I worked the first 3 months of last year just to pay my taxes alone. I didn't make any money until April. Nearly 25% of the money I made...
I just finished writing out two checks one for federal amounting to $3269 the other for $522. Ouch! Its because most of last year I was still working as a freelance video editor...now I'm fulltime. woo hoo. so the goverment can kiss my ass next year.
Dollar-wise: a pretty painful amount. Percentage-wise: not so bad compared to most; it's amazing what having a stay-at-home wife and a kid will do for your taxes..
All my income is 1099 and I don't pay any taxes on it until the deadline. I get hit with a small penalty but its worth it. It does however suck writing tax checks big enough that I could buy a new WRX every year.
Too Much, State offset the federal for a net gain of $11. In the last 2 years we have gotten jack back b/c my wife just keeps getting killer raises and bonuses. Fair Tax
Yea, I know but when we get back like $900 from state and have to turn around and pay $900 to the feds, it is kinda depressing writing that check. It is like we are depending on the state tax to come back so we can pay the feds. If I could get my state and fed taxes to be 0 I would be happy.
yeah. i knew i had to pay taxes on the 1099-misc and was prepared, but the self-employment tax caught me off guard. paying taxes on the cash is one thing, but calling me a business was a little shocking. i paid too much to tell, but i did get to write off my car and miles for 3 months, oh, and my mac mini and 23" apple monitor :fawk: 2 can play at this game, feds. i got a new phat deck with the 1099 cash, the feds got no interest off me. wootwoot
Taxes actually worked in my favor this year; in the past I havent gotten any money back since I've made too much money as a dependent full-time student but this year I made just enough to where I get all of my tax money back. Woohoo, more mods!
Some of you said you 'had to pay.' Shame on you, you've been paying all year already. ;p I didn't ask anyone about a refund, I asked how much taxes they paid.
mine gets taken out automatically every check I get (either a perk or a disadvantage of working at a state job, of sorts). So every time I get money back. Sadly even though my income basically quadrupled from the previous year I didn't get near as much back as I was expecting. so no mods for me, it just went into savings. yay
Your taxes will be deducted automatically at just about any place of employement. And getting something back isn't a good thing, it just means you overpaid EVERY SINGLE PAYCHECK and finally got it back, with zero interest. People, getting 'money back' when filing is a terrible thing. If I offered an investment service where I'd collect $100 from you every month and after a year would give you $1200 back, would you go for it?
I was pretty much where I needed to be with my withholdings this year, but my living situation is probably changing from renting to taking on a mortgage. I wonder if I should update my withholdings to withhold a little less to avoid giving the government too much of an interest free loan.
had to pay too much this year... and I feel like i'll pay more and more but... as long as govnt spend where it supposes too, I don't feel like its wasted
I over paid by $1500 and change. BUT, that was only because I cashed out a 401K account that was going to close. I have my own investments and dont need the 401K, and I needed the cash then to pay off credit cards. If I hadn't cashed out the 401K I would have been about even. Nice to have a stay at home wife and 3 kids. Fairtax please.
Ok, after hearing all of the talk about fairtax and such I had a few questions for those that consider themselves knowledgeable about it. After having read the book, I'm skeptical that a plan such as this would work for several reasons. However, I agree that the current system is cumbersome and costly and a better alternative is out there somewhere. (Sorry for the long read) My questions/concerns, in order of importance: 1) In the book, the authors discuss the transition of going from an income tax based means of revenue collection to the fair tax. The transition they describe is "cold turkey". Basically after passage of the law, the government would eliminate the federal income tax and levy the 23% sales tax. The question is, from where does the money to send the first set of prebate checks come from? I don't know of any source for the money that we'd end up sending out. Estimating wildly, I'd guess that the initial payments would require some $350+ million (est. 300 Million people / 4 people per family x $525 prebate) in the first month. This first prebate check would be before any taxes would have been collected under the fairtax plan. Where does this money come from? 2) Administration of the plan. What organization checks the validity of the social security numbers required to receive the prebate checks? Who collects this information? Who sends out these checks? Presumably the IRS would, but the main focus seems to be the abolishment of the IRS. The book discusses the transition to local (state) governments who would administer the collection, distribution of the SSNs. The authors also just offer an ‘I’m sorry’ to all of those people who have been saving and making decisions based on the income tax structure who will lose money moving to a consumption tax? Do the authors really think that no one should be compensated (i.e. deferred savers, home owners, businesses claiming depreciation)? Isn’t the transition they describe at the rate at which they describe it (overnight) too expensive? 3) Enforcement and auditing. With the abolishment of the IRS, who does the auditing to ensure that smaller organizations are compliant. With the Fairtax, I see that large retail corporations (Wal-Mart, Target, etc.) would easily comply. But, what's to prevent the non-chain restaurants, stores, etc. from simply not charging the required 23% sales tax. It seems too easy to defraud the system. Also, since corporate taxes are eliminated, how does the small business prove to the retail level that they are not the end user of the good? The fair tax eliminates itemized deductions on returns because there are no returns? Does the builder that buys supplies at Home Depot provide a government issued card? Which organization would issue/monitor these cards? Who monitors eligibility to receive? On a larger scale, who audits the corporations for compliance? What prevents the business from collecting the 23% tax and then pocketing the tax and lying? Who is going to give states the money to establish ‘mini IRS’? 4) Fraud. This is related to item #1 in the transition. As stated in the book, to allow for a smoother transition, The Fair Tax would allow retailers to claim a certain portion of inventory as tax-exempt (or something to that effect). It makes an analogy to a tire store having 'x' tires in its warehouse. What's to prevent every retailer to inflate (grossly?) their stock in warehouses to escape the tax? Who audits that to check for inaccuracy? 5) Pass through of tax rate. Does anyone else feel as though the 23% embedded taxes would not pass through with 100% efficiency to yield a 23% sales tax? Maybe it's just me, but I don't feel like these taxes would pass through that clearly. So, to reiterate, I'm in support of tax reform, but I'm not really sure that the fair tax is it. Can someone address these issues that I have with the Fair Tax? Right now, I can't support it. I want to, but I can't. There's got to be a better way.
Which Part of 3? Regarding the auditing, I'm not sure. I presume that the states (or more localized, i.e. county) do the auditing of sales tax. That is, if it happens, which I'm not sure that it does. I know of quite a few cash only businesses that I'd be willing to point a finger at that are skirting the issue (not to mention waiters claiming tips for income tax, etc.). So, the short(est) answer that I know is no one does enough. Regarding the deduction of corporation to corporation sales, those purchases can currently be itemized as business expenses, mileage, etc. on tax return forms on both the state and federal level (I assume, I don't make business deductions. Hell, I could be completely wrong). Even so, the sales tax today is not the entire source of income for the federal government. Assuming similar rates of fraud, which may not be accurate, I don't know, the government would lose a helluva lot more money. Either way, I think that fraud/compliance is a big problem currently. The authors seem to want to communicate that fraud will be very difficult and will have minimal impact. In short, I think it wishful thinking on their part. The "authority" to monitor tax evasion (is that the right word?) is abolished with the IRS. I do think that the Fair Tax may be able to have less fraud, but that's really a guess on my part. I'm just not quite as optimistic as the authors are. It'd still be too easy to get around a sales tax (especially on services). Stupid, semi-related question: What's to prevent everyone from incorporating to be able to claim (more) purchases as business expense? I just don't see the new plan as correcting these problems that exist in the current plan.
You can find some answers here: http://www.fairtax.org/site/PageServer?pagename=about_faq And here: http://www.fairtax.org/site/PageServer?pagename=about_beyond To address one of your concerns, here's what they say... Since business purchases are not taxable, how does the FairTax keep individuals from pretending to have a business so they can buy things tax free? The FairTax has several features that make it difficult and very risky for persons to have a scam business in order to purchase items tax free. First, in order for any person to purchase items tax free for business purposes, the business has to be a registered seller and possess a registered seller certificate issued by the state sales tax authority. Registered sellers are expected to file monthly or quarterly sales tax returns with the state (depending on sales volume). The certificate enables the business to purchase tax free from wholesale vendors, but the vendor must retain a copy of the registration certificate to justify not having collected tax on the sale. When a business purchases items for business use from a retail vendor, they have to pay the tax on the purchase and take a credit against the tax due on their monthly sales tax return. They must keep invoices/receipts to document what they purchased and the amount of the purchase. They might also make note of the purpose of the purchase on the invoice. Also, as registered sellers, they are subject to the possibility of being audited by the state. During such an audit they will have to produce the invoices for all the “business purchases” that they did not pay sales tax on, and will have to be able to show that they were bona fide business expenses. If they cannot prove this, then they will have to pay the taxes that should have been paid when the items were purchased, plus interest and penalties. The probability of being audited will be much greater than it is under the current system with its over 140 million tax filers. Under the FairTax, there will be less than 20 million businesses that will be filing sales tax returns and thus subject to the possibility of being audited. Thus the probability of tax cheats getting caught will be much greater than it is today, making tax evasion riskier than it is today. Additionally, while the FairTax has much stronger taxpayer rights than does the current tax system, the FairTax legislation provides for a number of fines and penalties for noncompliance. It also authorizes a mechanism for reporting tax cheats and obtaining a reward. An example would be 1-800-TAX-CHET. Another potential scam would be to have a “fake” family business in order to buy things for family members tax free. The FairTax has a specific provision to prevent this. Although it does not prohibit businesses from providing taxable property or services as gifts, prizes, rewards or as remuneration for employment, the gift, reward, etc. is considered to be the conversion of property or services from business use to personal use and is therefore taxable. Likewise, there is a similar provision to prevent abuse of employee discounts. Under the FairTax, employer-provided employee discounts over 20 percent are taxable. The term “employee discount” means an employer’s offer of taxable property or services for sale to its employees or their families for less than the offer of such taxable property or services to the general public. If the employee discount amount exceeds 20 percent of the price to the general public, then the sale of such taxable property or services by the employer to the employee is considered the conversion of property or services to personal use and is subject to tax. The taxable amount is the amount by which the discount exceeds 20 percent of the price to the general public.
Thanks for the info moose. I knew you'd come through. I thought that there would be a better way to regulate the scamming part, but it's still putting an increased burden on the state governments. That's part of the reason that I assume that the Fair Tax would either be higher than 23% or the states would have to increase their own sales tax (or income tax, etc.) to account for the increased workload. I still need to give this some thought. I'm not sure I want to commit to this idea since it seems to me that there are more inherent costs than were described in the book. I guess I'll just have to wait for book #2 (though I really don't like the idea of buying it, on principle - I'm not a huge Neal Boortz fan, per se). At the rallies, are there debates or is it pretty much just a Fair Tax fanclub type of thing?