ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Thought I was seeing things. I am on the final leg of my tax inputs, my tax situation should not really be that complex: wife's part-year income, my investments (simple stuff) & dividends/interest, the usual itemized deductions, plus kids college credit/deductions, and a small Roth conversion. The only thing a little funny with all those credits is, my income gets me into the 15% marginal bracket, but the credits almost completely wipe out my taxes, so instead of a gentle slope up from near zero, I hit a 15% slope immediately. OK. This is what I found:
I was trying to figure out if I should go through the work of adding up the "Good Will" type clothing and used goods donations we did this year. It's a fair amount of work to do it properly, so before I started I wanted to make sure that my deductions were not limited or anything.
OK, so I look at Schedule A, and I look at the worksheet and no limitations. Great - should be "golden". Well, I'm dreading documenting all this, so I first make a rough stab at just increasing our charitable donations by $100 to double-check what happens to my tax due/refund. Nothing. Hmmmm?
More digging, and I finally find a very circular string of events that I have not completely nailed down yet, but here are the basics. $100 greater deduction does reduce my intermediate tax calculation by $15. Good so far. But why no change to the final number? I see a Recovery Rebate Credit line item that increased by $15, offsetting the reduction 1:1. What? Well, that leads to a long string of inter-related calculations that I would require me to draw a flow chart to understand how they interact. Something to do with the Child credit, income limitations, $300 per child that contributed to the child credit, some magic number for your filing status, throw in a bag with a chicken bone and shake....
But the bottom line, is between some range of numbers, any change in my taxable income/deductions/credits seems to be gobbled up by the RRC. Does that seem right?
I'm guessing I could have taken another $2,000 in Roth conversion with zero tax liability, but I'm too bleary eyed and tired to figure that out right now. I suspect that other things would come into play to interact with that also. It's these interactions that are the killer - it is really tough to understand what is going on.
Arghhhhh. Anyone have a plain English explanation of this RRC?
Did I mention TAX REVOLT in another thread? I tell you, I am getting fed up with this.
-ERD50
I was trying to figure out if I should go through the work of adding up the "Good Will" type clothing and used goods donations we did this year. It's a fair amount of work to do it properly, so before I started I wanted to make sure that my deductions were not limited or anything.
OK, so I look at Schedule A, and I look at the worksheet and no limitations. Great - should be "golden". Well, I'm dreading documenting all this, so I first make a rough stab at just increasing our charitable donations by $100 to double-check what happens to my tax due/refund. Nothing. Hmmmm?
More digging, and I finally find a very circular string of events that I have not completely nailed down yet, but here are the basics. $100 greater deduction does reduce my intermediate tax calculation by $15. Good so far. But why no change to the final number? I see a Recovery Rebate Credit line item that increased by $15, offsetting the reduction 1:1. What? Well, that leads to a long string of inter-related calculations that I would require me to draw a flow chart to understand how they interact. Something to do with the Child credit, income limitations, $300 per child that contributed to the child credit, some magic number for your filing status, throw in a bag with a chicken bone and shake....
But the bottom line, is between some range of numbers, any change in my taxable income/deductions/credits seems to be gobbled up by the RRC. Does that seem right?
I'm guessing I could have taken another $2,000 in Roth conversion with zero tax liability, but I'm too bleary eyed and tired to figure that out right now. I suspect that other things would come into play to interact with that also. It's these interactions that are the killer - it is really tough to understand what is going on.
Arghhhhh. Anyone have a plain English explanation of this RRC?
Did I mention TAX REVOLT in another thread? I tell you, I am getting fed up with this.
-ERD50