Taxes...

[Revalos]

So I go from being a moderately poor college student in Madison, WI, with my wife and I bringing in about $40k a year to a moderately well off cube monkey in Washington, DC pulling in about $100k a year...this all happened since August 2003.

This seems to rock at first...until now when I just did my taxes. I owe freaking $2k! That's 5 of my damn car payments!

What the hell did I fuck up in my withholding? I took the fewest exemptions possible, I don't own stocks or anything...what the hell did it? Is it because I don't get all those nifty student credits anymore? Does the massive income change somehow fuck taxation up? I blame GWB, although I'm sure he reduced the damn things.

The 2005 tax calculator tells me I'll owe close to $4k next year + penalties unless I fix whatever it is that I'm fucking up. Although, I will be buying a (fucking ass-reamingly expensive) house so that might reduce the tax a bit. But should I start putting more money into the withholding? I thought you only do that if you are some kind of stock market jockey or some shit.

So, if you get nothing out of this post, all you collegiates out there...one day you'll break into the real world and The Man will serve you ice cream on a silver platter, but he'll rape you with the spoon when its over.

[Edaarin]

One of the reasons I'm trying to get a tax accounting internship this summer...heheh...

[Back]

Figure 33% of your earned income will go to taxes. Taxes include federal, state, local, disability and social security.

And people say we aren’t a socialist society.

Owning a home allows you to itemize. You can write off all the interest you pay on a home. It would be worth it to look into someone doing your taxes for you for two reasons. One, its easier on you, but more importantly, two, you can see what they do, then do it yourself next time.

[Revalos]

Yeah, I'm pretty much convinced that biting the bullet and getting a Tax Advisor is probably worth my while, especially next year with the home and whatever other crap I have to itemize. I wish I could have used that car I donated to charity, but it wasn't worth enough to itemize.

33% looks about right on what my tax program says, ah well...it was nice back in the day to get a refund...I guess I'm just paying it back now.

[Back]

Mind you, the upper crust only pays around 20%-15% of their income. Possibly less with all the loopholes.

Too bad the "upper crust" pays most of the taxes in this country still.

- Arkans

[peam]

i'd just quit paying htem.

You're withholdings have nothing to do with the overall amount you pay in taxes. The withholding is simply the estimated amount you'll pay in taxes, if its over or under what you actually owe than you either pay the difference or get it back.

The fact is, if you just make money and don't shelter it you get fucked.

However, buying that house will give you all sorts of deductions.

[Jazuela]

Buying a house will give you a *significant* bonus in the tax situation.

Your first year of mortgage payments is almost all interest - no principal, or very little if any. The interest is deductible off your taxes, which means you'll likely get a very lovely refund at the end of the next year.

The following year, not as much of a refund, but still definitely a refund. Expect this to happen for the first five years, with each year being subsequently lower for your refund.

After that things start to level off, because you'll be paying more principal and less interest.


EDIT: The following paragraph isn't entirely accurate. I can't remember how it works. But there's some kind of calculation that goes into net/gross income when deducting paycheck amounts for certain savings plans, so you definitely want to look into them and ask an advisor for the company for an explanation in plain english.

If you have a 401K at work, ask whoever is the advisor for that about tax benefits. In addition, make sure that if possible, all "benefit" deductions are made pre-tax, rather than post-tax. That includes union dues if any. When you have all your medical, union, savings plan deductions made pre-tax, it lowers your "net payment" for that paycheck, and the taxes come off the net rather than the gross. The pre-tax payments into savings plans and such are not taxable and not considered income.

Lastly, if you have a state income tax, make SURE it's being configured correctly. Like it or not, when you have state income tax refunds, the government will tax the refund *even though the government already taxes that amount the year before, within your paycheck.*

It's better to owe state income tax by deducting too little during the year, than get a refund at the end of the year and have to pay twice on that refund.

I'm not sure why the feds do this..I don't even know if they're supposed to be doing it. But they do, and the only thing you can do about it is either pay extra state at the end of the year, or bend over and take it.

[Edited on 2-5-2005 by Jazuela]

[Revalos]

Thanks for the advice y'all, except Captain Bar Tab's suggestion on not paying them.

My wife and I do have a 401k and all we pay is pre-tax. A 401k isn't an IRA right? Maybe I should up my percentages...currently I'm at 5% (the highest amount that is matched by my employer).

Heh...I owe $300 to Maryland and $1700 to the Feds...so no problems with State refunds there...::mutter::

I am going to set up a health savings plan next year...I couldn't figure out how to do it right this year (since I need to keep so much liquid assets for the house down payment). I really think the house will help a great deal in all of this as well.

I am glad that I'm still spending like I did in College mostly so I have more than enough to pay the taxes now without any problem whatsoever, its just the principal of the matter (heh...I made a pun) that irks me.

[Back]

Originally posted by Arkans
Too bad the "upper crust" pays most of the taxes in this country still.

- Arkans

Wheeeeee!!!!!!!111!!111

[Jorddyn]

You can have however much withheld from your paychecks as you want, regardless of how you set up your exemptions. I signed my W-4 with Single and 0 exemptions, plus I had an extra $40 a paycheck taken out for taxes because I took a hit from rolling my SIMPLE IRA into a Roth this year. I recommend you do something similar.

Assuming you and your wife earn most of your income from salary, it is relatively easy to figure out how much you are going to owe/get refunded.

Grab a 2004 form. Enter in your expected 2005 income (AFTER deducting all pre-tax including 401k and cafeteria plan stuff).

Unless you're planning on having a child before December 31st, you'll have 2 exemptions.

As far as deductions, you have two options. You can assume you'll be taking the standard deduction, or you can estimate what your itemization will be. Take your amortization schedule from your house, plug in the interest number. Plug in the estimated annual taxes on your house. Plug the amount of state tax you paid last year plus the $300 you have to pay now. If you're big on donations, guess how much you're going to give throughout the course of the year. Instant schedule A!

Work all the way down to the bottom of the 1040, see how much your total tax bill is (IGNORE WITHHOLDING). That's how much tax you'll owe for the year. Divide it by how many times you get paid each year, and that's how much should be coming out of each paycheck.

Check your paystub. If you don't have enough coming out, visit HR and tell them you want to have an extra X dollars withheld each pay period.

Don't get a tax advisor, get a money manager.

Don't pay quarterly estimated taxes (it hurts too much and will piss you off), bump your withholding.


My wife and I do have a 401k and all we pay is pre-tax. A 401k isn't an IRA right? Maybe I should up my percentages...currently I'm at 5% (the highest amount that is matched by my employer).

I'm guessing you're fairly young. In that case, I recommend that you don't up your 401k past what your employer matches. Instead, drop a couple hundred each month into a Roth IRA. You can contribute up to $4,000 in 2005 (so long as your joint income is under 150,000), and I recommend you do the full amount if at all possible. This won't help your taxes now, but will provide really nice income when you're older.

With a 401k, when you withdraw money after age 59 1/2, you have to pay tax on the income portion of it. With a Roth, when you withdraw the money after 59 1/2, it is all tax free. If you need to get to the money before that age, you can withdraw the principal from your Roth penalty free (so long as the money has been in there for 5 years), but you'd pay a 10% penalty PLUS taxes to take it out of your 401k.

Jorddyn, CPA :D

[Scott]

Don't feel bad. My dad owes $12,000 this year......

[Jazuela]

Another thing to keep in mind:

Getting a refund is nice, but the government is holding onto your money all year and you're not getting a dime's worth of interest on it when the refund check comes.

What you probably would rather do, is see the absolute smallest debt/refund at the end of the year. Get it as miniscule as you can, so you don't owe anything, or get anything back.

The best way to do that is to figure out in advance your projected tax amount for the following year -

Then claim whatever you need in order to come close to that amount. Then, set aside a few bucks every stinkin week in a straight low-interest savings account, which would exist specifically for the purpose of paying tax if you end up owing at the end of the year.

If you end up not owing, or getting a refund, you can either keep that money in the bank for the following year (since your refund would be less the following year because of your interest/principal deal with your mortgage), or donate it and use it as a write-off (to offset the potential debt with that mortgage issue), or spend it, or whatever.

A nice thing about this system, is that if you choose to keep the money in the bank, at the end of 10 years you'll have a rather nice sum you can use for a 10-day cruise, or a new roof for your house (which you might need by then), or renovations, or a car...

All because you socked away 10-20 bucks a week "just in case" you owe money at the end of the tax year. And if you're in the 100k income bracket, 10-20 bucks doesn't hurt a bit. Not even a tiny little ant-bite's worth of sting. Chump change, mad money.

I did this before I got married and had enough cash to buy a new car after only five years of nickel-and-diming myself to death. It was very sweet :)

[Revalos]

Thanks everyone for the continued advice!

Yay! I tempted a CPA to post for free...woo!

Jorddyn, My wife and I are both 26 and I was considering starting to contribute to an IRA...but the house hasn't been found or purchased yet...we're still looking. I've got about $14,000 in the bank right now and pay about $1200 a month in rent and miscelaneous bills, I wanted to have a good chunk of change that I could give as "honest money" on a home contract since it is insanely competitive around here.

Should I still start an IRA up anyway? If so, how should I do that? I've heard of a money manager before but where would the best place to look for one be? Internet? Classifieds?

Jazuela, I am saving a good bit of money...I just started up a savings account with the Federal Credit Union that I'm associated with, I plan on putting some money away every paycheck (they have a branch in my building...makes it easy) but should I do an IRA instead?

I know that its best to get your taxes right on the money, no more, no less, but its tough for us. I am on a salary, but my wife isn't. She's hourly and her wages shift from month to month. So I have to guestimate what she's going to make...it shouldn't differ that much I guess.

And Scott...ouch...12 Gs is a load...hopefully he pulled in some serious cash to warrant that. I remember when my dad got stuck when the Stock market went belly up and also owed some insane amount of money on taxes because he had made so much before losing it.

[GSTamral]

<<<
Mind you, the upper crust only pays around 20%-15% of their income. Possibly less with all the loopholes.
>>>

This is not true. There are a few and far between who pay only that on income, and most of those people are heavily re-investing money (real estate, etc) as business expenses, much of which creates jobs.

More importantly, a flat tax can solve the loophole matter quite properly. Some people decide to spend more of their lives getting educated, and spend more time working for that chance to succeed. Fuck the american dream if we tell them they can work as hard as they want but get nothing more to show for it. Then we'd be just like the working class of socialist germany. 13.5% unemployment, a single-faceted labor workforce, a brain drain of the brightest minds moving out where they CAN succeed, and 35 hour workweeks for many of the employed. That's all well and good if people in general didn't mind spending the rest of their lives sharing homes or apartments with other families, not being able to go on nice vacations, and in general just having the basics in life, but that type of lifestyle doesn't appeal to everyone. Some people don;'t mind the routine. Others do.

Back to topic:

At 100,000 a year, not owning a house with a wife:
Social Security will eat about of the total (6.2% up to 78,000 for each of you). There's 6,000.
FICA medicare will eat up another 1500 or so. Federal Taxes on average for you (as a married couple, 100k join income, come to around 20-23% on average). That's about 20,000-23,000 in federal taxes.
State taxes and city taxes will run you another 4000-5000.
Unemployment will run about 300 a year.
All other applicable taxes will run less than 100 per year.

So if you are paying less than 32,000-35,000 a year total in taxes by each paycheck, chances are you are gonna owe money.

Throw in food, rent, car payments, gas, and general living expenses, you might be able to save enough to buy a closet in fairfax in 7 years.

[Back]

Yeah, this economy is rough.

[Revalos]

Actually Tamral, I will buy a house this year. Yes, it will involve 100% financing, and yes, it will be hard to scrape it for a couple of years, but I want to get out of the Suitland ghetto. My Columbian crack dealer looking image can only get me so far (always nice to have cops come by to tell me my lights are on in my car...heh, scares the crap out of my neighbors).

It won't be in VA...I'm shooting for College Park. I can still find a few houses (on .5 acres, without sharing a wall, and a walkable metro stop) <$330k there, its just a matter of competing with the goldfingers who see that College Park's neighborhoods are getting better and better while Bethesda/Silver Spring get worse.

Don't argue with Tamral. Since he said it, it must be impossible for someone at his age and in his tax bracket to own a home.

[Jazuela]

Tamral's computation is very badly flawed. I don't know about the laws in Virginia or Maryland, but in Massachusettes you can deduct the a portion of the cost of your rent from your income for state income tax purposes.

Also if either of you are a full-time student and under the age of 25, you are *exempt* from income tax, whether you're married or not.

Then there are the various deductions that aren't related to owning a home - medical, which most people don't qualify for, but if you do it can be a very sizeable deduction. It includes pretty much any medical expense other than experimental drugs or treatments, and over the counter medications.

There's also charitable contributions - if you're only claiming $650 they won't blink. If you want to claim more than that it's a good idea to keep receipts, just in case you get red-flagged.

Costs involved in looking for work - including travel expenses, such as air-fare and hotel out of state for a job interview. It isn't something you'd want to fudge though - if you went to Disney World with your family for vacation, don't ask for a job application and pretend it was job-related. THEY KNOW!

If you use your home computer in its own room for work purposes, in certain situations you can claim a *portion* of your home (or apartment) as a work-related expense. The laws are pretty strict on this, so check carefully to make sure you qualify.

Other work expenses, such as uniforms, business lunches paid for out of your own pocket and not refunded by the company, miscellaneous travel for work-related meetings, etc. etc. etc. If it's required as part of your job, and the company isn't picking up the tab, then it's *usually* a deductible expense.

People who are in $100,000 income brackets tend to have more expenses than people in lower income brackets. And the more expenses you have, the more likely some of them are deductible.

[Revalos]

Being under 25 and a student and being exempt from income tax is news to me. I had to do it forever, but I never owed anything, it was always a refund of a portion. I know I did pay some out of withholding. But since I'm 26 now, no dice.

Sadly, I don't qualify for much of anything else on there either, as for charity, I donated my clunker for $3k and dropped a couple other things off to Salvation Army for about $100. I looked at itemization, and the standard deduction was more. Medical isn't itemizable until it reaches a certain amount, which mine didn't.

Wisconsin also had that rent-percentage deduction...but sadly MD doesn't.

I definately milked the moving for work deduction last year, as I had to move from WI to DC, at a couple thou. I wish I could deduct the cost of the expensive ass suits I have to buy for work though...that's probably $1000 or so.

Oh well...learning a lot here, hope others are too. Thanks for the help!

[Jorddyn]

Originally posted by Jazuela
Also if either of you are a full-time student and under the age of 25, you are *exempt* from income tax, whether you're married or not.


This is totally, completely incorrect for Federal income tax. I can't speak to specific states, though.

I'll respond to the rest of the posts later.

Jorddyn

[GSTamral]

<<
Also if either of you are a full-time student and under the age of 25, you are *exempt* from income tax, whether you're married or not.
>>

And you call my post flawed?

I never said it was impossible to own a home at a young age on 100,000 a year in income. I said it was impossible to own a home in the Northern Va/DC metro area on that income.

If he is willing to move north, or further south, where homes are around 250-350, it is easier, but by no means easy.

350,000 100% financed for 30 years at 7.75% (probably the best rate he'll find as his age with no down payment), translates into around 2,700 a month in payments, of which, during the first year, approximately 2,300 will be tax deductable. Now throw in property taxes, which in the area will run you around 10,500 a year, all the insurance needs, which can run up to around 2,500 a year (but not tax deductable), and what you'll end up with is around 40,000 a year in tax deductable payments.

[GSTamral]

<<
If you use your home computer in its own room for work purposes, in certain situations you can claim a *portion* of your home (or apartment) as a work-related expense. The laws are pretty strict on this, so check carefully to make sure you qualify.
>>

This is hogwash. Even if you own your own business and operate it out of your own home, this cannot be done. You can claim the computer, you can even claim a car, but your primary home principal is never tax deductable. Nor can you claim a tax break for depreciation.

[Jazuela]

Tamral, you're full of shit.


Home Office Tax Deduction - What's tax deductible?

You can deduct on your tax return real estate tax, mortgage interest, utilities, operating expenses, and depreciation. You cannot deduct on your tax return the total that you incur for all of the above expenses. You must allocate the expenses to business and personal use on your tax return. Use one of the two (2) following methods:
if all of the rooms are not equal size divide the number of square feet used for home office space by the number of total square feet of your home. Apply the resulting percentage to your tax deductible expenses on your tax return. (i.e. 100 sq. ft. used for a home office divided by 1000 sq. ft. total size of home equals .10 or 10%. Apply 10% to the total of each tax deductible expense on your tax return.);
if all the rooms are the same size you may base your home office tax deduction on a comparison of the rooms used for home office space versus the total number of rooms. (i.e. Your home has 10 rooms and 2 rooms are used for your home office. You can deduct 20% of your total expenses on your tax return.)

http://www.irs.gov/pub/irs-pdf/p587.pdf

Is publication 587, which gives you all the criteria necessary to qualify for deducting expenses involved in working out of your home. It includes using a part of your home as a daycare center, but is not exclusive for that use only. The quote above is a brief summary of parts of Pub587, taken from a webtax website.

The reason I knew about this law, is because I had a home office when I owned my own business, and had to learn what I was and was not allowed to itemize so that I could fill out my ScheduleC properly.

As for student status, I misrepresented my undersanding of the law, and confused it with state tax as well. The federal tax exemption applies if you are a student in the same place you are employed. If you work for the university and are a full time matriculating student there, then your employment with the university is TAX EXEMPT.

In Massachussettes, at least when I went to college, you were exempt from state income tax if you were a full time student in the state and under the age of 25. That law may have changed since then, it's been a couple of decades.

[Jorddyn]

The federal tax exemption applies if you are a student in the same place you are employed. If you work for the university and are a full time matriculating student there, then your employment with the university is TAX EXEMPT.

I always understood that you were exempt from FICA in such situations, but not Federal tax. It's not really relevant to the topic at hand, though, and I couldn't find anything on a quick search stating this as true or false, so I'm not going to state that as definite.


Originally posted by GSTamral
Social Security will eat about of the total (6.2% up to 78,000 for each of you).

The ceiling is actually up to 90,000 in wages (meaning your deductions/exemptions are irrelevant) per individual. You're ahead of the pack for even knowing there is a ceiling.


FICA medicare will eat up another 1500 or so.

True.


Federal Taxes on average for you (as a married couple, 100k join income, come to around 20-23% on average). That's about 20,000-23,000 in federal taxes.

Your number is high. On $100,000 of taxable income you will pay around 18,469 in tax according to the tax tables for married filing jointly. Let's say that they don't itemize. They'll get a $9,700 standard deduction. They'll also get to deduct $6,200 for the personal exemption. That leaves them with $84,100 in taxable income, and $14,506 in tax. 14.5% effective tax rate, not 20-23.

Assume they do buy a $300,000 house in June at 6.5%. (I'm not arguing about whether they can buy a house or not, whether the market sucks, or the interest rate. I'm using this as an example) The interest on that alone is to make itemizing worthwhile (approximately $9,750). They'll also have, at the very least, deductions for both state and property taxes, again lowering their effective tax rate.


State taxes and city taxes will run you another 4000-5000.

I know nothing about state taxes in that part of the country, so I won't comment.


Unemployment will run about 300 a year.

You have to pay your own unemployment taxes?!? :wow: That sucks.


So if you are paying less than 32,000-35,000 a year total in taxes by each paycheck, chances are you are gonna owe money.

Ignore FICA (SS and medicare). You can't adjust it, your employer will handle it correctly.

Don't worry too much about state taxes. You owed $300 this year - that shouldn't have been terribly painful with your income.

Focusing solely on Federal tax, the highest your liability (married filing jointly) will be at $100,000 of income is $14,506. That breaks down as follows (since I don't know how often you get paid):

Weekly: $279
Bi-Weekly: $558
Twice a month: $605
Monthly: $1209

My recommendations are as follows:

You said your wife works hourly, so I'm going to assume that her income is comparitively small. Have her claim 9 exemptions on her W-4. Likely, they won't withhold any Federal tax. Then, you can adjust your withholding as necessary to cover your joint taxes for the year. I think it will be simpler for you if you don't have to continually adjust both of your withholding.

Begin having enough withheld to cover the $14506 stated above. Once you buy your house, recalculate what you'll owe based off the amortization schedule and estimated property taxes that they give you. Adjust your withholding accordingly.


Jorddyn, My wife and I are both 26 and I was considering starting to contribute to an IRA...but the house hasn't been found or purchased yet...we're still looking. I've got about $14,000 in the bank right now and pay about $1200 a month in rent and miscelaneous bills, I wanted to have a good chunk of change that I could give as "honest money" on a home contract since it is insanely competitive around here. Should I still start an IRA up anyway?

My recommendation to you is that you do start contributing to an IRA. The sooner you start, the more you'll build up. Compound interest is a beautiful thing. You don't have to contribute all at once, though. Your limit for the year is $4,000 (for each you and your wife). Make a monthly deposit so that you'll have that much in there at the end of the year.

I'd say leave your $14,000 alone. That gives you a nice cushion in case something should happen (house-wise or otherwise). You said it is in the bank? You shouldn't have more than a couple thousand in a standard savings account because interest rates are so incredibly low (1/2 to 1%). Talk to your banker about a money market account if you haven't already. You get the liquidity you might need (they tend to limit you to several withdrawls a month), but will make closer to 3 or 4% interest.


If so, how should I do that? I've heard of a money manager before but where would the best place to look for one be? Internet? Classifieds?

My honest advice is to talk to your wealthy friends. Tell them you're looking into hiring a money manager, ask them who they use. Try to locate one who works on an hourly rather than commission basis. Why? Those who work on commissions tend to get paid more on the items that make more income for their firms. If the item is making more money for their firm, it is making less money for you.

Once you get a couple leads, go talk to them, see if they match what you want. Make sure they understand your goals.

A couple random notes.

Keep track of everything you donate. Everything. Anything that you can donate to Goodwill/Salvation Army/Charity of your choice rather than throwing away (or even selling at a garage sale), do. It adds up fast. Track the coins you give to the bell ringers, track the $10 you throw in at church.

You can deduct business expenses (Sorry, your suits don't count!) to the extent that they exceed 2% of your adjusted gross income.

You can only deduct medical expenses over 7.5% of your adjusted gross income. I sincerely hope this does not happen to you.

I really do wish you the best of luck. Feel free to U2U me if you have any more questions.

That'll be $350, please :D

Jorddyn

[Jazuela]

The FICA exemption applies to certain things related to schools and to non-profs. I can't remember what the three school-related things are called, it's in that publication I believe.

What I -think- you're referring to is the "Exempt" status of management employees and professors of colleges. Those are the folks usually on salary, rather than hourly wages, and not subject to union rules and restrictions. I was a non-exempt employee of a university, but if I had been a matriculating student there I would've been able to claim full exemption from taxes at -that- job. If I had another job elsewhere I'd still have to pay taxes for the second one.

[xtc]

Originally posted by Backlash
Figure 33% of your earned income will go to taxes. Taxes include federal, state, local, disability and social security.

And people say we aren’t a socialist society.

Owning a home allows you to itemize. You can write off all the interest you pay on a home. It would be worth it to look into someone doing your taxes for you for two reasons. One, its easier on you, but more importantly, two, you can see what they do, then do it yourself next time.

LOL @ Backlash, no offense but in the USA you pay very little tax.

In Canada the top tax bracket starts at $52 500 CDN. Every dollar earned over 52.5K is taxed at 50%. There is a National tax on all good and services of 7%. Additionally most provinces add their own tax on goods and services of 8%. Interest paid on a Mortgage is not tax deductable.

I have friends who live in Finland who tell me their top tax bracket is 65%.

So 33% is pretty reasonable when compared to other countries. One of the things I miss about the states is the low tax rate. However I have kind found a way around taxes up (which is totally legal)

[Back]

Originally posted by xtc

Originally posted by Backlash
Figure 33% of your earned income will go to taxes. Taxes include federal, state, local, disability and social security.

And people say we aren’t a socialist society.

Owning a home allows you to itemize. You can write off all the interest you pay on a home. It would be worth it to look into someone doing your taxes for you for two reasons. One, its easier on you, but more importantly, two, you can see what they do, then do it yourself next time.

LOL @ Backlash, no offense but in the USA you pay very little tax.

In Canada the top tax bracket starts at $52 500 CDN. Every dollar earned over 52.5K is taxed at 50%. There is a National tax on all good and services of 7%. Additionally most provinces add their own tax on goods and services of 8%. Interest paid on a Mortgage is not tax deductable.

I have friends who live in Finland who tell me their top tax bracket is 65%.

So 33% is pretty reasonable when compared to other countries. One of the things I miss about the states is the low tax rate. However I have kind found a way around taxes up (which is totally legal)

JFC I was just answering the original poster’s question on american taxes.

[xtc]

Originally posted by Backlash

Originally posted by xtc

Originally posted by Backlash

And people say we aren’t a socialist society.



LOL @ Backlash, no offense but in the USA you pay very little tax.

In Canada the top tax bracket starts at $52 500 CDN. Every dollar earned over 52.5K is taxed at 50%. There is a National tax on all good and services of 7%. Additionally most provinces add their own tax on goods and services of 8%. Interest paid on a Mortgage is not tax deductable.

I have friends who live in Finland who tell me their top tax bracket is 65%.

So 33% is pretty reasonable when compared to other countries. One of the things I miss about the states is the low tax rate. However I have kind found a way around taxes up (which is totally legal)

JFC I was just answering the original poster’s question on american taxes.

I wasn't dispariging you. I was simply saying the USA has a way to go before becoming a socialist country, especially in the area of excessive taxation.

[Back]

Well, completely off topic, obviously America is not a socialist society. But some programs we have adopted could be viewed as socialist concepts.

[KymberlynX]

From what I understand about having two household incomes, the total amount of both peoples deductions have to equal the total amount of deductions for filing purposes.

For example...if you claim 2 on your taxes, you have to have 2 and wife 0, or you 0, wife 2, or you 1, wife 1.

This is the way my father explained it to me.

[Jorddyn]

Originally posted by KymberlynX
From what I understand about having two household incomes, the total amount of both peoples deductions have to equal the total amount of deductions for filing purposes.

The only time that what you claim has to equal what you have is on your actual return.

You can claim whatever you want on your W-4. Just be prepared for the consequences if you're single with no dependents making $200,000 and claim married with 9 children. Penalties = ouchie.

Jorddyn

[KymberlynX]

Originally posted by Jorddyn

Originally posted by KymberlynX
From what I understand about having two household incomes, the total amount of both peoples deductions have to equal the total amount of deductions for filing purposes.

The only time that what you claim has to equal what you have is on your actual return.

You can claim whatever you want on your W-4. Just be prepared for the consequences if you're single with no dependents making $200,000 and claim married with 9 children. Penalties = ouchie.

Jorddyn

Well, yeah...I was just trying to give a possible reason why he wound up having to pay so much. :P

[Skeeter]

Getting ready to figure up my taxes.

Wish me luck.