I got an "IRS" headache...

[Charade]

Good God!!! Could the tax code be any more complicated??!?!?!

I'm wading through the pages and page and PAGES of instructions on using a personal vehicle for business use (for my company). It's INSANE!!!

Who the heck thinks of this crap??

IMO, the WHOLE thing should be scrapped and redone. It's way too complicated for the average taxpayer to understand.

 

[Laugh O. Grams]

Consider yourself lucky! On Monday morning, I've got an audit meeting with the IRS to go over my company's payroll records for 2005! The auditor told me that there was nothing to worry about. It's just that in the past 2 years, our payroll has doubled and my total number of employees has gone up by 30% and they want to make sure that nothing is unusual. Yes, business is good...incredibly good really! Even though I'm confident that everything is done by the books and I have all of the records to prove it, I still haven't slept very well over the last week.

 

[LuvDuke]

IMO, the tax code is getting more complicated because of the computers. If people had to do this with pencil and paper, it wouldn't be as complicated.

John, why don't you go to some of the free sites and see if actually filling out the forms helps you? It works for me.

 

[Charade]

IMO, the tax code is getting more complicated because of the computers. If people had to do this with pencil and paper, it wouldn't be as complicated.

I don't think that's it. Somewhere somebody is tweaking the rules and it's just gotten out of control. I highly doubt you could find consistent answers from IRS auditors or tax preparers if the tax return was complicated. Simplify the rules!! Like why does it matter if my car weighs more than 6,000 lbs?

John, why don't you go to some of the free sites and see if actually filling out the forms helps you? It works for me.

I use Turbo Tax and it's not much help in determining if the standard deduction method for the business use of my car is better (or worse) than using the actual cost method.

 

[LuvDuke]

I don't think that's it. Somewhere somebody is tweaking the rules and it's just gotten out of control. I highly doubt you could find consistent answers from IRS auditors or tax preparers if the tax return was complicated. Simplify the rules!! Like why does it matter if my car weighs more than 6,000 lbs?

I use Turbo Tax and it's not much help in determining if the standard deduction method for the business use of my car is better (or worse) than using the actual cost method.

How good are your records? If you have records that reflect your actual cost, then compare that with the standard deduction which I assume is based on mileage.

I'll agree with you that the tax code makes no sense. For example, I fill out a schedule C (Business income) and a schedule SE (self-employment tax).

If I take no business expenses as deductions, but use my health insurance as a deduction, and pay the SE tax on the full amount of business income, it is more advantageous than if I take business expense deductions, thereby lowering my business income, pay less SE tax, and take a partial deduction for health insurance. Go figure.

If you can figure this out, you're on your way.

*Edited to Add*

Personally, I like Tax Cut better than TurboTax.

 

[Laugh O. Grams]

Frankly, I'm amazed either of you have time to run your own business, DIS, and do your own taxes! I hired an accountant years ago...my DIS time is far too important!

 

[Charade]

How good are your records? If you have records that reflect your actual cost, then compare that with the standard deduction which I assume is based on mileage.

I do have them all. But what I can't figure out is the depreciation for 2006. Which of course is the lions share of the deduction. So unless you lease it, you can't deduct the loan payment. You have to use the depreciation.

I'll agree with you that the tax code makes no sense. For example, I fill out a schedule C (Business income) and a schedule SE (self-employment tax).

If I take no business expenses as deductions, but use my health insurance as a deduction, and pay the SE tax on the full amount of business income, it is more advantageous than if I take business expense deductions, thereby lowering my business income, pay less SE tax, and take a partial deduction for health insurance. Go figure.

If you can figure this out, you're on your way.

I already told you I got a headache. Are you trying to kill me??

 

[Charade]

Frankly, I'm amazed either of you have time to run your own business, DIS, and do your own taxes! I hired an accountant years ago...my DIS time is far too important!

I don't have a business. This is using my car for my employer. I've usually had company provided cars but since they change the old plan to the new "screw the employee" plan, I had no choice but to get off their plan.

 

[LuvDuke]

I don't have a business. This is using my car for my employer. I've usually had company provided cars but since they change the old plan to the new "screw the employee" plan, I had no choice but to get off their plan.

I see we're not doing our taxes now.

 

[Laugh O. Grams]

I don't have a business. This is using my car for my employer. I've usually had company provided cars but since they change the old plan to the new "screw the employee" plan, I had no choice but to get off their plan.

Ahh, the old "Screw the employee" business plan...great for company morale!

 

[trip]

Good God!!! Could the tax code be any more complicated??!?!?!

I'm wading through the pages and page and PAGES of instructions on using a personal vehicle for business use (for my company). It's INSANE!!!

Who the heck thinks of this crap??

IMO, the WHOLE thing should be scrapped and redone. It's way too complicated for the average taxpayer to understand.

I totally agree!! Not sure if it's the best cure, but this plan sounds interesting. http://www.fairtax.org/fairtax/about.htm

 

[salmoneous]

I totally agree!! Not sure if it's the best cure, but this plan sounds interesting. http://www.fairtax.org/fairtax/about.htm

The "Fair Tax" is a plan to allow very rich people pay less in taxes - with the rest of us making up the difference. Personally, I don't want to pay more taxes so the very rich can pay less.

There are two parts to the tax calculation - figuring out what to tax, then applying the rate. Figuring out what to tax is the hard part - all the complexity, all the aggravation is there. Applying the rate is very simple.

Whenever people try to hide a "flat tax" under the guise of a "simpler tax" be vary careful. You don't need a flat tax to be simple. Question why they are combining the two.

If you want to simplify the tax code - great. If you want to flatten the tax rate - go ahead and argue for a flatter tax code. But don't try and argue for a flatter tax code by saying we need a simpler one.

The "fair tax" says it is revenue neutral. The very rich would pay a lot less in taxes. Who makes up the difference? Whenever somebody proposes a new tax system, the first thing I want to know is who is going to pay more taxes. If they aren't saying (and I've never heard the fair tax people say who is going to pay more) it's probably you. And me. Count me out.

 

[froglady]

The Fair Tax is revenue neutral because it is incorporated into the price of the retail product, similar to when you buy gas. The sales tax is there already, so you are paying the cost of the gas, plus all associated sales tax, before you start pumping. No post sales tax is added.

So, if you were to purchase a house for $100,000, a federal fair tax would already be reflected in the price. If 10%, the "actual" cost of the house would be $90,000, then the 10% would bring the actual sales price to $100,000. BUT, you would not be taxed AT the point of sale for FEDERAL tax, but BEFORE the sale. Each state would decide how to collect it's tax....this only applies to federal tax.

One would assume that someone rich would want a more expensive house, and that's where the increased tax revenue would come in. Obviously, someone who lives frugally, even though rich, would be paying less taxes. Someone poor living beyond his means and buying lots of bling would pay more than someone else with the same income who manages his money well.

There would also be a monthly stipend to cover the taxes of basics needed to sustain life, so the poorest people would only be paying taxes on any frills.

People really should take time to read the whole book, where all of the issues are covered. It's not a perfect system, but neither is the one we have now.

Edited to add... Everything new sold retail would be taxed...food , medicine, services, etc. The tax would be incorporated into the price. However, there would still be federal programs for those a certain designated income level, just are there are now. The medicare and SS taxes would still be taken out of every paycheck.

 

[salmoneous]

People really should take time to read the whole book, where all of the issues are covered.

Does it cover who will be paying more under the new system, and how much more?

It's easy to see that the very rich will be paying a lot less under the "fair tax" system than they pay under the current system. The fair tax is supposed to bring in the same revenue. So who's paying more?

 

[BuckNaked]

It's easy to see that the very rich will be paying a lot less under the "fair tax" system than they pay under the current system. The fair tax is supposed to bring in the same revenue. So who's paying more?

How do you figure that the very rich will be paying a lot less under the fair tax?

 

[froglady]

Does it cover who will be paying more under the new system, and how much more?

It's easy to see that the very rich will be paying a lot less under the "fair tax" system than they pay under the current system. The fair tax is supposed to bring in the same revenue. So who's paying more?

Right now, when the "very rich" buy their million dollar houses, ONLY the state and local governments get any tax money from the purchase. With the Fair Tax, there would be an embedded federal tax included in the house price. This applies to clothes, jewelry, cars, services, etc. Right now, the government only gets money when they fill their gas guzzlers, or pay for their $200 bottles of champagne.

They may not be paying more, but I doubt that the rich and famous will be giving up their luxuries any time soon.

But the average family will no longer see 10-30% of their paycheck disappear before they ever touch it, with no choice in the matter. Then, they have to spend hours, or payy someone, in order to reclaim some of that money. The average family CAN decide whether to buy something or not, however.

If the only "sort of rich" were able to keep more of their own money, it's possible that they would end up purchasing MORE consumer goods or services, thereby increasing the tax revenue. I know that if I had more pocket money, I would consider hiring someone to help around the house/yard.

Again, the book DOES address the issue of who will be paying "more." And yes, there is a possibilty that some people who pay absolutely no taxes currently may have to kick in a little bit, so I guess you could say that THEY are the people who will be paying more. But, as I already mentioned, there will be a stipend to cover the taxes on the basics up to a certain level.

I really don't have the time or room to try to reproduce a whole book on a website. I just suggest that those who dismiss the Fair Tax concept out of hand at least take the time to read the book first.

 

[salmoneous]

How do you figure that the very rich will be paying a lot less under the fair tax?

To grossly simplify

Today's system: Rate x Income

Fair Tax system: Rate x Spending

(1) The rich (as a group) spend significantly less than than earn
(2) The rate applied to spending under the fair tax will be significantly less than their current income rate (in total)

 

[Mrs.Toad]

Life is complicated, and income tax laws reflect that.

You don't have to take every deduction to which you are entitled. If you think the law should be changed to remove deductions that are hard to figure out, why don't you just skip taking those deductions and save yourself a headache?

After all, you are the person who wondered why people who think the country is in need of a higher tax rate don't just voluntarily give the IRS more money, aren't you? (If not, you can disregard my post. )

 

[honeymom]

I learned a long time ago that I always save money by using an accountant. While I pay for the accountant, they always save me more money and time than if I did it myself and they are well worth the cost.

 

[Charade]

Life is complicated, and income tax laws reflect that.

You don't have to take every deduction to which you are entitled. If you think the law should be changed to remove deductions that are hard to figure out, why don't you just skip taking those deductions and save yourself a headache?

It should be simpler. I shouldn't have to hire an expert to figure it out.

After all, you are the person who wondered why people who think the country is in need of a higher tax rate don't just voluntarily give the IRS more money, aren't you? (If not, you can disregard my post. )

I did ask the question. I think it's a valid one. If someone believes that more taxes should be collected to pay for "things", they should just do it. But they won't. Why do they wait until they're forced to (along with those that don't)? Are they lonely?