Tax or Penalty?

Um, who cares?

I mean, really, what’s with all the fuss regarding the Obamacare ruling for a health care plan that will probably never ever come to fruition anyway…

I just paid my property taxes this week. They call it a “tax” but I feel as though I’ve been “penalized” for my choice (and number) of vehicles.

I have 4 cars that I pay taxes on.

Not one of them is new nor in the greatest of condition.

We have a ’98 model, ’01 model, ’04 model, and ’05 model in our fleet.

Keep in mind that the tax bill pays no attention to mileage or condition — just year, make, and model.

So you’d think the 14 year old car would have the smallest bill and the 7 year old car would have the highest, right?

We’ll, you’d be wrong.

In order of highest to lowest, by tax bill, it goes ’04, ’98, ’01, ’05.

Yep, I’m taxed higher on the Land Rover and BMW.

You could say it’s because they “cost” more back when they were brand new (when I was also hit with sales tax), but as of right now, they’ve actually got the lowest value.

The most dependable (and newest) car we have is the 2005 Scion xA (release series 2.0, baby!). It’s tax bill was $162.

Point is, I’m “penalized” for having a Land Rover and a BMW.

Okay, okay, okay, some people will obviously just say those cars are worth more and that’s why they’re taxed higher and, while they’d be totally wrong (these aren’t italian super cars — oh wait, those aren’t worth much either), I’ll go with it…

How about this example?

You drive down your local gasoline alley and see that Exxon/Mobil has 87 octane for $3.75. Problem is, it’s on the left hand side of the street and making a left in-or-out on this busy stretch is more painful than a triple root canal.

On the right side, easy-in and easy-out, is a Shell station. The price for 87 octane is $3.80 if you pay cash or debit and $3.85 if you pay by credit. Yeah, it’s a double whammy coming…

Now, built into the price of gas is a hidden local and/or state tax on top of the federal tax. Okay, so it’s not actually hidden but I don’t recall every seeing anyone read that sign on the pump with the fine print.

So, here we go… In my state, it’s a Petroleum Gross Receipts Tax and its percentage based and divided by the gallon. So as the wholesale price of gas rises and falls, so too does the tax.

So if I go to the Shell station on the right side of the road, I pay 5 cents more per gallon (and therefore more tax as it’s a percentage of that number.)

If I don’t have cash on hand and have to use a credit card, it’ll cost me 10 cents more than the Exxon/Mobile station accross the street.

The tax goes up and up and up depending on the gas station and the payment method.

Is that a tax or a penalty?

It’s called a tax but gas pumpers are penalized based on their gas station selection. Keep in mind, it’s not “just” the price of the gas — the tax is directly linked to the price of the gas.

So, again, is it a tax or penalty?

Who cares… It’s still money out of pocket.

– - – - – - – - – - – - – - – - – - – - – - – - – -

Disclaimer: I fully support a universal health care system.

Not necessarily Obamacare (or the tax vs. penalty opt-out debate), but something similar to what every other country not stalling itself in the dark ages has been doing for years.

If folks would stop reading Republican talking points and complaining about their “constitutionality” (I challenge the folks uttering this to define what it actually means) and “free rights”, they’d realize that a healthcare system for EVERYONE would benefit, well, just about EVERYONE.

Government death panels?

C’mon?

Seriously?

Give me a break…

Imagine, no health insurance premiums coming out of your paycheck. Sure, income taxes might go up and a federal sales tax might come into effect but will they exceed what you’re paying for a premium in each paycheck?

I don’t think so.

Not for me, anyway. Not even close.

It’s like Medicare (minus the fees or confusing “coverages” to select from) without having to wait until your 65. I can hardly contemplate why Americans don’t realize this.

I believe it’s a fear of the word “taxes” and that’s 100% due to the political landscape. No politician dare make reference to higher taxes.

“It’s not a tax, it’s a penalty…”

Who cares?!!?!?!?!?

I have no problem with higher taxes when they save me money (no more insurance premiums or co-pays) *and* I get something (FREE healthcare!) out of the deal.

Silence the pundits and lay out the numbers for people.

It’s a total win-win.

Posted on July 7th, 2012 at 3:20 pm by Brainy Smurf
Current Events, Rants, Taxes | 2 Comments »

Property Taxes Re-Assessed, some Pork, and a Dog wearing Glasses

After a couple of years with a 0% increase, the party is about to end.

The city that I live in has approved a 6% property tax increase for this year and an 8% increase next year.

I like how they planned the higher hike for the second year making it actually higher than the 8% number they’ve released to the public.

For those unsure of the math (or how percentages can be deceiving), here’s how it works…

Let’s say your property tax bill for 2011 was $1000.
The 6% increase for 2012 would cost you $60 more.
The 8% increase for 2013 would cost you the $60 more and then an additional $84.80.
It’s not just $80 more because the starting point is higher ($1060).

Higher starting point and a higher rate means more for the government.

That’s why a flat tax is generally preferred, though, mostly due to the fact that the general public fails to understand percentages…

I could go on and on about the gas tax here (which is a percentage so the State government benefits greatly when the price of gas goes up) but I’ll spare you…

So over the next two years, in this scenario, I’d pay $1060 and $1144.80 in property taxes.

Basically, $204.80 extra.

Doesn’t seem like that big of a deal but my actual property taxes aren’t a mere $1000… They’re more like $5k for the house and $750 for the cars.

In short, the increases add up. Like…to the tune of $345 the first year and $832.60 the second.

Ouch.

So while I should be upset about this tax issue, I’m not, really…

See, it’s just like on the national level, I don’t think we have a tax problem… we have a spending problem.

Plain and simple, the city and the country spend frivilously.

I don’t have a problem with my taxes going up if I see (and agree with) where the money is being directed.

Problem locally, though, is that while our taxes are going way up, our services are still slated to be cut. There’s a disconnect there.

Absolutely, I’ll pay more for good service but instead, in this scenario, I’ll be paying more for no service.

Where’s this money going?

Well, I know where some of it is going… No joke, just a week ago there were countless parks and recreation employees mopping the road.

Yeah, they were mopping the road. Like a tile floor. Not kidding.

I don’t know why and, frankly, I don’t care. But I do know that everyone of those guys was getting paid. To mop the road. That’s the type of expense that I think the city should “cut” immediately.

I really hate the phrase, but it’s pork barrel spending…at the local level.

Anyhow…this coming increase will cause me to come up short when my property taxes are due. Currently, I stash away $95 each week so as not to get caught with empty pockets when the bill comes due.

It’s looking like I’ll have to “up” that to $110 or $115 per week just to break even…

Could be worse, I suppose…

Posted on June 14th, 2012 at 4:54 am by Brainy Smurf
Finance, Rants, Taxes | 3 Comments »

Super Romantic Valentine’s Day Tradition

So, for the second consecutive Valentine’s Day, I did our taxes.

Not much to report, really — my 2010 taxes were almost an exact carbon copy of my 2009 taxes.

We’re due a refund of $2634 from the federal government and $1135 from the state government.

Romantic, huh?

Posted on February 14th, 2011 at 7:18 pm by Brainy Smurf
Finance, Taxes | 1 Comment »

Musings on a Snowy Day

So as I was out shoveling the snow this morning with my shoveling partner, I started to salivate at the thought of doing my taxes…

I mean, usually, a month from now, I’m finishing up my taxes and waiting for that nice big check (I mean, deposit) from the government. This year is no different — February should be pretty nice on the income side of things.

On the other hand, with another shoveler on the way in less than 90 days, well, we need a new car. One that’ll fit four of us. Comfortably.

Yep, that’ll cancel out the tax refund.

And then some…

Posted on January 8th, 2011 at 1:10 pm by Brainy Smurf
Finance, Photo, Smurfling, Taxes | No Comments »

2010 Tax Assessment/Adjustment

Just days after paying my second installment of property taxes, I received a letter from the local tax assessor’s office.

Thinking it might be a reciept or something (though I didn’t include a SASE with my payment to recieve one), I casually opened the unexpected correspondence.

Crap.

The assessment on my home increased over 12%.

Now, I don’t really have a problem with that since we put nearly $50k worth of work into the house over the summer, you know, it was kind of expected but… the last time the city did assessments was in 2007 when the housing market was at an all-time high.

Great luck for them — as it ensured an inflated tax revenue for the city for years to come as the market tanked shortly there after and the tax assessor’s office only does a city-wide assessment once every decade or so.

Basically, they timed it just right and I can’t fault them for it.

What I have a problem with is that they took into account the improvements that I made in 2010 and apparently “added” them to the original 2007 assessment — so now my appraisal is super-inflated.

My tax bill for 2011 (and probably the next six or seven years) will also be inflated. That blows.

Great timing on the city’s part. Terrible timing on mine.

Now I know that tax assessments and real estate values (or even appraisals) aren’t congruent but they are connected. You can’t deny that.

I’m also aware that I can challenge the assessment but the hassle involved is probably only barely worth the added expense I’ll need to pay, the time commitment, and all of the stress involved.

That, and I’ve heard so many horror stories from folks that have challenged their tax assessments that it’s not something that I’m willing to take on right now — though I suspect some of the challenges were less than honest to begin with and there’s probaby some local government propaganda advising against even trying to question their authority floating about too.

Whatever… I’ll just be annoyed for a few minutes and keep on paying my taxes on time.

On the brightside, this should boost the value of my home on my monthly net worth updates a bit as it makes up a percentage of how I calculate its current value.

Hooray for imaginary wealth on the internet!

Posted on December 24th, 2010 at 3:46 am by Brainy Smurf
Finance, Taxes | 1 Comment »

Tax Evasion on the Road

One annoyance that I seem to stew over repeatedly is traffic.

It’s never the number of cars on the road — my commute is quite tame. All two miles worth.

Instead, even with such a short commute, it’s the number of, well, criminals and just plain idiots out there on the road with me.

I’ve ranted about Virginia drivers — I’m sorry, you’re terrible.

I’ve gone on and on about how practically every other car in Connecticut has a temporary handicapped placard hanging from their rearview when it’s quite clear that there isn’t anyone with a physical handicap in the car.

Red lights? who cares! Apparently these days you just need to honk your horn as you speed through one and it’s okay.

It drives me bonkers when I see a smoker toss a butt out the window. That’d be like me throwing gum wrappers out the window (which I don’t). The former is apparently okay but the latter is littering? Explain that one to me…

I nearly explode when I see someone empty an entire ashtray at a stop light (if they even bothered to stop.)

School buses? Don’t even get me started.

And I’m not even going to go into my feelings on texting while driving.

Would you believe that I actually saw a guy texting while on a motorcycle a couple of weeks ago? No joke… I should have run him over…

So go back up to the photo at the top of this post.

This guy was in front of me at an ATM last weekend. Everything seems to be pretty normal to the untrained eye but when you look a little closer, this is kind of like when a bank robber puts on a fake moustache to hide their identity…

The dealer logo on his truck indicated that he bought the truck less than one mile from where I live so… isn’t it a but odd that he has a Florida license plate? A special one, even…

Wonder why that is?

Well, I’ll tell you why…

He’s a tax cheat.

Here in Connecticut, we need to pay personal property taxes on our automobiles.

It sucks — I’ll be the first to tell you.

The very illegal way around this, though, is to register your car in another state. That way Connecticut has no idea that you even own the car (which seems odd in this digital age)…

Florida, apparently, is an easy state to “use” in this situation.

Seriously, I’d say that 10% of cars on the road in Connecticut have Florida plates slapped on them right from day one. Really, I’ve never seen a space shuttle or a manatee in Connecticut but they’re all over the license plates up here.

Further, 90% of the cars with Florida plates have bogus handicapped placards too.

Hey, if you’re going to break the law, why not go all out, right?

So back to this tax cheat, I mean, you’d think that allegedly being a fire fighter, you know, he’d hold himself to a higher standard being a pseudo government official of sorts.

Really, some even consider them heroes. I’m not of that sort but that’s neither here nor there…

Even still, I think we can all agree that heroes should pay their taxes.

What really blows my mind is that the police (also apparently heroes) don’t seem to care.
You’d think that our state government would be upset about all of this lost tax revenue, not to mention illegal tax evasion going on.

It’d be quite easy to stop and then enforce — I mean it’s right out in the open under their noses.

Just using the guy up top as an example:

• His car was purchased at a dealership in central Connecticut.
• He has a bumper sticker touting that his kid was a student of the month at a local elementary school.
• His freakin’ vanity plate clearly indicates that he’s a “Connecticut Fire Fighter”.
• His car is registered in Florida.

Um, can you say guilty?

Posted on May 15th, 2010 at 9:08 pm by Brainy Smurf
Rants, Taxes | 1 Comment »

Taxes Filed – Refund(s) Received!

I’ve been *so* behind with posting over the last few months so much so that I didn’t even do my annual “I Filed my Taxes Today” post this year.

Cutting to the chase, I filed my taxes back on February 13. It was a fun filled Saturday morning spent in front of the computer telling TurboTax that, no, once again, I did not earn any income working on a farm and I don’t have an illegal alien working as a maid and living under the basement steps.

Seriously — you spend far too much time answering questions that only apply to a tiny tiny tiny slice of the population but good luck finding where to enter how much you paid in property taxes…

Or how to get your $1000 credit for making a person? I checked the box but I didn’t see my refund magically go up $1000… Whatever…

Anyway, 2009 was a bit of a step backwards in the Smurf household. We earned around $10k less.

That’s okay though — unlike a lot of folks my age, I’m fully aware that my top earning days are behind me. I neve expected my income to continually rise the way it did through my twenties and I’ve definitely run into a plateau of sorts.

Maybe 2010 will be better but I doubt it. Some might blame the economy, or whatever, but the fact is, at a certain point, you just level off. I’m cool with that.

The good news is that we didn’t owe this year like we did last year. I wasn’t sure *how* that was the case last year but we took steps to make sure that it wouldn’t happen again.

Making $10k less didn’t hurt our cause either.

In the end, as you can see up at the top, we received $2585 back Federal and $1262 back from the State for a grand total of $3847.

No small sum but I have to admit — I really thought we’d be getting more.

I’m glad that I wasn’t counting on it but I almost feel naive for actually thinking that having a kid would “aid” me in my taxes in a get-rich-quick sort of way.

Right now, it sorta feels like that “buy a house and you’ll get tons of money back on your taxes” myth. I fell for that one too.

Gee — borrow over a hundred thousand dollars, pay thousands upon thousands of dollars in interest and then we’ll give you $30 back on your taxes for your troubles. Such a deal!

Maybe it’s just me…

Oh, and I’m pretty sure I ranted about this last year but I’m going to rant about it again this year cause it really rubs me the wrong way…

In the mail, I received a Form 1099-G from the State of Connecticut indicating that I “earned” $1258 from them in 2009 and that I had to report it as income on my taxes.

Okay, so I was over taxed in 2008 by $1258. Then, in 2009, they refunded me the $1258. And finally in 2010, I need to pay taxes on that same $1258 that I overpaid in 2008.

So, wait, why again do I have to pay taxes on my refund?

I already over paid taxes on it once — the state gave it back to me — and then I had to pay taxes on it again?

Double taxation, no?

Posted on February 27th, 2010 at 9:45 am by Brainy Smurf
Finance, Rants, Taxes | 5 Comments »

Celebrating Independence by Writing a Check

What could be more patriotic than paying your property taxes?

That’s exactly what my wife and I did for the Fourth of July.

In Connecticut, we have to pay local property taxes on our automobiles. We used to be pretty unique in that respect but, from what I’ve heard, now roughly half of the country has a similar tax. Greedy government… Grrrr…

The bill came on Wednesday.

Not including her car (she pays her taxes, I pay mine), total tax due for my two cars was $385.18.

That’s $42.36 less than last year but it still seems like an awful lot for an 11-year old BMW and a 5-year old subcompact Scion.

Here’s an updated chart of my personal property tax bill for the past nine years:

Sure, looking at the tax that I’ve had to pay in the past, I should be quite pleased.

I’m not — $385.18 is a lot to pay on top of the registration fee, my drivers license fee, and the emissions test fees that I have to pay for on each vehicle.

And if I’m not mistaken, upon purchase, I also paid a 6% sales tax on top of the sticker price.

Grand total on the BMW, I’ve probably forked over nearly $10k to the State of Connecticut in taxes alone.

I dunno, seems a little excessive when you put it all together…

Anyway, it’s a good thing that July is a three paycheck month for me — just like last year.

I can spare it.

Posted on July 4th, 2009 at 9:47 pm by Brainy Smurf
Finance, Rants, Taxes | 1 Comment »

Taxes Filed : Feelings Mixed

Yep, spent some quality time with TurboTax this morning finalizing everything to the point where I was comfortable enough to file.

Things weren’t as rosy in 2008.

That was my final conclusion before clicking the “Submit” button.

See, our 2007 tax return landed us $3444 total. That broke down to $2643 from the federal government and $801 from the state government.

This year, our refund is just $798.

We actually owe $460 federal. That’s never happened before.

It’d be safe to say that I’m a little disappointed right now.

It’s not that I was counting on a huge sum to roll in… I guess I’ve just come to expect it. And this year, it won’t be there. That kinda hurts.

But, at the same time, I have to pat myself on the back a bit for all of those calculations I did back in December of 2007.

Without asking you to go back and actually read that original post, I adjusted my filing status and withholdings in an attempt to “balance” things more to my own benefit.

In a nutshell, I tried to increase both my take home pay and my 401k contributions by decreasing the tax withheld — but only to the point where I wouldn’t owe anything to the government come tax time.

I came pretty darn close.

In fact, the only reason that I went over is because the hockey team that I quit working for in November of 2007 (because they were *months* late in paying me) finally paid me on January 6, 2008.

Yep — that one check, just six days into 2008, resulted in a 1099-Misc. Grrrr…

In other news, I find it really aggravating that the state charged me sales tax for e-filing.

Gotta love the double taxation. Call it what you want, but that’s what it is.

More puzzling, that $0.20 works out to around a 1% sales tax.

Last time I checked, 30 seconds ago, Connecticut’s sales tax rate was 6%.

I *really* don’t get it.

Posted on February 22nd, 2009 at 11:56 am by Brainy Smurf
Finance, Taxes | 5 Comments »

My PMI Battle: Re-Ignited

So I started doing my taxes this week and, while going through the motions, I stumbled across something that drove me bonkers last year.

I’m in shock that I didn’t blog about it then. Perhaps I did, but I couldn’t find any mention of it…

And, honestly, I wasn’t going to blog about it this year either until reader Doug Hill posted a comment on one of my better entries regarding my PMI battle with Countrywide — the one I eventually gave up on.

See, last year there was a “new” deduction that homeowners could take. You could deduct your PMI!

How about that?

I was pretty pumped — until TurboTax told me that I didn’t qualify for the deduction.

It didn’t indicate why, so I just assumed that it was because I was too awesome, um, that it was because my income was too high. You know, something positive.

But this year, the same thing happened and I made a lot less. For a minute or so, I got all excited when it allowed me to enter that I’d paid $1021.80 for PMI in 2008, you know, thinking that I’d get most of it back from Uncle Sam.

No dice. I don’t qualify. Still.

So, modified slightly, here’s what Doug Hill said to get me all fired up:

Only those that took out a loan after 1-1-07 can deduct the cost of PMI through 12-31-10.

I took my loan out in August 2005…

Look up P.L. 110-142. Newest version of section 3 (b) doesn’t say anything about when you took out a loan; but IRS Code Section 163 Section H (iii) says the loan must be after 1-1-07.

Now we have two classes of homeowners who pay PMI — Deductible and Non-Deductible.

He’s right.

Like Doug, I’m getting hosed because I bought my house before the market started to falter. As MoneyMateKate so eloquently stated in another post, “No good fiscally responsible deed goes unpunished these days. Grrr.”

Grr is right.

Once again, it feels like I’m getting the shaft for making a wise move and paying my mortgage bill on time and in full for all of these years… while the people who are walking away from their mortgages because they bit off more than they could chew could potentially be “bailed” out…by the taxes I’m paying.

Posted on February 5th, 2009 at 8:48 pm by Brainy Smurf
Finance, PMI - Mortgage Insurance, Rants, Taxes | 5 Comments »

Forthcoming Quality Time in Front of the Computer

Figures…

Just when I said that I wasn’t eagerly awaiting my W-2 this year, I’ve already flip-flopped…

No, that’s an overstatement.

I received my W-2 from my employer today and it truly had me thinking about doing my taxes for the rest of the work day.

Of course, I haven’t purchased any tax software yet and I’m still waiting on a few 1099-MISC’s so I can’t really get going anyway buuuuuuuuut the juices are definitely flowing.

I’d be shocked if I make it through this weekend without installing TurboTax…

(Yes, I’m actually going to use the same product in consecutive years… Sorry TaxCut…)

Posted on January 27th, 2009 at 7:45 pm by Brainy Smurf
Finance, Taxes | 3 Comments »

Eagerly Awaiting Your W-2?

Crazy how things can change in the span on one year…

No, I’m not talking about the economy. Or maybe I am…

I dunno, you can decide…

Last year, at about this time, I was eagerly awaiting the arrival of my W-2 and other assorted 1099-MISC’s so that I could sit down, file my taxes, and get my nice fat tax refund — we received a check for $3444 last year!

This year, though, I’ve barely given a thought to doing my taxes.

Haven’t priced out the different versions of TurboTax and TaxCut.

I haven’t even opened my last pay stub of 2008 to get an idea of how things may fall yet.

In all honesty, I’m not even salivating about the “thousands” that could potentially be coming in just a few weeks.

Why?

My best guess is that it has something to do with being debt free.

Last year, we threw almost all of that money towards debt.

This year, we don’t have that hanging over us. We don’t really *need* the refund.

Oh, wait, we did just spend $1650 on baby furniture, didn’t we?

Okay, I take that “we don’t need it” line back — the tax refund will again be paying down debt this year…

The big difference is that it’s not weighing on my mind like it used to.

Posted on January 23rd, 2009 at 8:35 pm by Brainy Smurf
Finance, Taxes | 3 Comments »