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Tax Season 2012: Work No Longer Pays

F

FlagDUDE08

Banned
Sadly, we don't get a free $400 per person from the US government this year. On top of that, there's a new form for those that have sold stock (Schedule D-1 is gone).

Further discussions expected to ensue.
 
Re: Tax Season 2012: Work No Longer Pays

I wonder how many people will now have to pay a tax penalty because they were expecting that $400 credit.

I also love how people are complaining about someone who makes the majority of their money through bank interest, dividends, buying/selling stock, and royalty distributions. I'd love to see what their 1040 form entails at the time they retire. It'll probably look pretty similar.
 
Re: Tax Season 2012: Work No Longer Pays

FlagDUDE08 said:
I wonder how many people will now have to pay a tax penalty because they were expecting that $400 credit.

I also love how people are complaining about someone who makes the majority of their money through bank interest, dividends, buying/selling stock, and royalty distributions. I'd love to see what their 1040 form entails at the time they retire. It'll probably look pretty similar.
Click to expand...

I don't think so. Assuming BHO is re-elected, I understand that he plans to push really hard to implement tax simplification using a slimmed-down 1040, with only two lines:

1) How much income did you have last year?
2) Send it all to me.
 
Re: Tax Season 2012: Work No Longer Pays

I love having an accountant for a father.

I'm filing single and 0, so I usually get a pretty hefty <strike>interest free loan to the government</strike> refund. Bought a house last year, so I should get a little more on top of that from interest.
 
Re: Tax Season 2012: Work No Longer Pays

You know, if people wanted to really go after banking corporations with loans, they REALLY should go after the government and itemized deductions as well. I wonder how many people out there actually make minimum on-time payments on their mortgages just to claim the deduction on taxes... they're losing more money doing that. Of course, if you can find an investment that pays a dividend at 118% your interest rate, all the better to put your surplus money there.
 
Re: Tax Season 2012: Work No Longer Pays

Ok, silly tax question here. My student load got transferred over from Citi to Sallie May this fall. Clearly I didn't have a choice in the matter I believe. Would have just rathered to stay with Citi. Anyways, what I was wondering is do I need an end of the year statement from both Citi and Sallie May, or do I just need the one from Sallie May??
 
Re: Tax Season 2012: Work No Longer Pays

bigmrg74 said:
Ok, silly tax question here. My student load got transferred over from Citi to Sallie May this fall. Clearly I didn't have a choice in the matter I believe. Would have just rathered to stay with Citi. Anyways, what I was wondering is do I need an end of the year statement from both Citi and Sallie May, or do I just need the one from Sallie May??
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You need the total amount of loan interest you paid in 2011. You might get a 1099 from each.
 
Re: Tax Season 2012: Work No Longer Pays

FreshFish said:
You need the total amount of loan interest you paid in 2011. You might get a 1098-E from each.
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FYP. I'm not sure how the government refinancers work, as I've never had to use them, so I'm not sure if Sallie sends one. Bigmrg, you'll definitely need one from Citi. If you've been paying them online (checking, OK the name isn't Brent :p), you should be able to download the 1098 information from your account. However, if your adjusted gross income before this deduction is more than $75,000, don't bother, because you won't be eligible to claim the deduction.
 
Re: Tax Season 2012: Work No Longer Pays

FlagDUDE08 said:
You know, if people wanted to really go after banking corporations with loans, they REALLY should go after the government and itemized deductions as well. I wonder how many people out there actually make minimum on-time payments on their mortgages just to claim the deduction on taxes... they're losing more money doing that. Of course, if you can find an investment that pays a dividend at 118% your interest rate, all the better to put your surplus money there.
Click to expand...
A lot of Americans don't seem to understand basic accounting. Getting a portion of your interest back in a mortgage deduction doesn't mean you didn't pay a lot more than that in interest to begin with, the vast majority of which isn't coming back to you.
 
Re: Tax Season 2012: Work No Longer Pays

Bob Gray said:
A lot of Americans don't seem to understand basic accounting. Getting a portion of your interest back in a mortgage deduction doesn't mean you didn't pay a lot more than that in interest to begin with, the vast majority of which isn't coming back to you.
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Considering the number of people that hire tax professionals... yeah.

I would honestly feel dumber if I was forced to use tax software and eFile.
 
Re: Tax Season 2012: Work No Longer Pays

Bob Gray said:
A lot of Americans don't seem to understand basic accounting. Getting a portion of your interest back in a mortgage deduction doesn't mean you didn't pay a lot more than that in interest to begin with, the vast majority of which isn't coming back to you.
Click to expand...

Thank the Deity that they never succeeded with the idea to tax imputed rental income for homeowners!


While many Americans don't understand accounting, it seems like far fewer understand economics and the role of opportunity cost.

I don't mind paying interest on my mortgage because I really like the house we live in. The enjoyment is worth it.
 
Re: Tax Season 2012: Work No Longer Pays

FreshFish said:
I don't mind paying interest on my mortgage because I really like the house we live in. The enjoyment is worth it.
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But why pay more in total than you have to? Throw a few extra bucks at the principal, and the total amount of interest you'll have to pay goes down!
 
Re: Tax Season 2012: Work No Longer Pays

FlagDUDE08 said:
But why pay more in total than you have to? Throw a few extra bucks at the principal, and the total amount of interest you'll have to pay goes down!
Click to expand...

Depends on the interest rate and other debt to be serviced. Also depends upon the need for liquidity and flexibility. Once you pay extra toward principal, you no longer have that cash on hand. I'd much rather save the cash on hand and have the option to be able to pay off the entire mortgage early in one lump sum if I want. Especially in this day and age. The risks of inflation coming back in two years are just way too high for my comfort. I want a nice stockpile of silver coins first before I even think of sending extra principal payments.

Financial institutions promote losing money management strategies by getting us to look at our lives as a series of separate compartments while financially successful individuals generally have a good holistic view of the entire terrain.

Economics is the intersection between unlimited wants and limited resources.
 
Re: Tax Season 2012: Work No Longer Pays

FlagDUDE08 said:
But why pay more in total than you have to? Throw a few extra bucks at the principal, and the total amount of interest you'll have to pay goes down!
Click to expand...
Depends. If you have a few extra bucks, you should always put them where you think you will get the best ROI. Reducing total interest paid on a mortgage is a nice "investment" because it is a guaranteed return, but on the other hand, you then have that capital locked up in your house so you may have opportunity costs of not being able to invest in other, even better options. If you're paying 5% tax-deductible interest, it only takes a 3.5-4% return elsewhere to beat paying down the mortgage faster.

Edit: and what FreshFish said.
 
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Re: Tax Season 2012: Work No Longer Pays

LynahFan said:
Depends. If you have a few extra bucks, you should always put them where you think you will get the best ROI. Reducing total interest paid on a mortgage is a nice "investment" because it is a guaranteed return, but on the other hand, you then have that capital locked up in your house so you may have opportunity costs of not being able to invest in other, even better options. If you're paying 5% tax-deductible interest, it only takes a 3.5-4% return elsewhere to beat paying down the mortgage faster.

Edit: and what FreshFish said.
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This is true; I know I can hit 8.5% in the stock market pretty easily, so I've been waiting a little bit on the car and student loans (although have been making very accelerated payments), but it'd probably make more sense for me to go minimum on the car payments for now and put all the surplus in the stock market (and since I'm back to 5 grand, maybe use the rainy day portion for one of the two).
 
Re: Tax Season 2012: Work No Longer Pays

I get that taxation is much more inefficient and much more cumbersome than it has to be.

All the same, I don't think Ayn Rand herself could have written a less whiny title for this thread.
 
Re: Tax Season 2012: Work No Longer Pays

ExileOnDaytonStreet said:
I get that taxation is much more inefficient and much more cumbersome than it has to be.

All the same, I don't think Ayn Rand herself could have written a less whiny title for this thread.
Click to expand...

The thread title is actually a play on one of the credits on the 1040 form from the past couple of years that is no longer available. It was called the "Making Work Pay Credit".
 
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