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Debt ceiling to halt tax "refunds"

Discussion in 'Topical Discussions (In Depth)' started by <SLV>, Jan 22, 2014.



  1. <SLV>

    <SLV> Gold Member Gold Chaser

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    Better file quickly. The IRS starts processing returns on 1/31, and it takes 2-3 weeks to process.

    http://firstread.nbcnews.com/_news/...ounds-alarm-on-new-debt-ceiling-deadline?lite

    By Tom Curry, NBC News

    Treasury Secretary Jack Lew told House Speaker John Boehner and other congressional leaders Wednesday that Congress must vote to increase the government’s borrowing limit before late February.

    As part of the deal last year between President Barack Obama and Congress ending the government shutdown, the debt limit, which is just under $17 trillion, was temporarily suspended through Feb. 7.

    Lew said that as in the past the Treasury could use certain accounting and cash management methods to push back the point at which it reaches its legal borrowing limit, but officials believe the Treasury is likely to exhaust those measures in late February.

    One special timing factor, he noted, is that “the government experiences large net cash outflows in the month of February, due to tax refunds” so its cash balance will be lower than it would be at other times.

    Boehner spokesman Michael Steel said that the speaker has said the federal government should not default on the debt “or even get close to it, but a ‘clean’ debt limit increase simply won’t pass in the House.” It remains to be seen what conditions House Republicans might try to impose on a debt limit increase.
     
  2. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    The solution is to not have any refunds. Owe them instead!
     
  3. Agavegirl1

    Agavegirl1 Site Supporter Site Supporter Seeker

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    Most people with W2 income, cut it close enough to receive a refund of <$1000 so they don't have to pay in. Getting it down to the dollar requires frequent adjustments to their W4 and the HR department. Hard to do for the "accounting challenged".
     
  4. Ag lining

    Ag lining Gold Member Gold Chaser

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    You have no soul. You are a soul. You have a body.
    WoW this is a trend….. Trending now is what? A disaster waiting to happen? OR what is likely? A richer America all around? MO money MO money I hear the people cry!

    AW gawd…. do they know the many meanings of what they say and chant as a montra?
     
  5. anotherdave

    anotherdave Banned

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    It's not your currency. It's theirs.

    Maybe you should arrange to be reimbursed for your labor with some other form of remuneration? One that doesn't require you to pay in advance for the maintenance of an illegal, foreign system that sucks the life out of you and your family?

    Just a thought.
     
  6. ~BS

    ~BS Gold Member Gold Chaser

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    not too hard if you make a standard salary.

    file 99 exemptions & use a dollar amount on the w-4. take last year's tax, divide by 24 if you're paid bi monthly.
     
  7. <SLV>

    <SLV> Gold Member Gold Chaser

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    Most tax "refunds" (tax credits) for low income workers is actually a form of "stimulus" (welfare). Zero paid in; thousands "refunded."

    http://www.irs.gov/Individuals/Prev...,-Maximum-Credit--Amounts-and-Tax-Law-Updates

    2014 Tax Year

    Earned Income and adjusted gross income (AGI) must each be less than:

    $46,997 ($52,427 married filing jointly) with three or more qualifying children
    $43,756 ($49,186 married filing jointly) with two qualifying children
    $38,511 ($43,941 married filing jointly) with one qualifying child
    $14,590 ($20,020 married filing jointly) with no qualifying children

    Tax Year 2014 maximum credit:

    $6,143 with three or more qualifying children
    $5,460 with two qualifying children
    $3,305 with one qualifying child
    $496 with no qualifying children
     
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  8. Irons

    Irons Deep Sixed Mother Lode

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    I don't get how people don't understand this.

    They aren't paying me for the privilege of holding the money I earn so give them as little as possible.

    "I'm getting a tax refund, hee hee!"

    No moron, you gave a thief a zero interest loan.
     
    ctrl-z, Nickelless, Rcpb2000 and 15 others like this.
  9. Ensoniq

    Ensoniq Gold Member Site Supporter Gold Chaser

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    And this is a mistake.

    Yes it stings to write a tax check to the gov but upon further analysis it stings more to voluntarily give the gov an interest free 1 year loan.

    The added risk that the gov may use taxpayer refunds as leverage in their effort to raise the debt ceiling should make this a no brainer decision,

    I'd suggest everyone adopt the discipline to save the money they'd otherwise have withheld and take control of their finances.
     
  10. Irons

    Irons Deep Sixed Mother Lode

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    Student loan defaulters and now obamacare resistors/failures will be having their "returns" taken now anyway.

    Double tax on the stupid. Ain't that illegal? Hee hee. :rolleyes:
     
  11. Aurumag

    Aurumag Midas Member Midas Member

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    Leverage. Fear-mongering. Subterfuge.

    The debt ceiling WILL be raised in perpetuity because systemic inflation keeps the FRN wheels turning.
     
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  12. anotherdave

    anotherdave Banned

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    You can call it systemic inflation if you like, but the real reason is the FRN has no definition. It's whatever they say it is. And whatever we believe.
     
  13. Tecumseh

    Tecumseh Silver Member Silver Miner

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    The title of this thread is nonsense - no way they are holding people's tax refunds hostage. Fear mongering.
     
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  14. southfork

    southfork Mother Lode Found Mother Lode

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    Havent gotten a refund in decades of any means, mostly have to pay every year, Im with those not wanting to give the Fed a interest free loan.
     
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  15. AgBar

    AgBar Commodore Gold Chaser

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    Can't.

    If the past is any guide, I won't even receive all my paperwork until late February / early March.

    :banghead:



    EDIT: my favorite is getting something well after April 15 -- like in July or something -- that says "Important Tax Document Enclosed!" :hmpf:
     
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  16. EO 11110

    EO 11110 He Hate Me Mother Lode

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    no way this flies unless can be blamed on tea party (the biggest enemy of the red/blue party)

    a good portion of the dimocraps voting base has a negative income tax rate -- they get back all they put in plus thousands more from us suckers
     
  17. curmudgeonista

    curmudgeonista Banned

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    Not sure that's entirely accurate. Most should; likely more don't. How often do you hear people talk about what they're going to buy "when I get my tax check"? There are an awful lot of foolish people who treat IRS refunds as an annual "bonus" and would be devastated if there wasn't any forthcoming.
     
  18. Professur

    Professur Gold Member Gold Chaser

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    I've been riding that horse for years. I've seriously been told people prefer it this way because if they keep the money themselves, they'll just spend it during the year instead of saving it for their vacation. Seriously, adults tell me that. Adults.
     
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  19. Argentium

    Argentium Midas Member Midas Member

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    Incredible, but true. I'm positive that the majority of tax donators in the US, hold this opinion. I do pretty good, adjusting witholding through the year (depending on bonuses), so over the last 10 years I average paying in $200-300 at tax time (including state).
     
  20. ~BS

    ~BS Gold Member Gold Chaser

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    Good thing you guys don't own a business in addition to having w-2 income. Figuring out how much you owe is harder. Taxation on schedule c income can easily be around 50%

    Example:

    Federal income tax: 28%
    State income tax: 8%
    Social security: 12.4%
    Medicare: 2.9%

    Say you make $1000 from your business, taxes come out to:

    280
    80
    124
    29
    Total $513


    This doesn't take into consideration any other state/local/sales/etc taxes. Makes it wonder why us small business owners even bother... we take 100% of the risk, yet fork over 50% of the profit to the government.
     
  21. anotherdave

    anotherdave Banned

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    Sooo, WHO makes the determination on how much taxable income you owe?

    Somehow, I think it's you.
     
  22. Ahillock

    Ahillock A nobody Mother Lode

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    - Move to WA, TX, AK, FL, NV, SD, WY, TN or NH?
    - Vote out the bums that keep raising our taxes and giving free stuff to the FSA?

    I feel your hurt. I know you small business owners are getting killed under Obama. Sorry.
     
  23. ~BS

    ~BS Gold Member Gold Chaser

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    Either the business owner or his accountant (if he has one) will calculate the taxable income, which of course is subject to audit from the irs.

    Can be lots harder to determine how much you're going to owe versus a w-2 income since your income isn't constant and your tax rate is so high. If you project $20k income at the beginning of the year, but later realize it's going to be $50k, your tax just went from $10k to 25k or viceversa. So you better not be expecting to be able to spend/save all of that extra income because uncle sam is going to take his unfair share.
     
  24. gringott

    gringott Midas Member Site Supporter Midas Member

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    This is why I sold my business years ago and never started another. The biggest partner never showed up for work.
     
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  25. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    As a business owner I can testify that every penny of what I pay for goods to my wholesale vendors is recorded, as well as every item I sell at retail. I wish it was as easy as you infer.
    AWD
     
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  26. anotherdave

    anotherdave Banned

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    They've got their meathooks in pretty deep, don't they? Tell me, how did a country that started out forbidding direct taxation, or anything but gold or silver as payment come to this? We are starving commerce at an accelerating rate, only to buy more influence for commerce's enemies.

    This "go along to get along" isn't working out very well, is it? Is it patriotic? Is it even "the law"? Maybe if we hadn't caved in to that little lie in the beginning, or agreed to their unconscionable terms of contract this wouldn't have happened. But it was the easy path, yes.
     
  27. Rusty Shackelford

    Rusty Shackelford Midas Member Midas Member

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    Now lets be honest. Schedule C allows for deducting 1/2 of the SS and FICA taxes you pay so the effective rate is not 15.3%. The Standard deduction and number of exemptions you file with also applies to your Schedule C income, so 28% is not your effective rate either. If you are paying 50% you should find a new accountant/tax preparer.
     
  28. Rusty Shackelford

    Rusty Shackelford Midas Member Midas Member

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    File quarterly, and, again, find another accountant.
     
  29. PhucilliJerry

    PhucilliJerry Gold Member Gold Chaser

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    As part of my job I run payroll for anywhere from 70-130 employees depending on the season. A large number of them treat tax season as a yearly bonus or a savings account that they can't touch until Feb/Mar. Only 1 person besides myself adjusts their W-4 throughout the year to minimize their return, and they are only a part-timer. Last year my wife and I got a single digit refund, but I was disappointed we didn't owe single digits. I don't get the mindset, but many do it. I suppose if you can't be responsible with your money, that is one way to save up for a big purchase, but I have little interest in giving the government a free loan.

    And of course, those are the people who ask daily in January when their W-2s will be ready because they need that refund to pay down (not off) their credit card bills from Christmas. Nothing like giving the government an interest fee loan only to use it to pay part of your credit card balance costing you 1x.xx% or 2x.xx% interest. Geniuses.

    Maybe there is an opportunity there. Who wants in on the GIM2 fund? We can charge a small fee on funds to hold their "would be" tax refund dollars for them until Black Friday week. Any early withdrawal would incur a large fee. No credit card interest and no waiting until Feb/Mar for their refund........
     
  30. Fatboy

    Fatboy Silver Member Site Supporter Silver Miner

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    Fear mongering? Yes. But then again, they would never, ever, think of closing the White House tours for school kids, the DC Monuments for war veterans, or the National Parks either. OOOPS, they did that and much more. Inflict the most pain possible is the new mission statement in DC.
     
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  31. Aurumag

    Aurumag Midas Member Midas Member

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    I allegedly "owe" the IRS so many FRNs in back taxes, that it may be decades before I ever see a refund check, so this fear-mongering debt-ceiling raising has no effect on me.
     
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  32. anotherdave

    anotherdave Banned

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    Two words: Aurumag futures!
     
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  33. Rcpb2000

    Rcpb2000 Silver Member Silver Miner

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    Daycare and student loan interest dissappeared this past year for me. Last year I had a refund of a few hundred, this year with higher wages and overtime, I owe both state and federal. Time to update my W4. I like to be closer to 0 +/- $200.


    Forgot to mention: when your finances and expenses change, it makes it difficult to adjust your W4.
     
  34. ~BS

    ~BS Gold Member Gold Chaser

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    My example was having a business on top of a w-2 income, therefore the lower rates & standard ded / personal exemptions were not considered. Many people have w-2 incomes, then decide to run their own small businesses. If one doesnt plan to quit a day job, only the marginal tax rates applied to the bsn income are relevant

    Also that 50% calculation was just a quick estimate, but if you wish to get technical regarding the ss and fica rates, 15.3% x 50% =7.65% - multiply by the tax rate of 28% and 8%. Then add the two numbers together equals tax reduction of the amount that equals 2.7% of the 15.3% you paid.

    Look at the numbers above, does it still not equal around 50% taxation? From your post, I gather you understand something of our tax system. As a business owner, I can say yhe same.
     
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  35. Usury

    Usury Gold Member Gold Chaser

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    EXACTLY my thoughts....spot on.

    Rusty, you ever pump **** or do something else on the side for extra income and see how you come out on taxes keeping your day job? A lot of folks quickly decide it's not worth the extra effort....which is a shame. There should be MORE reward for working harder....not less.

    I have a similar situation this year.....commission job, so it's tough to get your withholding to come out exactly, even though I do adjust my W-4 throughout the year. On top of that, I just sold a property at a loss to stop the cashflow bleeding me dry and as a result am owed a sizable refund this year. This really pisses me off to think about possibly getting screwed again/more if I'm held up getting my refund.

    And for those that just say they'll pay each year--there are penalties and interest accrued for underpayment of taxes. Why would I under pay my taxes and owe more--that's even worse than giving them an interest free loan.
     
  36. Tinbox

    Tinbox YOU GET NOTHING! YOU LOSE, GOOD DAY SIR! Site Supporter Gold Chaser

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    I'm pretty sure that is incorrect, you shouldn't have any penalties as long as you pay up by April 15
     
  37. Usury

    Usury Gold Member Gold Chaser

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    I used to think that too....

    http://www.irs.gov/taxtopics/tc306.html

    Of course most that owe, probably owe a small amount (<$1000), so they don't trigger the penalties. However, when you are commission or have a side business, it's easy to suddenly have a much bigger tax bill than you anticipated. Especially when the asshats in Congress are not consistent on extending tax deductions or AMT treatment from year to year and usually impose a law change at the last minute--sometimes retroactively.
     
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  38. Rusty Shackelford

    Rusty Shackelford Midas Member Midas Member

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    I run a lucrative side business of consulting after my daily w2 job is done. Filed the 1099s for years on sched C, which is on my 1040 which is effected by standard deduction and 4 exemptions. Marginal rate is 28%, but effective rate is closer to 10%. Switch from schedule C to sub chapter S and have all consulting pass through. Largely eliminates SE hit.

    The effective rate is all that matters.
     
  39. Rusty Shackelford

    Rusty Shackelford Midas Member Midas Member

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    Usury is correct. You can face underpayment penalties if you are tax payments are not within a certain level on a quarterly basis.
     
  40. Usury

    Usury Gold Member Gold Chaser

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    That's true even if all your income is W-2 since the taxpayer elects the withholding elections on the form.
     

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