Darn Those Taxes, Darn Them I Say

[wintergreen48]

Well, I just did my taxes, and I am not pleased. Despite (supposedly) reform in the Alternative Minimum Tax, I still got hit with over $8,000 in AMT, which is over and above the 'real' tax that I have to pay. Jeez. And that is despite the fact that I live in a relatively low-tax state, and don't have a mortgage (and thus, no interest deduction), the two items that usually trigger high AMT liability. The trigger for AMT, in my case, is that DESPITE not having mortgage interest and DESPITE not having high state taxes, my deductions are 'excessive' nonetheless: that's what I get for paying God's Share (the 10% that I give to church and other good causes). I bet the ACLU is behind this. Or maybe it is because of my snooty accent. Dang.

On the other hand, it could have been a lot worse. When I started the program (Turbo Tax), it downloaded a lot of my information and the first screen showed that I have over $34,000 in taxes DUE. Last year, I reduced my withholding exemptions to -0- figuring that this would cut my end-of-the-year tax liability, and I couldn't figure out why I still owed so much. Not to mention, I couldn't figure out how in the world I was going to pay $34,000+. After I cleaned the vomit and stomach acids off the keyboard, I saw that the TurboTax automatic download did not include my deductions, nor did it include estimated tax amounts that I paid during the year, and when all that was done, it turns out that I owe just a bit over $1,000: still more than I would like, but a LOT less than (barf) $34,000.

Which brings to mind another reason for me to be grateful to Capital One for firing me (although the Severance Letter does not say that I was 'fired,' it says that they 'terminated the work cluster and all associated personnel'). How kind of them, to do what they can to cut my tax liability...

Oh, and speaking of Capital One, I actually had a very nice warm and fuzzy that I want to share. I got an e-mail from someone who still has a job there, and she wrote to tell me about something that had happened that I actually had not thought about for awhile. A few years ago, one of the Administrative Assistants at Capital One completed a Certified Paralegal program, finishing at the top of her class, and wanted to go for a Paralegal position at Capital One (these pay pretty well, several times-- multiples-- of what the AA jobs pay). She checked in with HR, which told her (per policy) that she could not post for the position without obtaining several years' worth of outside experience, which she could only obtain if she were to leave Capital One entirely and then reapply, years afterward. For someone who already had 12 years in at that place (including time with the predecessor bank from which Capital One spun off), this was distressing. ANYway, her then manager (who is the one who sent me the e-mail today), came to me for some advice, and, well, I found a way around the problem (what HR told her was true and was a fixed policy; I spit on fixed policies). I suggested a few things that could be done to get around the problem, and she did them, and she got what she wanted (and a ton more money). And she is today one of my biggest fans. After my departure from the company this month, she told a lot of people about this incident, and her (former) manager e-mailed me to let me know. It is nice to be remembered by people in a positive way.

But I'm still ticked about the tax thing.

[kayrharris]

All I know about taxes is the form I fill out for the accountant and the accompanying paperwork to go with it. I do feel your pain, as I'm sure a check will be in the mail from my household on April 15.

Congrats on the good advice and the ensuing success story. They knew who to call to get the job done right!

[TheCalvinator24]

I really need to get my tax return done. We aren't getting much back, but if I don't get it done, I'll wind up rushing at the last minute.

[Beebs52]

to tell me about something that had happened that I actually had not thought about for awhile. A few years ago, one of the Administrative Assistants at Capital One completed a Certified Paralegal program, finishing at the top of her class, and wanted to go for a Paralegal position at Capital One (these pay pretty well, several times-- multiples-- of what the AA jobs pay). She checked in with HR, which told her (per policy) that she could not post for the position without obtaining several years' worth of outside experience, which she could only obtain if she were to leave Capital One entirely and then reapply, years afterward. For someone who already had 12 years in at that place (including time with the predecessor bank from which Capital One spun off), this was distressing. ANYway, her then manager (who is the one who sent me the e-mail today), came to me for some advice, and, well, I found a way around the problem (what HR told her was true and was a fixed policy; I spit on fixed policies). I suggested a few things that could be done to get around the problem, and she did them, and she got what she wanted (and a ton more money). And she is today one of my biggest fans. After my departure from the company this month, she told a lot of people about this incident, and her (former) manager e-mailed me to let me know. It is nice to be remembered by people in a positive way.

But I'm still ticked about the tax thing.

I feel for/with you about the tax thing, but you absolutely ROCK with the admin thing. I'm thinking you have a consultancy position via word of mouth that may be your true calling. What screwed up policies. And I thought I worked in the Mad Hatter's world. Not necessarily my company, but associated entities who are spawning Tweedledums and Dees as we speak.

[themanintheseersuckersuit]

I spit on fixed policies

But I'm still ticked about the tax thing.

both of these would make good signature lines

[MarleysGh0st]

I'm getting some money back from the feds, but I had to write another check to New York. Because my state taxes aren't deductible on my state return, I can't do better than the standard deduction, so all my charitable contributions count for nothing, as far as Albany is concerned.

And I recently got my new real estate assessment. The value of my house went up modestly, but they also boosted the assessments to be based on 100% of market value, from the previous 85% level. Oddly, I don't remember any headlines about the county legislature passing this 18% tax increase.

[PlacentiaSoccerMom]

I hate AMT taxes.

Maddie had to pay them on her Jeopardy winnings because she was under the age of 14 and Jeff and I have been paying them for seven years.

I can't imagine the government fixing the issue because it is the source of so much revenue for them.

[Bob Juch]

I hate AMT taxes.

Maddie had to pay them on her Jeopardy winnings because she was under the age of 14 and Jeff and I have been paying them for seven years.

I can't imagine the government fixing the issue because it is the source of so much revenue for them.

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

[Appa23]

I hate AMT taxes.

Maddie had to pay them on her Jeopardy winnings because she was under the age of 14 and Jeff and I have been paying them for seven years.

I can't imagine the government fixing the issue because it is the source of so much revenue for them.

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

I can see that the AMT cost you at least one G.

[Bob78164]

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

That's rather hard for me to believe. I live in California, a state with a 9.3% marginal tax rate, and I've been subject to AMT for a number of years. Worse, I'm in the phase-out zone where my AMT exemption is evaporating, so each additional $100 of income increases my AMT tax base by $125. With all of that in place, my total marginal tax rate is still significantly south of 50%. --Bob

[Bob Juch]

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

That's rather hard for me to believe. I live in California, a state with a 9.3% marginal tax rate, and I've been subject to AMT for a number of years. Worse, I'm in the phase-out zone where my AMT exemption is evaporating, so each additional $100 of income increases my AMT tax base by $125. With all of that in place, my total marginal tax rate is still significantly south of 50%. --Bob

Bob, that increased the tax on my other income so the next effect was just a $20,000 gain.

[peacock2121]

And she is today one of my biggest fans.

I think she has to get in line and take her turn.

I do love that she spoke of you so that others know how great you are.

[Bob78164]

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

That's rather hard for me to believe. I live in California, a state with a 9.3% marginal tax rate, and I've been subject to AMT for a number of years. Worse, I'm in the phase-out zone where my AMT exemption is evaporating, so each additional $100 of income increases my AMT tax base by $125. With all of that in place, my total marginal tax rate is still significantly south of 50%. --Bob

Bob, that increased the tax on my other income so the next effect was just a $20,000 gain.

That's why I referred to the <I>marginal</I> rate, not the nominal rate. My nominal rate (between state and federal) is 35.3%, but my marginal rate is north of 40%. --Bob

[ToLiveIsToFly]

We can't file our taxes until Frankie gets a SSN. Who knows when that will be.
We were all psyched to have the kid before the new year for the exemption. But it turns out our mortgage interest, taxes and charity add up to more than the standard (I wouldn't have thought so), so we get no tax break from the kid.

And our hospital stay ended up in two calendar years. BCBS sounds like they're not going to apply the max out-of-pocket for both years, but they haven't committed to it yet.

[ToLiveIsToFly]

We can't file our taxes until Frankie gets a SSN. Who knows when that will be.
We were all psyched to have the kid before the new year for the exemption. But it turns out our mortgage interest, taxes and charity add up to more than the standard (I wouldn't have thought so), so we get no tax break from the kid.

And our hospital stay ended up in two calendar years. BCBS sounds like they're not going to apply the max out-of-pocket for both years, but they haven't committed to it yet.

I mean, we're still psyched he came before the new year. I don't think Margy would have stayed sane if she had to wait another 60 hours.

[TheCalvinator24]

We can't file our taxes until Frankie gets a SSN. Who knows when that will be.
We were all psyched to have the kid before the new year for the exemption. But it turns out our mortgage interest, taxes and charity add up to more than the standard (I wouldn't have thought so), so we get no tax break from the kid.

And our hospital stay ended up in two calendar years. BCBS sounds like they're not going to apply the max out-of-pocket for both years, but they haven't committed to it yet.

I'm not sure how the birth could not have positive tax consequences. You get an additional Exemption, and a Child Tax Credit.

The Standard Deduction really has nothing to do with it.

[slam]

Because of the AMT, my $50,000 BAM winnins netted me a little less than $20,000.

That's rather hard for me to believe. I live in California, a state with a 9.3% marginal tax rate, and I've been subject to AMT for a number of years. Worse, I'm in the phase-out zone where my AMT exemption is evaporating, so each additional $100 of income increases my AMT tax base by $125. With all of that in place, my total marginal tax rate is still significantly south of 50%. --Bob

Bob, that increased the tax on my other income so the next effect was just a $20,000 gain.

I agree with Bob about this. A 60% marginal tax rate on your winnings simply isn't a possibly.

[Bob Juch]

That's rather hard for me to believe. I live in California, a state with a 9.3% marginal tax rate, and I've been subject to AMT for a number of years. Worse, I'm in the phase-out zone where my AMT exemption is evaporating, so each additional $100 of income increases my AMT tax base by $125. With all of that in place, my total marginal tax rate is still significantly south of 50%. --Bob

Bob, that increased the tax on my other income so the next effect was just a $20,000 gain.

I agree with Bob about this. A 60% marginal tax rate on your winnings simply isn't a possibly.

Let me type this slowly: The increase in income from BAM's $50,000 put me in the maximum rates for both NY and Federal taxes. That caused a huge increase in the taxes on my regular employment income. I did not say my total income was taxed at 60%.

[dodgersteve182]

You might want to have an accountant in your area review your returns? Some may offer to do it on a no obligation basis and only charge you a percentage of what they save you in taxes. Just make sure they don't fabricate deductions if you go this route.

[Bob78164]

Let me type this slowly: The increase in income from BAM's $50,000 put me in the maximum rates for both NY and Federal taxes. That caused a huge increase in the taxes on my regular employment income.

I'll type equally slowly. No, it didn't.

You appear to have made a common error, one that frequently requires correcting on a tax board that I frequent. The maximum rates don't "reach back" to sweep in earlier income. So if on a $70,000 income your tax rate was, say, 20%, and if adding $50,000 to that income puts you in, say, the 28% bracket, you do not reach back and apply the 28% rate to the first $70,000. Instead, you continue to apply the lower rate until the lower bracket fills up. The higher rate is applied only to the income that's above the cutoff for the lower bracket.

It is possible for the extra income to affect taxation of "earlier" income, but that occurs by phasing out deductions and/or exemptions that formerly shielded some of that income from taxation. When you work the math (and I have), you'll find that it's simply not possible to come close to a 60% marginal rate. --Bob

[MarleysGh0st]

Let me type this slowly: The increase in income from BAM's $50,000 put me in the maximum rates for both NY and Federal taxes. That caused a huge increase in the taxes on my regular employment income.

I'll type equally slowly. No, it didn't.

The Bobs are having a knock-down, drag-out over the tax code.



Good entertainment for a Friday afternoon!

[TheConfessor]

I've got to agree with Bob on this one.

[Rexer25]

I've got to agree with Bob on this one.

I must disagree totally, Bob is clearly correct here.

[christie1111]

I've got to agree with Bob on this one.

I must disagree totally, Bob is clearly correct here.

Rec!

[peacock2121]

Bob, that increased the tax on my other income so the next effect was just a $20,000 gain.

I agree with Bob about this. A 60% marginal tax rate on your winnings simply isn't a possibly.

Let me type this slowly: The increase in income from BAM's $50,000 put me in the maximum rates for both NY and Federal taxes. That caused a huge increase in the taxes on my regular employment income. I did not say my total income was taxed at 60%.

This just cracked me up.

Let me type this slowly!!!!!!

Cracked me up.