Tax Math

Aug. 22nd, 2009 02:56 pm
gushi: (Default)

So, from someone who understands this a little bit better than I, I could use some advice:

I have my monthly IRS statement here, it looks like this:

FORM:
Tax Period
Current Balance
 Includes:
  Penalty:
  Interest:
  Last Payment:
1040A
12-31-2004
$7329.15

$285.47
$492.95
$250.00
1040A
12-31-2005
$2492.73

$153.45
$117.73

              Liabilities
not shown:
$0.00

$0.00
$0.00

Note: Penalty and Interest totals are cumulative, and are calculated to the Due Date shown above. For more information on your penalty and interest computations, you may call 1-800-829-0922.

All installment agreement payments will be applied to the oldest tax owed, then penalties, then interest. [...]


So what I can't figure out from this, and I don't yet want to call them, is the following: Am I being charged MORE in penalties because of that additional year? As in, would it make some sort of logical sense to pay off the 2005 year ASAP, to avoid paying double penalties instead of single? OR is it simply the case that it's a compound amount.

One source I found says that the penalty is .5 percent per month, up to 25% of the total amount. Even that's unclear to me, as that would mean that after 50 months (four years, two months) such an amount would be maxed out, but the penalties I'm paying from 2004 don't appear to be anywhere near 25 percent of my amount-due.

IRS

Aug. 20th, 2009 06:30 pm
gushi: (Default)

I have thusfar, out of my paycheck, given the IRS $4000. It feels like not enough, like it will never end.

Furthermore, the money you pay is applied to the oldest tax first, then the newer ones, then penalties, then interest. (That is to say, when you're done paying ALL your taxes, you will still have penalties for the whole time to pay, and you will also have interest for so long as you have outstanding penalties.)

Considering this little blocking factor (and the extra money every month) is my blocking factor on considering any living situation other than where I am now, it feels like it will never end.

gushi: (Default)
By the way, when I propsed income tax be abolished, there were things I wasn't including in the theory. It's by far an imperfect system, but guess what? So is the one we have in place now. In this state, minimum wage at 40 hours a week puts you well below the poverty line. That's a problem.

Property taxes. These are a state thing, not a federal thing. The IRS does not charge you property tax, your state and local governments are responsible for assessing things like this.

Morton: Yes, you mentioned that black markets will become a bigger problem, and that's true. But the only thing right now that doesn't leave a paper trail is cash. I could see some interesting things happening as a result of this. With a federal income tax, a slew of new laws would pop up for people who now EVADE taxes by buying online. Hell, the feds and ebaypaypal could go into cahoots, and allow online merchants like me to automatically withhold (and submit on the fly) such sales tax.

And of course, basic staples of life (by that I mean food) would be untaxed. The computer systems in supermarkets already do this anyway.

I mean, sure, some things would fall through the cracks. Landlords who collect rent in cash would still not declare it. The kid who mows your lawn for $20 would not declare it.

Everyone who works off the books just to make ends meet...would still work off the books to make ends meet. But if some off-the-books fool goes out and buys an X-box 360, yeah, guess what, welcome to being a contributory member of society. Wanna buy beer and lottery tickets? Uh huh, you're gonna pay. Besides which, the stupid things that are presently charged sales tax would still likely apply.

For anyone who says "life essentials are the only thing taxed", I offer this example:

Filet Mignon is untaxed. Caviar is untaxed. Frozen hors d'ouvres are untaxed.
Toilet Paper is taxed. Soap is taxed. Band-aids are taxed.

The real problem with the sales-tax solution is that it takes away from certain things. When you go to file for (say) financial aid, they look at your tax returns. Now, they'd have the option to look at your state return, get a savings statement from your bank, or something like that. Credit reports wouldn't go away, but are less than perfect for this scenario since students typically have bad or no credit anyway, and having GOOD credit doesn't mean you have money. It would shatter the nice little standardization they have going, but I suppose they could find a nice way to employ all the lifeless personality-less drones who used to work for the IRS in college financial aid departments.

I'm probably babbling on about this, because I KNOW it won't get fixed. See also my rant about why I don't vote, and my last registered voter registration went back to the address of my high school. Which was about the last time I thought there was someone worth voting for.

August 2017

S M T W T F S
  12345
678 9101112
13141516171819
20212223242526
27 28293031  

Syndicate

RSS Atom

Most Popular Tags

Page Summary

Style Credit

Expand Cut Tags

No cut tags
Page generated Sep. 26th, 2017 07:08 am
Powered by Dreamwidth Studios