Taxes

[quote]hspder wrote:
Errrr… If you do things legally you can actually deduct the salary you pay the kid from your gross income, hence you really only need to earn $20 to pay the kid to mow the lawn for the $20.[/quote]

Does that mean I have to write him a 1099?

[quote]nephorm wrote:
hspder wrote:
Errrr… If you do things legally you can actually deduct the salary you pay the kid from your gross income, hence you really only need to earn $20 to pay the kid to mow the lawn for the $20.

Does that mean I have to write him a 1099?[/quote]

Only if you pay him more than $600 a year… And even if you do need your lawn mowed more than 30x a year, what you can do is, after you reach the $580, get ANOTHER kid to do it. The $600 limit is per contractor, not total.

By the way, one of the reasons there has been an increase in people paying the AMT (and an increase in visibility, even though only an extremely small % of tax payers actually pay it) is because an increasing number of people is too stupid to do proper tax planning and does foolish things like getting second mortgages to pay off debts (expecting to deduct that interest) or exercise stock options without selling them.

By the way, do not interpret this as a defense of the AMT… The only thing I’m defending is smart tax planning, an art that seems to be nearing extinction. I dislike the AMT as much as anyone around here, it’s just that I feel that making a big fuss about it is misguided – we have much bigger fish to fry.

[quote]hspder wrote:
Only if you pay him more than $600 a year… And even if you do need your lawn mowed more than 30x a year, what you can do is, after you reach the $580, get ANOTHER kid to do it. The $600 limit is per contractor, not total.
[/quote]

I was actually just trying to be a smartass, but oh well!

Way to make me feel like a dick by actually trying to be helpful.

[quote]hspder wrote:
By the way, one of the reasons there has been an increase in people paying the AMT (and an increase in visibility, even though only an extremely small % of tax payers actually pay it) is because an increasing number of people is too stupid to do proper tax planning and does foolish things like getting second mortgages to pay off debts (expecting to deduct that interest) or exercise stock options without selling them.
[/quote]

No offense, but you’re an economist with (I imagine) a rather flexible schedule. Most people work at least 40 hours a week, and don’t have time to research how to squeeze every dime out of their tax returns.

I don’t think that makes them stupid. It’s just one more reason why so many people support the flat tax and other simplified programs.

I also think that at large percentage of the people being hit by AMT have accountants to help them minimize the impact. For some reason, though, they still seem to be getting hit with it.

[quote]nephorm wrote:
I was actually just trying to be a smartass, but oh well!

Way to make me feel like a dick by actually trying to be helpful.[/quote]

When it comes to taxes, I’m always dead serious. :wink:

[quote]nephorm wrote:
No offense, but you’re an economist with (I imagine) a rather flexible schedule. Most people work at least 40 hours a week, and don’t have time to research how to squeeze every dime out of their tax returns. [/quote]

That’s why there’s the friendly neighborhood CPA like rainjack. OK, maybe not FRIENDLY, but CPA nevertheless. :wink:

[quote]nephorm wrote:
I don’t think that makes them stupid. It’s just one more reason why so many people support the flat tax and other simplified programs.[/quote]

OK, is uneducated less offensive? :wink:

I’m also all for simplified tax laws, however if you complain about something you need to at least understand it. I just feel that it is a bit silly to complain about something you really don’t understand, especially when it is such an important deciding factor for something as serious as picking a candidate in an election.

By the way, I am very aware YOU are not someone that would decide on a candidate based on that, but trust me: lots of people do. Even our dear friend Arnold admits initially he decided to become a Republican based on their “published stance” on taxes at the time…

[quote]nephorm wrote:
I also think that at large percentage of the people being hit by AMT have accountants to help them minimize the impact. For some reason, though, they still seem to be getting hit with it.[/quote]

Accountants are not miracle workers – they cannot fix things if you do go out and get a second mortgage for something other than buying or improving a house, or you exercise stock options and do not sell the stock immediately. After the mistake is done, it’s too late. No turning back…

And then, of course, there is the very small number of people who will be hit by the AMT either way, and seem to have the knack for getting a lot of attention, even in spite of their ridiculously small number.

[quote]hspder wrote:
rainjack wrote:
Subject to a 2.5% floor, and assuming you haven’t already hit the AMT - in which case 20 bucks will cost you 40.

Currently only about 2% of taxpayers pay AMT. I’m pretty sure nephorm is not one of them. And before you say “well, that number is expected to increase fairly quickly”, I must point out that the GOP has had the power and opportunity to change it dramatically or make it go away completely for almost a decade and has neglected to do so. So don’t blame me or the “liberals” if you guys continue to mindlessly vote Republican and in 5 years that % rises to – oh my! – 10%.[/quote]

The lower the number of people paying the AMT the better. That just proves my point that the tax breaks are in fact leading to an increase in revenue for the gov’t. I would have to disagree with the 2% number, however, based soley on anecdotal evidence.

I routinely have about 10% of my clients fall subject to the AMT each year. Granted, I am not a regular tax-accountant that deals with trailer trash waiving a W-2 and begging for a RAL, but I deal with the AMT far more often than I would like.

[quote]rainjack wrote:
orion wrote:
If you include indirect taxes and social security systems, 70%.

Fuck them…

That’s why I don’t live in Austia.

Hspder will probably chime in and tell you that 70% is a very healthy rate, and you should just see the big picture instead of worrying about your own little existence.[/quote]

Nah, he’ll say 70% is a bargain and look at all we get with that money! “Hell, let’s raise it to 80%! My economic models predict that we’ll all be 257% better off!!”

HH

[quote]nephorm wrote:
hspder wrote:
By the way, one of the reasons there has been an increase in people paying the AMT (and an increase in visibility, even though only an extremely small % of tax payers actually pay it) is because an increasing number of people is too stupid to do proper tax planning and does foolish things like getting second mortgages to pay off debts (expecting to deduct that interest) or exercise stock options without selling them.

No offense, but you’re an economist with (I imagine) a rather flexible schedule. Most people work at least 40 hours a week, and don’t have time to research how to squeeze every dime out of their tax returns.

I don’t think that makes them stupid. It’s just one more reason why so many people support the flat tax and other simplified programs.

[/quote]

He thinks everyone is stupid, too stupid to run their own lives, too stupid to choose a president, too stupid to vote for our congressional reps. He has a very low regard for people, like most libs.

When I read some of his posts, I swear it has the same feel as if I were reading ‘Mein Kampf’; the same arrogance, the same disdain for individuals.

Give a lib a brain and they think that THEY ought to run the world and we’re all to be the stupid serfs.

HH

[quote]hspder wrote:
ZEB wrote:
Thank you for the drivel, you didn’t let us down.

You even mentioned Clinton…

:wink:

You’re welcome. Glad to be of service… Now that I satisfied your request, will you go on your merry way and let the grown ups have an intelligent discussion for a change? Please?[/quote]

That was also expected.

Everytime your liberal propaganda has been exposed you sort of get mean about it.

Please continue.

[quote]rainjack wrote:
I would have to disagree with the 2% number, however, based soley on anecdotal evidence. [/quote]

Well, your anecdotal evidence is incorrect. It is 2%. Those are the IRS numbers, not anecdotal evidence. Look them up.

[quote]rainjack wrote:
I routinely have about 10% of my clients fall subject to the AMT each year.
Granted, I am not a regular tax-accountant that deals with trailer trash waiving a W-2 and begging for a RAL,[/quote]

Of course. And that is why you get a biased sample.

[quote]hspder wrote:
nephorm wrote:
And it becomes a lot less attractive to hire people to do things like mow the yard, or perform other services, when you know that you have to earn $40 to pay a kid to mow the lawn for $20.

Errrr… If you do things legally you can actually deduct the salary you pay the kid from your gross income, hence you really only need to earn $20 to pay the kid to mow the lawn for the $20.[/quote]

You are on crack!

What about if you use a contractor?

i.e. Landscaping company like most people do?

[quote]hspder wrote:
rainjack wrote:
I would have to disagree with the 2% number, however, based soley on anecdotal evidence.

Well, your anecdotal evidence is incorrect. It is 2%. Those are the IRS numbers, not anecdotal evidence. Look them up.

rainjack wrote:
I routinely have about 10% of my clients fall subject to the AMT each year.
Granted, I am not a regular tax-accountant that deals with trailer trash waiving a W-2 and begging for a RAL,

Of course. And that is why you get a biased sample.[/quote]

Hold on just a sec, Mr. Stick-Up-My-Ass. I wasn’t trying to disprove your point. I was just stating what I see. Wait till I attack you before launching a counter - it makes you look defensive.

BUT - If you take the percentage of taxpayers that are in the over-25% brackets, which is like what? 5-8%? And then you see how many of them are subject to AMT - the percentage of taxpayers that are potentially subject to the tax sky rockets.

Your 2% number is skewed if you will be honest about it for just a second. No one in the 10% and 15% brackets are subject, and very few of those in the 25% bracket are.

If anyone is still interested in the original question, my very own pay stub shows a difference of 35.6% between the gross and the net. That’s directly on the paycheck, before the GST, PST, property taxes, school taxes, etc, etc.

I’m gonna go cry now.

[quote]hspder wrote:
nephorm wrote:
And it becomes a lot less attractive to hire people to do things like mow the yard, or perform other services, when you know that you have to earn $40 to pay a kid to mow the lawn for $20.

Errrr… If you do things legally you can actually deduct the salary you pay the kid from your gross income, hence you really only need to earn $20 to pay the kid to mow the lawn for the $20.[/quote]

You have to explain this further. I do not see a spot on any of my tax forms that allows me to do this.