Comments on: Six Things I Think I Think After Filing Income Taxes

By: Gramps

Gramps — Fri, 02 May 2008 16:59:55 +0000

I think, why don’t we just pass the FairTax and make things simple, and put America on the road to economic prosperity! http://www.fairtax.org/

By: Bri-Austin

Bri-Austin — Mon, 21 Apr 2008 22:03:06 +0000

Just in case you haven’t tried TaxSlayer.com – you might want to. For 3 years now , I and 2 co-workers have simultaneously run our taxes on both Turbotax and on TaxSlayer and found we got more money back (or reduced what we owed by several hundred dollars) when using TaxSlayer – which permits you to e-file for $10. Why? Don’t know. However, since I work as a seasonal mailclerk for the IRS, no tax errors are allowed for us – and we get audited! Taxslayer seems to be doing a good job for us, it is very easy to use, addresses all areas – including selling stocks, moving IRAs etc., costs less than TurboTax (no deluxe version needed to do the above) and saves us money to boot. Run your taxes both ways next year and tell us what you think.

By: Macinac

Macinac — Sun, 20 Apr 2008 05:05:06 +0000

Over the years I have moved from doing it manually, to my own tailored spreadsheet, to commercial tax software. While the softrware may be buggy, I do like the flexibility (skipping back and forth), the ability to look up answers to questions, prompts for things I may not have thought of, and instant availability of most forms I might want to open and see directly.

On the other hand, I really dislike having to pay for e-filing! After all it would be cheaper and more accurate for the government to receive a packet prepared by TurboTax or TaxCut or the others. So far I have stuck with paper forms.

By: jm

jm — Thu, 17 Apr 2008 14:16:36 +0000

“It’s a classic case of moral hazard. I don’t like the idea of parents counting on government subsidies when they make the decision of whether to have children.”

That is a really good point. Its very similar to how people are using their income tax refunds to ‘get caught up on bills’ this year. If it gets down to that, you have deeper problems. I was raised to never EVER count on money that is not in your hand to be there when you need it.

By: Random reader

Random reader — Thu, 17 Apr 2008 03:48:43 +0000

How do you feel about tax evasion? I live in a country with the world’s highest tax rates and it’s not going to things I wish to support either. An article on resisting taxation would be much appreciated :)

By: Sunbee

Sunbee — Wed, 16 Apr 2008 23:07:22 +0000

How about those of us homeschoolers who get to pay both for other folks’ kids to attend public school and to educate our own kids? We don’t even get to take the teacher deduction, you know.

By: Cat

Cat — Wed, 16 Apr 2008 13:27:10 +0000

Australia- we also have a system of withholding, and tax returns are filed for “adjustments” like yours. Employers have tax tables and take out what they think taxes will be based on the person’s situation (kids, marital status, etc). Probably for Trent, it got complicated because there was no employer to know he was going to make a gazillion dollars via blog, and therefore no employer to deduct taxes from his blog income.

By: Cat

Cat — Wed, 16 Apr 2008 13:17:45 +0000

A warning for turbotax users. And taxcut, or whatever automated system you use. Check it for reasonableness. I know two people that used it and screwed up. My poor sister thought she was getting $10K back for a while there because she followed the turbotax interview, and it ended up double counting her mortgage interest. Oops. It is not foolproof, by any means.

By: Nancy Brooks

Nancy Brooks — Wed, 16 Apr 2008 12:10:16 +0000

First, I can’t believe you didn’t take your taxes to an accountant, i.e., someone who specializes in their field. It’s not wasting money. They can save you money in the long run. We spent $85 for our taxes to get filed for us. If you spent 16 hours this weekend, having someone else do your taxes for you would only cost $5.31 per hour based on that figure. That’s money well spent in my book. Maybe you wouldn’t have owed so much money.

Second, it seems like the majority of the American public doesn’t realize where most of our federal tax dollars go: interest paid to the Federal Reserve on the principal we owe them. With a debt of $9.4 trillion, the government owes a huge amount of interest. You know we’re not paying any principal when the debt grows instead of shrinks.

By: Lisa

Lisa — Wed, 16 Apr 2008 04:52:10 +0000

Amen to the post! My father always says, “Taxes are the price we pay for a civilized society.” (I think he stole it from someone. Let’s hear it for the public sector.

By: gr8whyte

gr8whyte — Tue, 15 Apr 2008 22:31:19 +0000

Tried TurboTax (TT) 2 years ago and abandoned it after I checked a TT worksheet calculation by hand and it was wrong. Returned to my tax form preparer and while it’s a bit steep, it’s once a year, I have a lot of fun bemoaning taxes with her and she’s worked some extra stuff for me for free.

By: Gayle

Gayle — Tue, 15 Apr 2008 22:22:25 +0000

Nice post, Trent. I’ve been using TaxACT for the past several years, though I debated going to a pro this year due to some similar changes in my life in 2007.

For about 3 months in 07 I was pulling 2 full-time paychecks, one for severence pay and the other as freelance work. This was the first time I’ve ever done freelance work and ended up earning 1/5 of my normal annual gross salary this way, on top of my regular earnings (was rehired by the company that laid me off as soon as my freelance gig ended, so there was never really a break in pay from that company).

One of my conditions for rehire was that I be made immediately eligible for 401(K) contributions–I immediately started dumping 20% of my pay into my 401(K) to try and bring down my taxable income, but it wasn’t enough.

I did end up having to get some advice from a pro regarding Business income deductions, but in the end TaxAct seemed to handle it just fine.

The uptick is that I’ve continued participating in my 401(K) at 20%, and will continue to until it becomes unbearably painful.

By: Jason

Jason — Tue, 15 Apr 2008 22:18:17 +0000

http://www.fairtax.org

By: Christopher Smith

Christopher Smith — Tue, 15 Apr 2008 21:58:22 +0000

Just as a note, be careful not to conflate the ideas of a simplified tax structure and a flat tax, even though the two are often advocated by the same camps. It’s entirely possible to slash through much of the spaghetti of the tax code while still leaving a progressive (meaning high-income people pay a higher percentage) rate structure–or, on the other hand, put a flat tax rate into effect while still leaving the nightmare that is the IRC.

As far as the parent comment about corporate taxes, I don’t think the flat-tax people are at all recommending that the corporate tax (which is the highest in the developed world) stay the same and business deductions get taken away from individuals; business deductions for sole proprietors would still go on Schedule C as business expenses. However, I say from personal experience in filing both partnership and corporate tax returns that the individual return (form 1040) is drastically more complicated than either because Congress has been using the tax code as a carrot-and-stick combo to try to get individuals to behave in ways it (i.e., the loudest lobby) likes.

By: George Donnelly

George Donnelly — Tue, 15 Apr 2008 21:01:10 +0000

It means the Iraq War and the deaths of millions of innocents.

It means the drug war.

It means the erosion of civil liberties at home.

It means torture and extraordinary rendition.

Oh I pay my taxes too, but only because the government would put me in prison and take all my worldly possessions if I didn’t.

By: JJJJJJJ

JJJJJJJ — Tue, 15 Apr 2008 20:55:13 +0000

I enjoy your website and read daily, but I have to say something that has been eating at me since a few posts back.

Your worship of the state is frightening, and think you would benefit from reading up on opposing view points on matters such as the FED and taxes.

Read up on some Austrian economics, check out sites like mises.org or financialsense.com. I think you are doing your readers a disservice by telling them things like “The Fed is doing all it can to fix the housing bubble” or “I feel good cause my taxes go to making sidewalks and schools”.

That being said, I wish you the best with your writing career, and hope you take the time to take a look at things from a different angle.

By: Erin

Erin — Tue, 15 Apr 2008 20:26:40 +0000

@ Johanna

I understand your frustration, but I disagree with your basic assumption: I’m not sure why you believe the fair/unfair argument is relevant at all. Nothing about taxation is fair; the system is, by design, inherently, unavoidably unfair. Every citizen of the United States could point to huge sections of the tax code and describe how it works against them. However, it is also the only system that WORKS when the goal is to redistribute money to achieve the greatest good for the greatest number. In many cases, a tax break that doesn’t directly benefit you may in fact be responsible for positive overall effects that DO benefit you, in terms of economic, social, and environmental improvements. I would be interested in hearing arguments against certain taxes based on overall economic effects, but “that tax break doesn’t directly benefit me so it’s not fair” is not a particularly useful approach.

By: Phil A

Phil A — Tue, 15 Apr 2008 19:04:40 +0000

There should be no tax for anyone earning under $35,000 a year. People earning under that amount shouldn’t even have to file taxes.

By: Kristen

Kristen — Tue, 15 Apr 2008 18:57:03 +0000

I don’t know why people are under the impression that corporations don’t pay taxes on corporate income. (As Selena stated above). I am a corporate tax accountant for a large corporation and let me tell you we definitely pay taxes. Taxes most people don’t even know about. Sales and use taxes, property taxes, state and local taxes, the list goes on. We get deductions just like individuals do for things that the government has decided to encourage but when it is said and done we pay taxes on our income. And if we don’t pay it this year we will probably be paying it in a few years when our deferreds reverse. I am all for taxing big corporations but remember in the end the consumers end up paying those taxes in higher prices for goods. I think more than just changing the tax system it is about changing the government spending so that the taxes dollars go further.

By: Selena

Selena — Tue, 15 Apr 2008 18:39:23 +0000

Keith: “You seriously want to give billions to the top 5% and have the middle-class pay more, all so your paperwork is easier?!?”
Let’s do a little math here – if I make $50,000 and pay a 10% flat tax I have to pay $5,000. If I make $250,000 and pay a 10% flat tax I have to pay $25,000. Um, isn’t $25,000 still greater than $5,000? Or is “new” math changed even that?
Bottom line is we shouldn’t be taxed for earning money anyway. The Fair Tax taxes spending – even the spending done by the “black market” folks. After all, those expensive cars they buy with their illegal funds would get taxed! And poor people (who spend less) would pay less taxes than rich people (who spend more).
As for corporation taxes – who do you think pays those now? The consumer! With lower/no taxes on corporate income, prices go down, people spend more, more tax is collected.
Educate yourself people – don’t just listen to the media and make ignorant comments.