keep on providing it the employee will have to pay taxes on the health insurance subsidy from the employer. For many employers the “fine” for not providing it will be significantly less than the cost of losing the tax break on providing it. All roads lead in the same direction in this new and better era we find ourselves in.</p>
<p>Of course, most of all this new policy will be subject to means testing. In 2013 my DH will pay about 40 percent more for the same family health coverage as his colleagues earning a lower income.</p>
<p>Means testing. It’s really called “let’s make working hard really dumb!”</p>
<p>They don’t cost the government anything. They just defer when the government gets the money. Presumably the government gets more because the balances will be higher and the income is taxed at ordinary income rates, not the tax-advantaged rates for capital gains and dividends.</p>
<p>Okay, bc, we should try to not get too heated. But this kind of stuff is crazy talk (not by notrich, but by whoever is suggesting it):</p>
<p>“While homeowners obviously don’t have to pay themselves rent, there is an implied rental income benefit of ownership that normally would be considered taxable income. The current law allows an exclusion from taxable income for the implicit gross rental income on housing services.”</p>
<p>I’ll bet everyone on this board is saying, huh? Who would propose that? Next we’ll have to wear breathing monitors so they can find a way to tax us for every breath we take.</p>
<p>NJres, yeah, that is a problem with mutual funds.</p>
<p>All the deductions have some purpose.
No. Not everybody can have those deductions and the higher the tax bracket, the more the deductions are worth.</p>
<p>Are the deductions worth more than having a lower tax rate?
If people get those deductions, people want them and people argue how great they are for society. If taxpayers don’t get the deductions, then they argue that they are subsidizing others and they want those
deductions to end.</p>
<p>Funny how that works. What is obvious is why we have the tax structure we have. People want these deductions. These subsidies. They have grown to rely on them.</p>
<p>This is why we don’t have a flat tax or a simpler tax structure.</p>
<p>We aren’t going to end these deductions in a year. That would be brutal for the economy.</p>
<p>If we went to a flat tax, those that rely on the deductions would probably be hurt and those that don’t would do better.</p>
<p>SteveMa, you are taxed at over 100 percent of your income because you lost deductions and subsidies?</p>
<p>What could you have lost? Tuition tax credit? Passive losses on real estate? Financial aid?</p>
<p>BcEagle91, deferred tax revenue is worth less than revenue today. Tax brackets may be lower not higher when people are retired. Not all income generated in retirement accounts are cap gains. Many retirement accounts allow taxpayers to defer paying taxes at ordinary rates when they invest money in those accounts. I try to use those accounts for income that would be taxed at ordinary gains. I think there are others like me.</p>
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