Per an old coworker of mine, “Derek getting ready for a hard day’s work.”
Footenote: Gaming the system with dependents
Is anyone else excited to do their taxes for 2011 or is it just me? I just got my W-2s! It cost David and I $747 to file our 2010 taxes. It’s the amount of federal refund we lost because we had to file separately.
It all has to do with income tax rates and exemptions and blah blah blah, no one likes that stuff as much as me.
This year, we have a trick! A “dependent” for tax purposes doesn’t have to be a child! Hell, it doesn’t have to even be a relative! Unfortunately it does have to be a human (no cats) and they has to pass certain tests to qualify.
We can’t be married for federal tax purposes but we can still combine our exemptions to game the system for a small advantage, if not for the full advantage that the married tax brackets would provide.
What do the numbers end up looking like? Given a rough projection, if we just file separate we’d lose out on about $2,200 worth of refund for 2011 compared to filing joint. Filing with the dependent claim, we only lose out on about $1,400! Huzzah! We’re losing, but less!
Unfortunately this trick is only going to work for 2011. Any other tricks people think they might know or be curious about?
Footenote: The IRS, the “payroll” tax cut, and politics
I love when politics and tax come crashing into each other. Here’s a few recent ones:
A while back the IRS was facing a $2 billion dollar cut to their budget. The IRS commissioner, testifying before congress, pointed out that for every dollar of the IRS budget they collect roughly $200 in revenue.
But we don’t like tax revenues anyway right? Not only do we hate taxes in general, but we also love the recent “Payroll” tax cut that just got a little two months extension.
Here’s the thing… the “payroll” tax cut is a Social Security (SS) tax cut. Social Security was traditionally funded by a 12.4% tax on the first $100,000 or so of wages, paid 50% by the employer and 50% by the employee. Now it’s funded by a 10.4% tax because they reduced the employee-paid portion by 2%. Oh, that’s coupled with a 3.6% increase in SS benefits paid to recipients for 2012, the first increase since 2009 (before the payroll tax cut). So they’re funding it less, paying out more, and I guess the market makes up the difference? That part is beyond me.
The tax cut means more money in the pockets of everyone who gets a W-2 including myself, that’s all well and good. I’ve got nothing against that. I’m just excited to see what happens when SS rears it’s ugly head into politics again because it’s a “broken and bankrupt system” that needs to be reformed or privatized or something. Will any politician get asked “Didn’t you vote for the payroll tax cut in 2011 and 2012 that further cut funding to SS and perpetuated it’s problems?” Think it’ll happen?
The last fun fact, and this is my favorite, The IRS is more popular than congress.
Radnote: Do teachers get paid alot? A reddit conversation
Them:
“Teaching is certainly one of the most underpaid jobs.”
Median teacher’s salary in my state is 60k for working 3/4′s of a year.
Me:
Why the downvotes? It is a factual statement. There are a couple of things to point out though. Many states the pay schedule is done by district, not by state. A teacher’s pay is determined by the number of years teaching and, essentially, the number of collage credits they have. How does that point on the pay schedule compare to other professions for the same experience and education (factoring for 3/4 of the year of course).
There are also cost of living factors to consider as well. One or two large cities with a high cost of living can inflate the median above the point you are trying to make. That is why look per city is much more effective than per state.
And there is always this classic, but flawed, example. If I was paid as a baby sitter in Oregon (min wage per student. I’ll use one of the worse schools I subed at where the teacher had 40 kids in each class): $8.80 * 8 hrs/day * 40 students * 180 employed days = $506,880