US taxes - not as bad as you might think

[scandal 951]

I've pretty much worked through my 2009 tax return.

Some pleasant surprises which are new this year: Schedule L, and Line 63 of Form 1040 (along with Schedule M).

Schedule L -

File this form only if you are increasing your standard deduction by certain state or local real estate taxes, new motor vehicle taxes,

or a net disaster loss

The standard deduction in 2009 for a Married Filing Joint return is $11,400.

I bought a new car in July 2009 - the sales tax $1254 was added to my standard deduction.

The first $1000 of property taxes I paid in 2009 was added to my standard deduction.

My resultant standard deduction is $11,400+1254+1000 = $13,654

As it turned out my itemized deduction (accounting for mortgage interest, state income tax etc.) still turned out higher than the standard deduction, and I wound up itemizing.

Still, it's nice to see the standard deduction beefed up for many filers who bought a car or paid property taxes, but otherwise would not benefit from itemizing.

Line 63 on Form 1040

63. Making work pay and government retiree credits. Attach Schedule M. . . . . $800

Woohoo! That's $800 directly into my pocket, thanks to the Obama stimulus. Making work pay, indeed!

As it turns out my net 2009 federal income tax , after taking all deductions and applying the $800 Make Work Pay credit, was only 10.94% of my AGI, and I earn a 6 figure salary.

If I add my Social Security, Medicare, and state income tax, my total 2009 tax burden is 22.3% of my AGI.

I can't say I'm happy parting with 22% of my income in various taxes but on the whole, that's not such an impossible burden to bear.

My tax burden when I filed in Israel and in Ontario Canada was a much bigger percentage of my gross earnings.

[one...two...tree 2,762]

A pop question to all the opponents of the health care bill - how much in taxes per household will need to be paid to cover it? Anyone?

How about Cap and Trade?

[mawilson 2,133]

A pop question to all the opponents of the health care bill - how much in taxes per household will need to be paid to cover it? Anyone?

Don't care, as long as everyone shares the burden and not just the top N percent making more than M dollars per year.

[trailmix 77]

My tax burden when I filed in Israel and in Ontario Canada was a much bigger percentage of my gross earnings.

That's interesting data, but what do you pay for healthcare insurance for your family? Before you can compare your taxes to Canadian taxes, you have to take that in to account as well. Was your income similar in Canada?

Edited January 31, 2010 by trailmix

[scandal 951]

That's interesting data, but what do you pay for healthcare insurance for your family? Before you can compare your taxes to Canadian taxes, you have to take that in to account as well. Was your income similar in Canada?

I am paying $2500 annually in payroll deducted health insurance premiums. That is coverage only for myself and my wife, if I had my kids under my coverage it would be higher of course. (I don't need to cover my kids here since they live in Brazil).

If you add in that $2500 as a 'tax', then my total tax burden grows to 24.8% of AGI.

Come to think of it, AGI probably isn't the right baseline income to use anyway - my health insurance and 401K reduce that susbstantially from my gross.

Total taxes/Total Gross Income = 22%. Where total taxes= Fed.Income tax+FICA+Illinois state income tax+health insurance premiums. Total Gross Income = All salaried payments+bonus+interest/dividend/investment income.

So, it's still roughly 22%.

My income in Canada was lower, but then again I left Canada in 1997. My earning potential has changed significantly over the past 13 years. If anything you'd expect my tax burden to be proportionately lower then as a lower earner. As I (dimly) recall, my combined federal+Ontario tax burden was well above 30%, probably closer to 40% back in those days.

[Kathryn41 3,205]

My tax burden when I filed in Israel and in Ontario Canada was a much bigger percentage of my gross earnings.

Just for comparison, here is the 2009 Canadian Federal tax rates - which include full medical coverage and hospitalization for every Canadian:

Federal tax rates for 2009 are:

• 15% on the first $40,726 of taxable income, +
  
• 22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
  
• 26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
  
• 29% of taxable income over $126,264.
  

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

Edited January 31, 2010 by Kathryn41

[I'm Gone 60]

Up I'll say I'm married and have one kid. My gripe about the tax code state and federal is the more kids you have the less taxes you pay. You are getting more government services, schools, trash pick up etc., but you pay less for it than a single person. I got a $1,000 child tax credit that came right off the tax I owed, why should I be rewarded for having a child and a single person doesn't get anything and it's my kid that is going to school.

The earned income tax credit is also BS. If your income is so low that you don't pay any tax, OK, but you shouldn't be given extra money.

Edited January 31, 2010 by I Quit

[one...two...tree 2,762]

Up I'll say I'm married and have one kid. My gripe about the tax code state and federal is the more kids you have the less taxes you pay. You are getting more government services, schools, trash pick up etc., but you pay less for it than a single person. I got a $1,000 child tax credit that came right off the tax I owed, why should I be rewarded for having a child and a single person doesn't get anything and it's my kid that is going to school.

The earned income tax credit is also BS. If your income is so low that you don't pay any tax, OK, but you shouldn't be given extra money.

...the more kids you have, the more money you spend.

[spookyturtle 9,466]

I think we should have higher taxes so we can provide the illegals with more benefits.

[I'm Gone 60]

...the more kids you have, the more money you spend.

Yeah and why is it the responsibility of everyone else to subsidize raising their kids?

[~PalmTreeGurl~ 154]

I dont understand something... Adam filed Married with (0) and I filed Married with (1) ... in a years time, they only took out $450 in fed taxes for him & took out $1650 from mine. It looks like his didnt have enough taxes coming out. Once we file Im afraid we are going to owe the gov. even after adding the $800 towards what we both paid, sure doesnt seem like it was enough taxes.

[one...two...tree 2,762]

Yeah and why is it the responsibility of everyone else to subsidize raising their kids?

Those without dependents have always subsidized those with dependents. The idea is that families with the dependent children were once and will someday pay into subsidizing other people's children. You sound like those retirees who don't like paying local school taxes.

[~PalmTreeGurl~ 154]

Ok, ? ... In order for more taxes to be taken out, would filing Married at a single rate with a 0 or 1 be about right? I dont understand why filing Married with a 0 took out ALOT less taxes than filing Married with 1... and neither one of us did the "at single rate" thinking it needs to be changed to that... can anyone explain this to me.

[Gary and Alla 3,694]

A pop question to all the opponents of the health care bill - how much in taxes per household will need to be paid to cover it? Anyone?

How about Cap and Trade?

I don't care. I am opposed to government health care. It is not a tax issue, it is a control issue. whatever you say now would matter not a whit anyway, the rates would increase before we even got any health care from that program. Income tax started at 1% and only for "rich people" I oppose a framework of legislation that gives that amount of control to the inept goverment run by transient occupants of various positions, including the President. I think Obama has adequately demonstrated in the last few weeks he cannot be trusted with even endorsing a candidate in a safe seat.

Obama, and congrewss have done NOTHING they have said they would. NOTHING. I am absolutely not naive enough to believe these clowns when they tell me what helathcare would be like. Are you joking? You actually believe they would be right about this and NOTHING else?

[Usui Takumi 1,562]

We got hammered by California this year. Foreign income is getting doubled taxed. Luckily, my wife's company wants to start in the US and will be creating a US subsidiary this year so we can avoid the issue next year.