Income tax time

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Shorty
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Income tax time

Postby Shorty » Thu Apr 12, 2012 8:56 pm

Finish your income taxes? They are due April 17. I will get refunds as usual, $518 Federal and $702 State. That means $1,220 too much was withheld from me so I lent that to the gvmnt interest free.

I hate that. Same things happens to me every year, I get big refunds which means I loaned them money. I filled out the W4 to increase my allowances and it still happens. Is there any other way I can reduce my withholdings?

Detritus
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Re: Income tax time

Postby Detritus » Thu Apr 12, 2012 9:24 pm

Shorty wrote:Same things happens to me every year, I get big refunds which means I loaned them money. I filled out the W4 to increase my allowances and it still happens. Is there any other way I can reduce my withholdings?

Don't itemize your return. That should take care of the problem.

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Re: Income tax time

Postby Bwis53 » Thu Apr 12, 2012 9:59 pm

I'd still much rather be getting a refund instead of having to pay out.

Prof. Wagstaff
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Re: Income tax time

Postby Prof. Wagstaff » Fri Apr 13, 2012 12:59 am

My big beef with the tax code this year: Medical expenses.

It's never been an issue for me before, but last year I racked up thousands of dollars in hospital bills. When I went to do my taxes, I discovered that I couldn't just deduct the total cost of those expenses, they needed to be itemized. Doctor bills are separate from hospital bills which are different from prescription costs which are separate from equipment costs which are not to be combined with laboratory costs. WTF?

The bills I received from the UW-Hospital and clinics do itemize stuff, but they total it before they deduct what my insurance pays, so to accurately report this stuff, I need to do a fuckload of math. But why? The total deduction is the same regardless of how those $$ are distributed, so it's just a whole lotta unnecessary bullshit, near as I can tell.

I know it's a foolish question but, why the fuck is the tax code so fucking complicated!?

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Re: Income tax time

Postby green union terrace chair » Fri Apr 13, 2012 2:35 am

Shorty wrote:I hate that. Same things happens to me every year, I get big refunds which means I loaned them money. I filled out the W4 to increase my allowances and it still happens. Is there any other way I can reduce my withholdings?

You can have a flat amount withheld each period. Do an estimate of your annual taxes halfway through the year and start doing that if you're going to end up paying too much. Just don't err the other way.

Bwis53 wrote:I'd still much rather be getting a refund instead of having to pay out.

It's "nice" but you're still wasting money. (Unless you have to pay a lot of interest and fines.) It's best to get as close to even as possible with just a little refund. If you get less than $500 you're doing it right.

If people had to write checks each month to the federal and state governments for taxes instead of having them withheld (and I mean both parts of SS, too), people would feel a lot different about the "fairness" of our tax code.

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Re: Income tax time

Postby narcoleptish » Fri Apr 13, 2012 7:48 am

If you (the OP) had not paid that extra in, would you have saved it, or would it just be gone? If you saved it incrementally throughout the year in a traditional savings account you would be missing out on less than the cost of a good tap beer. Treat it as a savings account. Stick your refund in an IRA or take a little vacation.

Prof. Wagstaff wrote:
I know it's a foolish question but, why the fuck is the tax code so fucking complicated!?


Probably so you give up and don't do the work to get your money back.

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Re: Income tax time

Postby kurt_w » Fri Apr 13, 2012 7:53 am

Prof. Wagstaff wrote:I know it's a foolish question but, why the fuck is the tax code so fucking complicated!?


Well, in large part because Congress has a long history of using the tax code (rather than the appropriations process) as a vehicle for social and economic engineering.

For example, let's say that you are a senator who believes that the government should encourage people to buy more expensive homes than they would otherwise do. There are a couple of ways you could do that:

(1) Appropriate money in the budget for a program that directly or indirectly subsidizes homeowners.

(2) Modify the tax code to reduce the taxes of homeowners.

The two approaches have exactly the same economic effect: non-homeowners are being taxed extra in order to subsidize homeowners. But in one of them, the subsidy is obvious and open, while in the other it's hidden (somewhat). Congress generally likes being able to meddle in social and economic policy without leaving their fingerprints on it.

An unpleasant side effect is the endless complication of the tax code, as every effort to subsidize Republicans' or Democrats' preferred activity involves adding new clauses to the tax code.

In your case, it's especially bad because you're dealing with the intersection of two notoriously awful systems in the US: the tax code and the health care system. My condolences.

In general, most people I know seem to think we'd be much better off by:

(1) Eliminating virtually all deductions, exemptions, and other complications of the tax code. Keep the code progressive, but eliminate its role as a vehicle for social and economic engineering.

(2) When Congress wants to economically reward or punish some activity, let them do it directly, by going on record to appropriate money to pay for it.

If we as a society believe that we should subsidize either health insurance or health care costs, let's just do that openly and directly, not by twisting the tax code into a pretzel or pushing employers to become involved in managing their employees' health.

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Re: Income tax time

Postby beenie » Sat Apr 14, 2012 6:37 pm

narcoleptish wrote:If you (the OP) had not paid that extra in, would you have saved it, or would it just be gone? If you saved it incrementally throughout the year in a traditional savings account you would be missing out on less than the cost of a good tap beer. Treat it as a savings account. Stick your refund in an IRA or take a little vacation.


This. For our household, anyway. If it was in the paycheck, it would be gone. And interest rates just aren't high enough right now for me to freak out about however little interest we'd be earning.

As for filing, it was done and refunds received last month. Except that we only got a part of what was due us from the state because my dumb ass missed one of the withholding amounts when I e-filed state, so I had to file an amendment, which is also already done.

Shorty
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Re: Income tax time

Postby Shorty » Sun Apr 15, 2012 9:17 am

green union terrace chair wrote:You can have a flat amount withheld each period. Do an estimate of your annual taxes halfway through the year and start doing that if you're going to end up paying too much. Just don't err the other way.

I did that a couple years ago. Will see if I can do it again. Thanks for the replies.

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Re: Income tax time

Postby Henry Vilas » Sun Apr 15, 2012 2:08 pm

Done!


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