Sigh. So, I would not be eligible for the Economic Stimulus refund because my parents claimed me as a dependent on their return. (Not that I’m complaining.. they did support me for 22 years, after all).
My tax obligation for 2008 will be high because I can shelter only ~$5,000 of my income (the standard deduction). A 401(k) wouldn’t be available for me until 2009 and I choose a Roth IRA over a tax-deductible traditional IRA.
My estimated state + federal refund for 2007 is a measly $800. (Yes I know about all the arguments for a low refund – free loan to the gov’t – yada yada yada… but still!)
I don’t regard taxes as just a necessary evil – taxes enable the government to fund “public goods” that markets simply cannot provide (not to discount the fact that waste or fraud can and do occur or that taxes don’t create inefficiencies). Taxes can create positive incentives (hello tax-advantaged retirement accounts!) and discourage negative behavior (taxes on pollution, for example).
Despite my very rational (and common?, I’d imagine) thought on taxes, the visceral reaction to difference between my gross income and my take-home pay is not a pleasant one. I think of every dollar on my paycheck as MY hard-earned money, and I don’t like to see this FICA dude take MY money.
Bah humbag.
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I agree with you… I don’t mind some taxes, but when R got a bonus check that was taxed a TON – almost 50% – it really bothered me. That was our money, and the government took half! I know this isn’t uncommon but it’s hard not to have a negative reaction when you see the numbers.
I can’t even imagine the people who make enough to be “upper middle class” who get taxed this much every time!
Agreed. I lose over $1000 in tax to the government each paycheque. And it makes me want to cry.
I know it’s hard to think of it this way – but just be grateful that you are getting $800!! M and I are only getting a little over $100 back this year, thanks to shenanigans related to filing as married peeps. We still have to finish our taxes…I can’t believe it’s April already!!!
If you filed your own taxes and took the standard deduction for yourself, your parents can’t claim you as a dependent – the IRS won’t give you the deduction AND give it to your parents on your behalf, so when your social security number goes into the system twice, they will automatically credit you and reject your parents’ classification of you.
I learned this in a tax acct class and promptly told my parents I was filing my own taxes that year (I had to; I had income) AND taking my own standard deduction (to lessen my taxes owed), so they might as well not try to use me as a deduction. They weren’t supporting me that year anyway, so I didn’t feel that bad (though I’m sure they needed the deduction more than I did; oh well).
I had to PAY taxes (again) this year. This is my biggest justification for using the library like my own personal bookshelf. I paid for it!
I had to PAY the government almost $2000 in taxes this year… and while the hit to my bank account kind of smarts, I’m actually HAPPY about it. Why? Well, as you’re probably aware, you’re not just paying taxes at the end of the year… you pay them out of every paycheck. A refund at the end of the year just means you overpaid and the government has some money they want to give you back. A payment means you underpaid and you have money to give to the government.
Now let’s consider, if you underpaid, you had extra money at your disposal. You (being the smart financial manipulator that you are) probably saved or invested it, meaning you earned something (let’s call it interest, for simplicity’s sake) on it. That’s great! You earned interest on the money you were borrowing from the government, and at tax time you gave the money back (but got to keep the interest). Yay!
Now let’s consider the flip side. The government took too much from you, and they return it at tax time. Did they pay you any interest? No. You just gave the government a free loan. So while it certainly feels nicer to get money at tax time than to pay it, in reality, owing the government money is actually the smarter financial move.