How much did you SPEND in 2005?

[LOL!]

I had to include income tax and FICA because it was about 33% of what we spent. That makes you kind of notice it.

 

[haha]

I'm curious why people are not including income taxes in their budget.  Isn't it an expense like everything else?

I believe income taxes are categorically different from living expenses, since they are a function of earnings, not of expenditures. You can be the most frugal person in the world, and if you make $500, 000 per year, you are going to pay a lot of income tax.

Yet the day you quit work, that figure will decline markedly.

Ha

 

[MJ]

The expenses I show are accurate almost to the penny. I am pretty frugal. Like most here, the only tax I included was my property tax which I see as an house expense. I do use turbo tax to help me calculate approximately what I will need pay for the current and next year. If you are already ER'd, the Fed and State tax due will vary based on the amount of your investment returns and investment strategies.
I need to figure out how to lower my taxes which after I sell my house will be fairly high.

MJ

 

[Cut-Throat]

I'm curious why people are not including income taxes in their budget. Isn't it an expense like everything else?

As Ha says. It is based on income. When you are retired and basically only have investment income it will go down. And you can always afford income tax.

I track spending for budgeting purposes. If I made a 1 time windfall profit on a piece of real estate and incurred another $100K of income tax, it would not tell me a lot about what I actually have to spend each year. However a property tax is a known entity and must be paid every year, no matter how well you are doing on your investments. That is why property tax is a 'cruel' tax, where income tax can always be afforded.

It's a nice problem to have. The bigger the tax, the better off you'll be.

 

[justin]

I should have taken a photo of the cherry tomato plant that grew in my yard last year. Apparently a tomato fell off one of the potted plants I had sitting on the patio 2 years ago and rolled off the patio and remained there until the following spring when its seeds sprouted. I saw it and just left it to its own devices, figuring it wouldnt stand much of a chance. By mid july, that plant had spread to cover about 9 square yards.

9 square yards?? Or 243 square feet? Or an area 15.5 feet by 15.5 feet?

 

[retire@40]

I believe income taxes are categorically different from living expenses, since they are a function of earnings, not of expenditures. You can be the most frugal person in the world, and if you make $500, 000 per year, you are going to pay a lot of income tax.

Everything you say is true, but the income taxes is still an expense.

I include a provision for taxes as part of my budget because it allows me to determine how much gross income I will need.  For example, if I know I will need $50K a year for my spending, I can't just withdraw $50K from my portfolio if I know there will be tax consequences of, say, $5K.  I must be able to determine the total gross withdrawal, including taxes, so I can net the $50K I will need.  The total withdrawal in this example is not $50K nor $55K, but an amount to compensate for taxes on the $50K plus taxes on the added $5K.  So the actual gross withdrawal is an amount higher than $55K, depending on the taxability of the entire withdrawal.

Why is this important?  Because it can help one predetermine the most tax-efficient strategy for withdrawals.

 

[youbet]

Everything you say is true, but the income taxes is still an expense.

Agree completely, income taxes are an expense. You either have to account for them as a reduction to income or an expense in the current period, whichever you are more comfortable with, but they have to be accounted for. I include them as an expense.

Also agree with Ha, they are not a "living expense." But they are an expense just the same.

 

[kat]

I'm curious why people are not including income taxes in their budget. Isn't it an expense like everything else?

I did not include it because I don't owe any. Don't jump to too many conclusions, as occasionally happens here, I noticed. It wasn't my goal. I just used the tax system everyone uses. Once in awhile -- and maybe more in the future -- I catch a break! Lots of times before it seemed I didn't catch any breaks (self-employed...), but I didn't hold it against anybody (the system) for more than a brief second. All in all, it was a good working life -- before ER.

 

[cute fuzzy bunny]

9 square yards?? Or 243 square feet? Or an area 15.5 feet by 15.5 feet?

Yepper doodles. It was one unbelievable sprawling plant. It shot out two 'tendrils' that were about 10' long each. Most of it was about waist high. About half the tomatoes were lost because they contacted the ground and got a little rot on them. I could have planted this sucker into a planting box over an arbor and it would have covered it like a grape vine.

I dont pay income taxes either. As soon as it appears my tax dollars are being well spent, I might consider not jumping through hoops to avoid paying them.

 

[SteveR]

Yepper doodles.  It was one unbelievable sprawling plant.  It shot out two 'tendrils' that were about 10' long each.  Most of it was about waist high.  About half the tomatoes were lost because they contacted the ground and got a little rot on them.  I could have planted this sucker into a planting box over an arbor and it would have covered it like a grape vine.

I dont pay income taxes either.  As soon as it appears my tax dollars are being well spent, I might consider not jumping through hoops to avoid paying them.

Must be a lot of bull crap fertilizer around your house to one to grow like that.

 

[cute fuzzy bunny]

I'm going to stunt your clever remark by responding as though I believe you're speaking literally...

We live in an old flood plain thats been levied extensively to build homes and lay out farms. Between all the stuff that was carried down and deposited by a few million rainy seasons, and the nearby dormant volcano (no i'm not kidding) that used to burp out some ash and whatnot periodically, we have some pretty rich soil 'round these parts. As evidenced by being able to drop a piece of fruit and have a plant start growing...

These were the "sweet 100" variety. Very prolific. Given that this sucker grew the way it did with 10 hours of direct sun a day @ 100+ degrees with just a spray from the hose a couple of times a week...highly recommended.

 

[kat]

Yepper doodles. It was one unbelievable sprawling plant. It shot out two 'tendrils' that were about 10' long each. Most of it was about waist high. About half the tomatoes were lost because they contacted the ground and got a little rot on them. I could have planted this sucker into a planting box over an arbor and it would have covered it like a grape vine.

When I bought my house, I spent the next five years with spontaneously sprouting cherry tomato plants, courtesy of the previous homeowner, and some petunias showing up in odd places. This is New York, with many months of winter.... Maybe it helps? Who knows. I hear it's the birds, and I kind of buy that....

P.S. Tomatoes do well on my relatively small lot in the city because I plant them next to the driveway (away from my dog) which is on the sunny side of the house. Tomatoes take to the hot asphalt......Go figure.....

 

[cute fuzzy bunny]

Just thank god you dont have wild asparagus or worse still...creeping bamboo.

 

[kat]

... And there's the neighbors on both sides who feed the birds... who live in my trees and bushes... and drop the seed...... I don't know the names of most of the plants the seeds grow (birds and squirrels are so careless with their seeds....) The bane of my existence, bird seed from my neighbors. Except for the violets, which are rather pretty.

 

[Robert the Red]

he bane of my existence, bird seed from my neighbors

Pretty mild bane!

 

[kat]

There's others, but I'll spare us both. (But you should see how those plants spread.... it's my whole entire back yard now.....)

 

[REWahoo]

I'm going to stunt your clever remark by responding as though I believe you're speaking literally...

We live in an old flood plain thats been levied extensively to build homes and lay out farms. Between all the stuff that was carried down and deposited by a few million rainy seasons, and the nearby dormant volcano (no i'm not kidding) that used to burp out some ash and whatnot periodically, we have some pretty rich soil 'round these parts. As evidenced by being able to drop a piece of fruit and have a plant start growing...

These were the "sweet 100" variety. Very prolific. Given that this sucker grew the way it did with 10 hours of direct sun a day @ 100+ degrees with just a spray from the hose a couple of times a week...highly recommended.

Years ago a friend built a home in an area with very poor soil. In an effort to improve the condition of his soil quickly and cheaply, he discovered he could get dried sludge free from the local wastewater treatment plant. Realizing a free topsoil bargain when he saw it, he had several loads spread on his yard.

What he failed to realize was that tomato seeds pass through the human digestive system undamaged. And humans in his neck of the woods evidently ate a lot of tomatoes, because both his front and back yards were overtaken by wild tomato plants. They grew three feet high from the front curb to the fence at the rear of his back yard!

BTW, he said they were delicious!

 

[cute fuzzy bunny]

I hope he tested that sludge for heavy metals before he dumped it all over his yard...

But a nice job of blunting my seriousness with a funny and related story!

 

[REWahoo]

I hope he tested that sludge for heavy metals before he dumped it all over his yard...

Testing? What testing? This happened long before the avearage joe knew what kind of dangerous sh*t dried sh*t could contain.

But a nice job of blunting my seriousness with a funny and related story!

You're welcome.

 

[unclemick]

Yep

Many many years ago - St Benard Parish did the recycled sludge thing (1960's) for developers expanding the suburbs.

Old timers had many a story - on how hard tomato plants are to kill. Tough rascals!

 

[kat]

....I think whatever is in bird seed is a very close second, having experienced both.

 

[cute fuzzy bunny]

Well, last years plant filled my compost bin to the top. Come to think of it, its been a few months, I should go take a peek in there and turn everything over. Maybe having seen what happened to the last plant will be a lesson to any prospective plants about what THEIR fates will be should they decide to take root at casa de ()...

 

[Nords]

9 square yards?? Or 243 square feet? Or an area 15.5 feet by 15.5 feet?

Same here. When the winter weather isn't cold enough to kill them they just keep on going.

We've been picking tomatoes every week since they ripened last August. They're a little smaller now and a little fewer than they were last summer but they're still better than paying $1 each at the store!

 

[Lancelot]

$13,202.25 or $36.17 day.

I have a cash budget and track every baht on quicken.
Includes US Income taxes, emergency trip back to the USA, new cell phone, travel.

Everything...

Lance

 

[retire@40]

$13,202.25 or $36.17 day.

I have a cash budget and track every baht on quicken.
Includes US Income taxes, emergency trip back to the USA, new cell phone, travel.

Everything...

With a budget like that, I could have completely retired in my early 30s with the net worth I had back then.

My gut feeling is that I wouldn't enjoy my life much with a $13K budget, but that's just me.