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Old 04-02-2010, 03:36 AM   #101
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I learned that the suppositions regarding that your tax bracket should be lower, and that paying off your house, both need to be re-visited with the negative consequences of increased taxes in retirement. Also, that when most of your taxable income is due to short term capital gains due to the significantly higher returns, you continually flirt with higher tax brackets then you would not like to be in. And that the expiration of the bush era cuts, will likely result in a 3% higher rate in 2011 and beyond for these higher brackets.
In short - I pay TOO D*@# much tax. I don't mind my fair share, but I feel like I'm paying a couple of somebody else's shares as well. Tax free Roth IRA growth of income is looking better and better.
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Old 04-02-2010, 08:00 AM   #102
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Originally Posted by whitestick View Post
I learned that the suppositions regarding that your tax bracket should be lower, and that paying off your house, both need to be re-visited with the negative consequences of increased taxes in retirement. Also, that when most of your taxable income is due to short term capital gains due to the significantly higher returns, you continually flirt with higher tax brackets then you would not like to be in. And that the expiration of the bush era cuts, will likely result in a 3% higher rate in 2011 and beyond for these higher brackets.
In short - I pay TOO D*@# much tax. I don't mind my fair share, but I feel like I'm paying a couple of somebody else's shares as well. Tax free Roth IRA growth of income is looking better and better.
Why are you taking short term capital gains??
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Old 04-02-2010, 08:30 AM   #103
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Someone remind me next year not to file my tax return until before April 1. Just received a correction of ordinary dividends and qualified dividends for 2009. Filed my tax return just a week ago because I got my final k-1 statement. What a headache for such a minor difference. Time for a med.
Yep - that's why we wait until just a few days before April 15 to file.

And one year - we still got an corrected 1099 just after anyway!!!!!

Audrey
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Old 04-02-2010, 09:05 AM   #104
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I hate K-1s with a passion. I've sworn off all investments that issue 'em.
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Old 04-02-2010, 11:06 AM   #105
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Lets see. Things I already knew and are reaffirmed:

I donít like to pay taxes
I should keep better records during the year
We are very fortunate
Our tax rate has declined drastically since I stopped working
The tax code is growing in complexity faster than tax SW ability to manage the complexity.

New this year:

form 1116 is still hard, just less so
Turbotax automatic transaction download is very time-saving
H&R Block tax at home wonít let you declare foreign income without using form 2555
Next year my default SW program changes - it's turbotax in spite of their poor customer service record.


My final thought Ė detailed knowledge of taxes and personal tax strategy will be a significant advantage over the upcoming decade.
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Old 04-02-2010, 11:30 AM   #106
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I hate K-1s with a passion. I've sworn off all investments that issue 'em.
I agree! I also learned that it does not pay to work.

Tomcat98
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Old 04-02-2010, 11:54 AM   #107
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I hate K-1s with a passion. I've sworn off all investments that issue 'em.
Agreed. I somehow ended up with a small investment in one of these years ago. Since it was small, I just did the best I could to enter the info and I am not sure I got it right or not. But I never got audited. I sold it and also decided to avoid them, just not worth the hassle factor for me.

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The tax code is growing in complexity faster than tax SW ability to manage the complexity.
I heard someone comment on this recently, can't recall where, but I think he made a very pragmatic point. The line of thought went something like this:

1) A basic tenet of most 'modern' law (the past several hundred years?) is that 'ignorance of the law is no excuse'. And that makes good, common sense - allowing for ignorance would simply be unworkable.

2) But, if we are to expect the 'common man' to not be ignorant of the law, then those laws need to be reasonably understandable by the common man.

3) Current laws are so complex, not even lawyers or the legislatures that passed those laws understand them. They often disagree on the interpretation.

4) It is unreasonable to expect the common man to not be ignorant of such complex laws.

5) The system is broken.

I thought that was a very good take on it.


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Old 04-02-2010, 12:22 PM   #108
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What I learned:
- If you have a small mortgage or no mortgage, it takes a lot of itemized deductions to get up to the standard deduction. We gave cash to charities and many boxes of carefully logged items to Goodwill, and only got a couple grand above the SD. Even with two-year bundling, it's probably not worth the hassle for us anymore. I'll probably do more Freecycling.
- I need to change tax software. I used TaxAct last year, but it didn't function right (I had to reload the program for every session). I've been a longtime H&R Block TaxCut user (now "At Home"--ugh), but that program has gone downhill. Far less information in the "help" menus, and their wording is imprecise (e.g. "Did you contribute to a 'Solo 401K' in 2009?" When the real question should have been "Did you contribute to a 'Solo 401K in 2009 or do you intend to make a contribution for tax year 2009?"). The cynic in me wonders if a company that sells in-person tax services might have a hidden agenda in selling less-than-stellar DIY tax software. So, despite reservations, I'll be a TurboTax user next year.
- I did a good job of estimating our taxable income and selling enough assets with CG to use up all of the 0% allowance on that. This year I'll go a step further and see if both DW (no income) and I (some earned income) can contribute to a deductible IRA--if I'd done that this year I could have gotten my taxable income down even lower and sold more CG at the 0% rate.

We have a terrible tax system. If it doesn't make you into a liar, it makes you into a lowly schemer consumed by beating the system. And those who escape both those fates come to believe they are patsies. And they are right.
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Old 04-02-2010, 01:13 PM   #109
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I learned that North Carolina is NOT giving refunds because they don't have the cash.
Nice!
TJ
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Old 04-02-2010, 05:30 PM   #110
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I learned I may have done something wrong? Received my tax refund this week and it was $2500 bigger than what was on the return I filed. I assume I'll get an explanation letter at some point.
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Old 04-03-2010, 12:38 PM   #111
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Originally Posted by samclem View Post
What I learned:
- If you have a small mortgage or no mortgage, it takes a lot of itemized deductions to get up to the standard deduction. We gave cash to charities and many boxes of carefully logged items to Goodwill, and only got a couple grand above the SD. Even with two-year bundling, it's probably not worth the hassle for us anymore. I'll probably do more Freecycling.
- I need to change tax software. I used TaxAct last year, but it didn't function right (I had to reload the program for every session). I've been a longtime H&R Block TaxCut user (now "At Home"--ugh), but that program has gone downhill. Far less information in the "help" menus, and their wording is imprecise (e.g. "Did you contribute to a 'Solo 401K' in 2009?" When the real question should have been "Did you contribute to a 'Solo 401K in 2009 or do you intend to make a contribution for tax year 2009?"). The cynic in me wonders if a company that sells in-person tax services might have a hidden agenda in selling less-than-stellar DIY tax software. So, despite reservations, I'll be a TurboTax user next year.
- I did a good job of estimating our taxable income and selling enough assets with CG to use up all of the 0% allowance on that. This year I'll go a step further and see if both DW (no income) and I (some earned income) can contribute to a deductible IRA--if I'd done that this year I could have gotten my taxable income down even lower and sold more CG at the 0% rate.

We have a terrible tax system. If it doesn't make you into a liar, it makes you into a lowly schemer consumed by beating the system. And those who escape both those fates come to believe they are patsies. And they are right.

I know what you mean by sometimes it's just simpler to take the standard deduction and not itemize.

One year I had many donations to Goodwill and kept good records, expecting my effort would be rewarded with a good deduction but found out I was better off just taking the standard deduction that year. This year though, it was still better to itemize for me.

The process of donations should be easier when you switch over to Turbotax as they have their Itsdeductible website that you can enter, keep track of deductions during the year, then Turbotax will automatically import this info when using it to prepare the return.
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Old 04-03-2010, 01:24 PM   #112
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Starting my taxes this weekend...UGH.
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Old 04-03-2010, 03:57 PM   #113
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I also learned that it does not pay to work.

Tomcat98
Unfortunately there are many people on welfare that have learned the same thing.
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Old 04-03-2010, 06:03 PM   #114
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I learned to keep better track of my Vanguard statements. I have them going back to 1997 and I'm sure I don't necessarily have the same investments now.
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Old 04-04-2010, 05:54 AM   #115
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Unfortunately there are many people on welfare that have learned the same thing.
Then there must be some truth to it.
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Old 04-04-2010, 07:13 AM   #116
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Unfortunately there are many people on welfare that have learned the same thing.
Welfare has pretty much gone the way of the dodo unless you count unemployment compensation.
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Old 04-04-2010, 07:44 AM   #117
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Originally Posted by samclem View Post
What I learned:
- If you have a small mortgage or no mortgage, it takes a lot of itemized deductions to get up to the standard deduction. We gave cash to charities and many boxes of carefully logged items to Goodwill, and only got a couple grand above the SD. Even with two-year bundling, it's probably not worth the hassle for us anymore. I'll probably do more Freecycling.
Learned the same thing last year. This year, I knew better and saved myself the effort of trying to itemize everything I gave to Goodwill. Much easier!
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Old 04-04-2010, 10:21 AM   #118
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Welfare has pretty much gone the way of the dodo unless you count unemployment compensation.
Welfare Spending Chart in United States 1995-2015 - Federal State Local



400 billion dodos?

And yes, when unemployment benefits are approaching two years, I think that needs to be considered welfare, not just helping someone get through a gap between jobs.

-ERD50
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Old 04-04-2010, 06:27 PM   #119
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Learned the same thing last year. This year, I knew better and saved myself the effort of trying to itemize everything I gave to Goodwill. Much easier!
Same here.
If I have something of decent value, I try to donate it to 501(c) organizations.
See http://en.wikipedia.org/wiki/501(c)
I take pictures of the items with my cell phone and compose my own donation letter in the proper format (i.e. IRS guidelines). I estimate the value by looking for same or similar item on sale onthe internet and print out two of the best asking prices. I print the photos for my tax records.
All the recipients need to do is sign and date two letters...one for me, one for them. Piece of cake.
For all low value items, not worth the time to do this approach.
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Old 04-05-2010, 12:57 AM   #120
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My surprising lesson: It's good to have some tax liability (so I can take advantage of tax deductions).

Since I'm just a few years into retirement, this was the first year I was able to get my federal income taxes down to zero. Near the end of last year I estimated my tax situation and exercised enough capital gains to barely keep me under the $34k income limit for 0% capital gains rates. But since my estimates of the stock dividends I would receive at the end of the year weren't perfect, I ended up about 1.5k away from the bracket where I would have started to owe CG tax.

I had assumed that owing approximately zero federal income tax would mean my deductions would be under the standard deduction. But that turned out not to be the case and I was a few thousand over the standard deduction due to having paid lots of state taxes last year when my income was higher. So I missed out on some deductions that I could have taken if I had tax to deduct them from, and even missed out on an educational credit. All in all I probably only gave the tax man an extra $200 or so, so more frequent/accurate tax estimates that would have alerted me might not have been worth the effort.

Next year I should be under the standard deduction so this shouldn't be an issue. I am intentionally NOT going to take this experience as a reason to be more obsessive with estimating my taxes; I'm already too obsessive with that kind of thing.
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