I am very lucky this year to receive a large tax return. I say lucky because only a deployment (4 months of non-taxable income) saved my ass. If it wasn't for that I would have went from a healthy return to almost nothing. Reason being? I make too much.

This isn't a humble brag either. Around this area I make enough to live a middle class lifestyle. I sold my nice truck and drive a jalopy to send my kids to private school and pay for their extracurricular activities. The cost of living sucks, which is a reality for most of us in the northeast. I choose to live here so I accept that fact.

However, what irks me is that the Federal tax code does not recognize the obvious income disparities between certain areas. 150k a year in the Northeast is not what it is in Kansas. But to the feds - it's all the same. For example:

From 140k to 170k they start reducing how much student loan interest you can deduct. At 170k it stops entirely.

At 150k you can no longer deduct rental losses.

At 160k you are in a higher tax bracket all together.

That income range is not that impressive around here. It's pretty average. So now I am going to have to play some (legal) games to get my AGI down for next year. And I was considering taking on another part-time job (in addition to the one I already have) but that is entirely out of the question because I would be working to pay more taxes essentially.

Rant off.

I claim zero and pay an additional $150 a week to IRS just so I don't owe them as much every April. It's sickening to think about.
My kids are grown and only have the mortgage interest to write off

quote:

Originally posted by BigSwede:
I claim zero and pay an additional $150 a week to IRS just so I don't owe them as much every April.

My kids are grown and only have the mortgage interest to write off

Ditto. Except mine's only an extra $25 a week.

Now that we can't claim any kids any more, all the wife's tutoring and test proctoring 1099 work throughout the year really screws our withholding calculations.

Brother, I feel your pain. You think paying taxes here is bad, you should try buying a house at a reasonable price in Anne Arundel Co.!

I can speak from recent experience, as we just got the contract back from the sellers last week.

For what I'm paying here, I could have twice as much house on twice as much land pretty much anywhere else (outside of central Maryland) and still have change left over for a cabinet full of Class III toys.

-Rob

quote:

Originally posted by BurtonRW:
Brother, I feel your pain. You think paying taxes here is bad, you should try buying a house at a reasonable price in Anne Arundel Co.!

I can speak from recent experience, as we just got the contract back from the sellers last week.

For what I'm paying here, I could have twice as much house on twice as much land pretty much anywhere else (outside of central Maryland) and still have change left over for a cabinet full of Class III toys.

-Rob

I am stuck here in Baltimore County because my MIL helps us a ton and she doesn't drive on any of the 95s and certainly not through the tunnels. I would have preferred AA County but couldn't have afforded the really nice areas anyway. I work at Meade so it would have been nice for my commute!

And yes I think about that often - how much land and house we could have elsewhere. My friend with the FAA took a job outside of Atlanta, bought a house twice as big as mine on 3 acres with a pond and it was just about half price from what I paid. Some people I know have been exploring West Virginia but that drive seems like it would be terrible. I commuted to Andrews for years and that was bad enough.

Once my kids get older there is about a ZERO percent chance I stay in this state. If it were up to me alone we would have already moved.

The problem, AJ, is what you're more-or-less suggesting is your Federal tax burden should be reduced because your local cost of living is higher. Based on that theory, people in many places of the country would face lower tax rates because they live in more expensive neighbourhoods--or even entire states. (E.g.: California.)

Were the Federal tax code amended to provide for that, the tax burden on people living in lower COL areas would have to be increased to make up for the shortfall. Many people live in lower COL areas because they can't afford to live in more expensive areas. Bumping their tax burden would be essentially subsidizing more wealthy people.

That hardly seems fair. Your choice of where to live, regardless the reason(s), should not become my burden.

quote:

Originally posted by ensigmatic:
The problem, AJ, is what you're more-or-less suggesting is your Federal tax burden should be reduced because your local cost of living is higher. Based on that theory, people in many places of the country would face lower tax rates because they live in more expensive neighbourhoods--or even entire states. (E.g.: California.)

Were the Federal tax code amended to provide for that, the tax burden on people living in lower COL areas would have to be increased to make up for the shortfall. Many people live in lower COL areas because they can't afford to live in more expensive areas. Bumping their tax burden would be essentially subsidizing more wealthy people.

That hardly seems fair. Your choice of where to live, regardless the reason(s), should not become my burden.

I see your point, but on the flip side, aren't people in high wage areas subsidizing the people living in low wage areas? Think about it on the federal level only - am I using more federal benefits than someone in the midwest? Probably not. Actually in my area and in my tax bracket, I use far less, but yet I am paying much more. Think about the federal aide that goes for Tornado damage, earthquakes, wildfires, etc. Those events are ultra rare in the Northeast.

Check out this map - https://taxfoundation.org/fede...id-reliance-rankings

Seems like the higher tax areas use less federal aid. I could live in Montana for far, far less than what it costs in Maryland, but yet far more federal tax dollars go to Montana. Is that a fair system? I am not sure what the answer is to that question. I am not sure what changes could be made it's just frustrating.

No website in the world is going to convince me that Montana wastes more tax dollars than Maryland.

How many people are on the government tit in Maryland? Probably more in Baltimore alone than in the entire state of Montana.

What is the destination for federal dollars in Montana? National Parks? Border costs? Indian Reservations?

And IMHO, we should consider having a flat tax. Regardless of how much you earn, you pay the same percentage (no deductions).

Earn $30k, pay $3K

Earn $3M, pay $300K

7% goes to the Fed, 3% goes to the state.
(Or some other percentage)

quote:

Originally posted by LS1 GTO:
And IMHO, we should consider having a flat tax. Regardless of how much you earn, you pay the same percentage (no deductions).

Earn $30k, pay $3K

Earn $3M, pay $300K

7% goes to the Fed, 3% goes to the state.
(Or some other percentage)

From your lips to God's ears...

Instead of part-time jobs, You should write (and sell) children's books.

Children's books, funny.

That's one reason I fled the Bay Area. A 16 percent pay cut resulted in a 30 percent increase in lifestyle, if not more. My Ky house was almost 4 times the size of my Bay Area dump townhouse and cost less, too.

Eliminate the Income Tax and replace it with a Value Added Tax. That way, even illegal gains are taxed when buying something. Kinda like when the 18 year old drug dealer buys a BMW with his drug money. He doesn't pay income tax on his drug money now.

quote:

Originally posted by LS1 GTO:
And IMHO, we should consider having a flat tax. Regardless of how much you earn, you pay the same percentage (no deductions).

Earn $30k, pay $3K

Earn $3M, pay $300K

7% goes to the Fed, 3% goes to the state.
(Or some other percentage)

It is absolute insanity when you look at the income tax rates for the highest brackets. Cardi B gave some excellent hood commentary on this issue when she first made it big.

And yes I will do Children's Books with the former Mayor of Baltimore once she gets out of the pokey

I could never figure out why Mortgage interest is generally deductible.

quote:

Originally posted by radioman:
I could never figure out why Mortgage interest is generally deductible.

To incentivise home ownership. There are other home-related tax breaks as well, such as the capital gains exclusion for the sale of a primary residence.

And apparently, in the initial tax code, all interest was deductible. Since then, the code has morphed into where only certain types of interest are deductible, with mortgage interest remaining as one of them.

We paid in over $25k. We’re getting back $2700. We’ll pay in the same or more next year but get back less if I make it in my job I just started.

I usually come out getting back from the Fed what I owe to the State. I'd rather keep all my money and be required to give a little up than ask for more back.

quote:

Originally posted by RogueJSK:

quote:

Originally posted by radioman:
I could never figure out why Mortgage interest is generally deductible.

To incentivise home ownership. There are other home-related tax breaks as well, such as the capital gains exclusion for the sale of a primary residence.

And apparently, in the initial tax code, all interest was deductible. Since then, the code has morphed into where only certain types of interest are deductible, with mortgage interest remaining as one of them.

I remember when credit card interest was deductible.

I owed $12 this year to the Fed and $190 to the state. I call that a pretty good tax year.