<p>So I finally sat down to do my taxes. I am using a free online service (but upgrading to deluxe for a small fee). This year is very very different for us, because we have almost no income. So I enter in my unemployment comp and my wife's very very small W-2 and the program is showing a federal refund due that is more than what was withheld from my wife's tiny paychecks. How cool is that? Free money! So I see there is this thing called the earned income credit that pays us $1500 for being poor, I guess. But it doesn't phase out, it disappears if you make more than $3100 in investment income. So investment income of 3099, we get a refund of $1837, but if the bank pays us $2 more in interest the refund drops to $417! How strange is that? Oh well, maybe next year. But most of this stuff, including tax brackets, are phased in and out. Please don't let there be too many situations where you make less money by making more.</p>
<p>You should also get a Making Work Pay credit. Max would be $800 on an earned income of about $12,000. </p>
<p>The earned income credit does phase out based on your earnings and number of dependents. It's meant to help people like you. And losing it for having $3100 of investment income makes sense to me. That much investment income depends on having a lot of money in the bank.</p>
<p>There is SO much that doesn't make sense with the IRS that I could go on forever. But the one that confuses me the most is the child credit that you lose when your child reaches the age of 17. Has the IRS never had a senior in high school?</p>
<p>years ago, I went round and round with my accountant when I used tanning bed costs(before I was clear on the dangers) and some clothes, and bar hopping tabs as deductions. I was a full-time dj then, and as an entertainer those were actual, legitimate deductions.
She had never had such a profession as a client, and she had difficulty seeing beyond the standard deductions of more typical employment.</p>
<p>i am very angry about the alternative minimum tax. it is affecting more and more americans every year--and often it comes as a surprise. the alternative minimum tax income level has not been adjusted for inflation since the 70's and when it is triggered, tax payers can no longer claim most of the deductions that should be available to them as well. it is hard to see people that are not really high-income wage earners lose their deductions and then find out that the actually OWE the IRS a significant amount of tax!</p>
<p>We got hit by the AMT - it close to doubled our taxes due. I would have been better off being unemployed, because the AMT took all of the income I made from a part time job.</p>
<p>Yes, AMT is a rip. All those years I was paying those crazy high property taxes in NJ and rationalizing them thinking, oh well, at least it is a tax deduction. Then I took a closer look at my tax return and realized that due to AMT, my property taxes were not actually deductible!! Alas, AMT is not an issue this year. </p>
<p>Just ran into another strange one tho, my software flagged me for a wash sale. I sold some bonds for a profit, but then bought them back 2 weeks later. But then 5 months later sold them for a loss. I don't think that is actually a wash sale - I think it only kicks in if you sell for a tax loss first then immediately buy the securities back. In my case, the gain is a taxable gain, and (I sure hope!!) my loss 5 months later is an offsetting loss. But my head is spinning!!! </p>
<p>My only issue with the EIC is that it disappears suddenly and entirely when your investment income exceeds $3100, so an additional $10 in interest earned can remove $1500 from your pocket!!! I think it is 100% appropriate to exclude folks from EIC based on unearned income but it's just strange to remove it like that.</p>
<p>Oh. AMT is the bain of my existence this year. Our finances are NOT complicated. My income, H's income, deductions of Mortgage interest, home equity income, state income taxes, and PROPERTY TAXES. So. I live in a heavily taxed area. Paying AMT this year. AND, because I am so LUCKY to be required to pay boucoup $$ with my return (not enough withholding), I have the privelege of being able to pay a penalty on top of that. GRRRRRR.</p>
<p>Wait till you have to pay the new 3.8% medicare tax on dividend income, interest, rent, etc.</p>
<p>Anybody familiar with the "State Board of Equalization". It might only be in California, but they come after you for taxes on things you bought without paying tax; like on Amazon. They are asking for 07, 08, 09, with interest. They will waive "penalties; at least until April 15.2010.</p>
<p>Shrinkrap- they are going after the Use Tax as in Sales and Use Tax. All the States do it. In fact the in-state merchants beg us to enforce the law. I ran a program that had some success with NC furniture retailers.</p>
<p>My tax preparer says up until now, "nobody does it', but this year, they are targeting business owners who net more than 100k, among others, doing an electonic registration, and sort of threatening to look through six years of your credit card use. Has anyone on this thread complied with this? I plan to, but was just wondering.</p>
<p>Well I disagree with your tax preparer because States have been doing it for years. I remember knocking on doors in 1980 and telling house wives that new dining room set includes sales tax. I also remember the President of the PTO trying to buy stuff using her schools tax exempt certificate. We obviously do not catch them all but we have been trying for years. It gets easier everyday.</p>
<p>California obviously identified some purchases you made that were subject to tax. Amazon is currently both fighting with and complying with States tax agencies.</p>
<p>It's welfare repackaged, NJRes. Congratulations.</p>
<p>NJres;
If you've filled out your forms properly and get money back that's ok. Everybody likes to get money back. But please don't call it "free money". It isn't free. It is my money. Money they are giving you beyond what you paid in is giving you my money.
My money- not in an exact sense, but in the broader sense that it is all other taxpayers' money. Others are chipping in more than their fair share so you can get more back. You may have given more in the past, or maybe will give more in the future; but this year, your "free money" really isn't.</p>
<p>I'm not giving an opinion if that's good, bad, indifferent, necessary, extravagant, or whatever. I just want NJres to be clear it isn't "free money". It is other peoples' money.</p>
<br>
<p>My tax preparer says up until now, "nobody does it', but this year, they are targeting business owners who net more than 100k, among others, doing an electonic registration, and sort of threatening to look through six years of your credit card use. Has anyone on this thread complied with this? I plan to, but was just wondering. </p>
<br>
<p>Why specifically go after business owners?</p>
<p>I live and work in a state with no sales taxes next to a state with high sales taxes. As you might guess, this has led to large retail areas in the border areas. We have a lot of folks buying stuff and bringing it back down over the border. People that work in our state and live in the other state also buy stuff over the internet for delivery in our state. It is more convenient but it also avoids sales taxes. We have a new Apple Store right over the border and saving $100 in sales tax on your new laptop is apparently appealing.</p>
<p>I'd say that going after credit card records would be a pretty effective way of dealing with this sort of thing though it could just push us into a cash economy. We also have very low cigarette and liquor taxes and people from other states come here to buy it. I wouldn't be surprised if there were people buying for other people to make it worth the trip. I imagine that the cigarette and liquor thing is mostly a cash thing. You can buy them at the grocery store and not worry as neither the grocery store nor the credit card vendor keep line item detail of your purchases.</p>
<p>MA sent DOR people to try to force businesses to give out their customer record information from a tire dealer. MA residents were buying tires along with the tire service here and MA wanted use taxes for the tires. NH passed a law making it illegal to provide such information. Nothing like border tax wars.</p>
<br>
<p>But please don't call it "free money". It isn't free. It is my money. Money they are giving you beyond what you paid in is giving you my money.</p>
<br>
<p>Well said. This is funds being taken away from high-income taxpayers.</p>
<p>You guys crack me up. I assure you none of the money I get from the IRS will be tax dollars paid by you. I have arranged to only receive money that has been borrowed from China.</p>
<p>Listen NJres- you should thank Ronald Reagan for your "gift"</p>