Income Tax time!

After finishing up with Turbo Tax for filing the 2003 income taxes, I looked at the report for "typical" numbers for filers in my tax bracket, and it never fails to surprise me how much less the so called average tax liability is than my resultant figure, less than half-
I wonder how accurate those figures really are?
One factor, medical deductions, are normally ignored unless they exceed a certain minimum, and the figure shown on the average is pretty significant-
Does anyone use Turbo Tax and think the US Averages look reasonable?

I just picked up my taxes from the accountant. I love this man. If he didn't already have a life partner, I'd bear his children. I sold a piece of real estate last year that resulted in ALOT of capital gains. I set aside $7000 in anticipation of having to pay that much this year just for the gains. Instead, I am getting a return of $800. Did I mention that I love my accountant?

As far as the national averages, I heard a very interesting report on G. Gordon Liddy a few weeks back. I'll admit that I can't remember the source he was quoting and I haven't been able to find anything to back up his figures but I do remember that I had heard these figures before. The figure that stunned me the most was that the top 5% of wage earners (over $120K/annual gross) pay like 90% of all taxes paid. The bottom 5% (less than $26K/annual gross) pay nothing. I wish I could find coraboration for those figures. I'd really like to know how accurate they are. My personal experience has been that it's pretty dead on.

I don't know if I told you or not... but I love my accountant... /ubbthreads/images/graemlins/grinser2.gif

Wow, I'd be preeetty happy too, going from -7k to +800!
That's where a sharp accountant can make all the difference-

I could believe the 5%/90% thing, but in the figure that was presented for the US Averages, it was supposedly for the same tax bracket, which is why I would have expected things to be a wee bit closer.

Sasha-

My understanding is that individual taxes make up about 40% of the revenue of the Fed government. And that the top 10% pay about 50% of individual tax which is 20% of the total. However, the top 10% do not pay more into the social security or medicare funds. The Feds get most of their revenue out of non-individual tax sources like customs fees etc. Not 100% sure of those numbers.

Liddy is not a good source of anything as far as I'm concerned- and that number of only 5% being under the $26,000 level doesn't sound right either. There are a whole lot of folks under the $20,000 level- like maybe 30% I would estimate. Right-wingers like Liddy are trying to convince the public that the rich are being horribily treated and should have their taxes drastically cut- to be picked up by the middle-class taxpayers. There are a lot of rich folks like Warren Buffet and Bill Gates(&his dad) who fervently disagree with Liddy.

I might add that the top 1% of the income chart owns 50% of the financial assets in the US. Probably the widest income spread outside third-world countries. The rich have a better deal here than anywhere else in the world.

My wife and I are in the 33% tax range. I think it tops out at 35% then you pay 7.625% tax for social security up to a limit of around 60K of salary ( which is the max benefit you can get for social security). Your employer pays a matching % of social security also.

That is why I am a Mr. Mom now. It does me no good to have over 40% of a 40K a year job taken before I incur my other expensenses in communting and paying to have two children taken care while both parents work. If we wanted to get a nanny to watch the kids so I could work I would have to make over 60K a year just to break even.

Oh a tax change has been approved that now allows married couples to take the same deduction filing jointly as married couple that file separately

Stu... oh believe me! I'm not a huge Liddy fan! I just had it on the radio while I was going to work because that's the station that I listen to Sean on in the afternoon... /ubbthreads/images/graemlins/wink.gif

Like I said.. the figures were intriguing to me because I had heard them before somewhere else... but for the life of me, I can't remember where. And I'm sure I have them wrong... but not that far off. I'd love to know what the real figures are though. One thing that I do remember clearly because it really did surprise me is that "upper class" or the highest tax bracket that exists, starts at $126K. That's a nice annual income from where I'm sitting... but it's not RICH, in my opinion. And I was also surprised that the lowest bracket was at $18K and below... and they pay nothing in the end and more often than not get MORE money back... even though they didn't pay any in or got a full return of what they did pay in.

Oh well... I don't have the actual figures so I guess it's all a moot point in this thread. I'm just happy that I'm getting something back... and I love my accountant... /ubbthreads/images/graemlins/grinser2.gif

Started working on mine after supper. Just finished. Drink now in hand.

I just ran some quick numbers and it looks to me that if you are married filing jointly and have 2 kids under the age of 17 then you can make $39,700 and pay no income tax. That includes the $2,000 child tax credit. I don't know but you might even be able to get a little profit with the EIC.

Here's a few other little tidbits I learned last night at 2AM while finishing my taxes

I have my 2002 and 2003 income tax books in front of me as well as returns from 2001-2003.

Standard deduction:
2001: $7,600
2002: $7,850
2003: $9,500

Exemptions:
2001: $2,900 per family member
2002: $3,000 per family member
2003: $3,050 per family member

Child tax credit:
2001: $600 per child
2002: $600 per child
2003: $1,000 per child

Here's the biggee from the tax table:
If you had taxable income of $50,000 after standard deductions and exemptions, you are filing jointly and have 2 kids.

Your tax bill in 2002 would have been:
$7,303
-$1,200 child tax credit
Total tax: $6,103
Gross Pay: $69,850
Income tax rate of 8.8%

Your tax bill in 2003 would have been:
$6,804
-$2,000 child tax credit
Total tax: $4,804
Gross Pay: $71,700
Income tax rate of 6.8%

Bottom line
You could have made $1,850 more in 2003 than in 2002 and still paid $1,300 less in income tax.

Working on mine now. I always wait till the last minute because I always end up having to write a check, and I like putting off painful things for as long as possible.

Last year, I ended up sending in a check that would have bought a small car. I think the damage this year will be worse... /ubbthreads/images/graemlins/icon23.gif

/ubbthreads/images/graemlins/broke.gif

Should have filled in mine before April 1st...
Strange: I'm actually quite good with numbers, but when it comes down to my own bookkeeping I just develop some kind of writers' block. Same with most other "official" forms.
Better visit my accountant soon.
I don't mind paying taxes BTW, I just wished the rules were a bit simpler (even if that meant I'd have to pay a bit more).
Anyway, the gov't already knows everything about us (moneywise) why don't they do the forms themselves? Isn't that how they do it in Sweden??

I don't have to do taxes, because my net income for the whole year was about $4014.88. And that is below the nontaxable upper limit. I don't know what that limit currently is, but I remember reading $8000.00 somewhere.
So April 15 does not scare me, and this is probably the only time this year that I'll post in an income tax thread. /ubbthreads/images/graemlins/smile.gif

I too hired an accountant this year. Only the second time I've ever done that but I'm just not happy with the computer programs, I never feel i'm doing it right.

This is also the first year in the last 5 that we'll be getting some money back! Not much, but something. Thats unbelievable. It might even be enough to cover the cost of the accountant /ubbthreads/images/graemlins/grin.gif There is nothing clever or shady or questionable about these folks, indeed they are told to be very conservative in what they will take in the way of deductions for you, so I've got no worries there. Actually, i can't tell you what a thrill is it to NOT be doing my taxes this afternoon and looking up how late the post office will be staying open /ubbthreads/images/graemlins/wink.gif

Sasha, I was lucky enough to get to see Gordon Liddy and Timothy Leery when they were on tour doing their debate. Doesn't matter where you stand politically, that was an amazing thing to see!