This April's Taxes May Be A Shock

[Mr VJP]

 

Remember this WHEN YOU DO YOUR TAXES IN APRIL) !

 

Remember this WHEN YOU DO YOUR TAXES IN APRIL) ! ! ! ! ! !

  

In case you didn't notice.

Here is what happened on January 1, 2014 :

 

Top Medicare tax went from 1.45% to 2.35%, an increase of 62 %

 

Top Income tax bracket went from 35% to 39.6%, an increase of 13 %

 

Top Income payroll tax went from 37.4% to 52.2%, an increase of 52 %

 

Capital Gains tax went from 15% to 28% an increase of 87 %

 

Dividends tax went from 15% to 39.6%, an increase of 164 %

 

Estate tax went from 0% to 55%, an increase of infinity . . .

 

Remember this fact: These taxes were all passed with only democrat votes

No republicans voted for these taxes.

 

These taxes were all quietly passed under the Affordable Care Act, aka OBAMACARE.

 

 .

And THEY told you it wasn't going to cost you anything AND you could keep your own insurance.  Silly people, you'll believe anything the anointed one will tell you.  

 

 

 

 

Edited December 18, 2014 by Mr VJP

[jrm]

 

 

 

 

Estate tax went from 0% to 55%, an increase of infinity . . .

 

 

 

 

That is old.

 

The estate tax gradually phased out and went to 0 in 2010. Due to inaction by congress, it was reinstated in 2011 at 35%.

 

2010 was the only year without an estate tax. Many hoped it would remain at 0%, and some congressmen floated that idea. If the economy wasn't in such bad shape at the time, it might have had some traction.

 

The personal exclusion from Federal Estate tax was set at $5,000,000. With portability between spouses, a married couple had a combined federal exemption of $10,000,000. The exclusion is indexed for inflation. In 2014, it was 5.34 million per person.

 

The exclusion was supposed to drop to $1 million and the rate increase to 50% after the phase out plan expired. However, congress issued a bill, which the president signed. That kept the exclusion where it is and brought the top rate to 40% (from 35%). Aside from the lifetime exclusion increasing, the rate is fixed at 40%.

 

This is all at the federal level. State level is different. NYS has an exclusion of $1 million and rate are something like 11-14%.

 

 

 

My mom passed in 2012 and my dad passed in 2013. I have been through all this with some fancy accountants and lawyers. I think estate tax, regardless of exclusion, is nothing more than theft. The government comes in and TAKES money someone has EARNED and already paid taxes on. The concept disgusts me and I see the government as nothing more than someone who digs a grave to steal a gold tooth from a deceased's body. 

 

 

That said, the original statement regarding estate taxes changing on January 1, 2014 is completely false.

 

Some of the other information looks a little suspect.., Capital Gains for example. As far as I can see, it is still at 15%. For those in the top bracket (>450k income) is goes to 20% - both having the ACA (Obamacare) surcharge of 3.89%.

 

Note that dividends and capital gains are taxed at the same rate so it doesn't make sense to claim different increase amounts for the two.

 

 

 

They are bloodsucking leaches who steal the money you work for. I fully agree we are hopelessly overtaxed and that people should get to keep what they make. However, two wrongs do not make a right (although three lefts do).

[Merlot]

Wife and I are thinking of relocating down south, just to get away from NY taxes and the weather. Both are too taxing on us.

[BizCT]

Simple way to avoid estate tax is having your family names on your bank accounts, houses, etc. my remaining grandparents are 91 and 86. If either of them died it would be pretty simple. Houses and bank accounts have my parents names on them, so there is no issues.

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[Lawdwaz]

Simple way to avoid estate tax is having your family names on your bank accounts, houses, etc. my remaining grandparents are 91 and 86. If either of them died it would be pretty simple. Houses and bank accounts have my parents names on them, so there is no issues.

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There's PLENTY of folks that old that absolutely will not do this.  Never will they relinquish control of an asset that they have busted their ass for to turn over to another family member.

 

I know what should be done but plenty of folks don't understand.  Seen it more than a few times........

 

Hopefully your grandparents are gifting $14k a year to everyone and anyone that is close to them if they can afford it.

 

[Lawdwaz]

This info came from this blog.  I wonder how credible the source really is?

 

http://nesaranews.blogspot.com/2014/12/remember-this-when-you-do-your-taxes-in.html

[Mr VJP]

The info was forwarded to me in an e-mail from a friend in Washington State.  I think the only thing that needs to be credible is the data posted.

[BizCT]

There's PLENTY of folks that old that absolutely will not do this. Never will they relinquish control of an asset that they have busted their ass for to turn over to another family member.

I know what should be done but plenty of folks don't understand. Seen it more than a few times........

Hopefully your grandparents are gifting $14k a year to everyone and anyone that is close to them if they can afford it.

I understand, and for those with big families I'm sure jealously among family members is an issue too. My family is very small, so this is how we do it. We take mortgages from our elders, so it's a win win for all. The Loaner gets better interest than a savings account and the loanee gets better interest than a bank offers and at least the interest stays within the family instead of the bank getting it. I'm only 30, but all my bank accounts have my brother and parents on it. If I die tomorrow, my $ isn't tied up. They just go to the bank and withdraw it like they technically could right now.

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[pewlodar]

Wife and I are thinking of relocating down south, just to get away from NY taxes and the weather. Both are too taxing on us.

If you pay some more in taxes, King Andy said he will fix the weather or at least tell you when the weather is bad with his new super weather service.

[jrm]

I understand, and for those with big families I'm sure jealously among family members is an issue too. My family is very small, so this is how we do it. We take mortgages from our elders, so it's a win win for all. The Loaner gets better interest than a savings account and the loanee gets better interest than a bank offers and at least the interest stays within the family instead of the bank getting it. I'm only 30, but all my bank accounts have my brother and parents on it. If I die tomorrow, my $ isn't tied up. They just go to the bank and withdraw it like they technically could right now.

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This is not tax advice... you should only get tax advice from a qualified lawyer or accountant. That said...

 

There are many things wrong with the scenario you describe. The govt  wants their money. You cannot simply mix assets with other people and get around tax. 

 

If you earn money (and pay tax on it) and then place those funds in a bank account with joint ownership, that money does not simply go to the other person when you die. Sure, they can withdraw the funds. However, there is a "tax event" that takes place. That money is still subject to estate tax. If you don't declare it on the deceased persons estate tax return there can be big trouble with the IRS. If the funds in that account came from both parties, it will be a nightmare sorting things out. The IRS can assess tax penalties if they decide that the money you made constituted a "gift" to that other person on the account.

 

When you make a loan between family members, it is not necessarily a win-win. There is a minimum level of interest that must be charged. The loaner must declare that interest on their tax return and pay income taxes on it. This can often be a beneficial arrangement as opposed to using a bank. It can also push someone into a higher tax bracket, negating any tax advantage. If it is done simply to transfer assets between family members, it is often not worth it. 

 

Remember that the lifetime exclusion is currently 5.34 million dollars per person. For a married couple that doubles to 10.68 million dollars. Unless you and your wife are worth more than $10.68MM together, all the games usually aren't worth it because there is ZERO federal estate tax liability. New York State's exclusion is still at $1MM, which isn't hard to hit if you own a home, but the estate tax rate is low enough that playing games usually doesn't make sense.

 

If you fall into the $10MM+ area, then you should:

- have your own lawyer and accountants advising you

- know this stuff already

- have already made plans to minimize estate taxes

- NOT be taking tax advice from strangers on a hunting forum

 

Upon death, a bank account is supposed to be frozen. This can make it hard for people to get needed cash to pay bills for the deceased. An executor can access those funds, but even that can take too long in some cases.

 

A good workaround is to simply open a bank account with an "In Trust For" title. The account owner is the only person who can access that account. Upon their death, the funds are immediately available to the beneficiary. All you need is a valid death certificate. For most people, that is a better solution than joint bank accounts where either party can access the money at any time.

 

People much smarter than you and I have tried to beat the IRS and failed. They have seen it all. The only way some of these tricks work is that it is such small potatoes they don't have the manpower to catch up with it. But when they do... they will come after you for every penny they think they are owed - plus penalties and interest.

 

Taxes suck. I have my own business and get hit on both sides. It is rape. All you can do it bitch about it. If you don't pay, they will take everything away and lock you up. Loan sharks are nicer people and more forgiving than the IRS. The IRS should be abolished and the tax code scrapped. It is a punitive system that penalizes those who are successful.

[BizCT]

I politely disagree. Why let banks have your interest if you can keep in the family? You can take a mortgage from a family member at say 2.5%. That family member is getting a better rate than a savings account and you are getting a mortgage rate much lower than a bank can offer. Both parties claim the interest paid/received and most importantly, no bank is collecting 10-15 years worth of interest.

Regarding bank accounts, I should have clarified better. When I said other people on my accounts it is ITF.

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Edited December 19, 2014 by Biz-R-OWorld

[landtracdeerhunter]

If you pay some more in taxes, King Andy said he will fix the weather or at least tell you when the weather is bad with his new super weather service.

 

Starting his campaign for president a bit early. Another bone thrown to Buffalo along with his" Billion Dollars for Buffalo" sales bull.

[landtracdeerhunter]

There's PLENTY of folks that old that absolutely will not do this.  Never will they relinquish control of an asset that they have busted their ass for to turn over to another family member.

 

I know what should be done but plenty of folks don't understand.  Seen it more than a few times........

 

Hopefully your grandparents are gifting $14k a year to everyone and anyone that is close to them if they can afford it.

 

 

This can come from the "Depression" era.  Also some know their family all to well.

[jrm]

I politely disagree. Why let banks have your interest if you can keep in the family? 

 

Agreed.

 

Current rate is around 2.7%. This will be advantageous in most situations. My point is that it is not a "one size fits all." For some, it can push the lender into a higher tax bracket, negating any advantage.

 

Also, there is the question of what interest rate can be earned on the money loaned.

 

Current 30y mortgage rates look to be around 4% (CNN reports average at 3.8%). it sounds like a good deal to take a family loan at 2.7%. That's a 1.3% gap in rate. If the family member can get better than 4% (taxable) on an investment (entirely possible with well rated long-term bonds), the difference is negated. Depending on tax bracket, a 3% tax-free bond could be even better. The difference in interest could be "gifted" back to the family member tax free with no detailed record keeping or tax form filing necessary, making it a win-win for both family members. You get your 2.7% loan and your family member gets better than 2.7% on their money - all with no intra-family loan paperwork or amortization schedules to file.

 

A 1% difference in earning on a 100,000 loan is $1,000/year. I'll take that any day.

 

Nothing wrong with your idea of lending between family members. I have done it too in certain situations, even if it is considerable IRS hassle to deal with. With the current spread between AFR and mortgage rates being so small, now is not an ideal time for many to go this route.

 

Just pointing out that everyone's situation is different and there are sometimes better alternatives. Any decent accountant can advise the best course for one's own situation. YMMV.

[jjb4900]

my taxes are a shock every year......I don't expect this year to be any different.

[Sogaard]

EDIT:  Never mind, it's not even with the effort. If you want to complain that the top earners in the country have to pay some more in taxes this year, that's you're prerogative.

 

 

I wish I had "top income tax bracket" problems.  

Edited December 19, 2014 by Sogaard

[Culvercreek hunt club]

I'm really feeling terrible that all these top income multi-millionaires have to pay a little more in taxes.

 

 

#richpeopleproblems ?  

No one here is probably surprised you aren't for people keeping what they earn.

[Mr VJP]

Why shouldn't those of us who work hard and attain success be made to pay for the people who are sloths and parasites on the rest of the citizens?

 

After all that's the Marxist way.

 

[Uncle Nicky]

There won't be any surprises here. I don't fall into any of the top income categories, any stocks I have are tied into IRAs or 401k, and nobody died & left me anything this year (so far).

[Culvercreek hunt club]

and nobody died & left me anything this year (so far).

 Well there is still hope. 12 days left in 2014.

[Sogaard]

Why shouldn't those of us who work hard and attain success be made to pay for the people who are sloths and parasites on the rest of the citizens?

 

After all that's the Marxist way.

 

You can play extremist word games all you like, but when it comes down to it, many more hard working Americans can now afford healthcare thanks to the ACA (modeled off of a Republican idea, I might add).  We were already paying for the sloths and parasites every time they walked into the emergency room, now there is a least some accountability to not carrying health insurance.

 

And Culliver, if this country has given you the opportunity to make 400k a year (top income bracket), yes, I do believe you should have to give a little more.  

 

And that isn't even mentioning what that top earner tax bracket was like in the 50s and 60s, you know, when this country could actually afford to build infrastructure.

Edited December 19, 2014 by Sogaard

[jrm]

EDIT:  Never mind, it's not even with the effort. If you want to complain that the top earners in the country have to pay some more in taxes this year, that's you're prerogative.

 

 

I wish I had "top income tax bracket" problems.  

 

 

I could argue the "should keep what you earn" line as others have gone.

 

Instead, let me point out that the whole "successful people are evil" isn't so much about money. It is about instigating class warfare and dividing the populace. While everyone is "marching on wall street" and having a bitch-fest about the "evil" people who have the audacity to become successful - the government is screwing you over and has their hand deep in your pocket.

 

I'm not rich and I pay more in taxes each year... how's that "tax the rich" thing working out for you?

 

Bread and friggin' circuses. Smoke and friggin' mirrors.

 

Might as well say "I wish I had those AR owner problems." Heck, no one needs an AR or a 30rd magazine. Those people should be stopped! All they need is a slingshot, just like me!

 

United we stand, divided we fall. EVERYONE is overtaxed, not just the "rich" people. If everyone got on the same page, instead of believing a Robin Hood myth, we could have real tax reform and ALL get to keep more of what we bust our butts to earn.

Edited December 19, 2014 by jrm

[Culvercreek hunt club]

And Culliver, if this country is enabling you to make over 400k a year (top income bracket), yes, I do believe you should have to give a little more.  

Wow if that didn't sound like Obama. (You didn't build that) The country enabled them to make their money? If you mean the opportunity was there for them, then yes I agree with that. Just as it is for everyone else too. I'd argue it may be easier for the less fortunate that want to apply themselves to make it with all the financial aide opportunities than to be in the middleclass. that is  where it is tough. can't get the aid and can't write the check.

 

Trust me, I am no where near those brackets, but I can't feel jealous and want what they worked for taken away because I don't have it.

[Sogaard]

Wow if that didn't sound like Obama. (You didn't build that) The country enabled them to make their money? If you mean the opportunity was there for them, then yes I agree with that. Just as it is for everyone else too. I'd argue it may be easier for the less fortunate that want to apply themselves to make it with all the financial aide opportunities than to be in the middleclass. that is  where it is tough. can't get the aid and can't write the check.

 

Trust me, I am no where near those brackets, but I can't feel jealous and want what they worked for taken away because I don't have it.

 

 

I actually rephrased my wording before you finished typing this (see the edited version).  You are correct, "enabled" was not what I meant.

Edited December 19, 2014 by Sogaard

[Mr VJP]

Those who want the government to collect more taxes, really want the government to spend even more money!