Tuesday, April 12, 2011

Tax returns . . .

are in the mail. We sent some money to the US Treasury and the State of Maryland will return some to us. But as I worked my way through the forms and listened to the news this past couple of weeks, some issues seemed worthy of a few comments and questions.

Last year I reached the age of "Required Minimum Distribution" according to the Internal Revenue Service. This means those funds invested in 401(k) retirement arrangements begin to be taxable. And the IRS requires us to take out a little less than 4% the first year and a slightly higher percentage each year thereafter. This means we have more income (good news) and higher taxes (okay news). But another consequence is that the amount of Social Security (government retirement plan) that is taxed goes up (the bad news). There are 18 different forms (plus one "other") of income, some taxable, some not, some taxable under certain circumstances. I believe that taxes are necessary to fund the services that support the population in general, but it seems that income should be in two categories: "taxable" or "not taxable".

Can anyone explain the Alternate Minimum Tax in plain English? I have a little of the income and deductions that invoke the AMT. In the past, I got to step 12 of the worksheet with a 0 or negative amount and that meant no AMT was due. For 2010 the instructions say go directly to Form 6251 that takes 54 steps to reach the same conclusion. The AMT is the most convoluted form I have encountered, mainly because no explanation of the overall purpose is given.

General Electric created news when it was reported the company was paying no Federal taxes for 2010. Turns out that the report was premature, though GE acknowledged that the company does work to keep its taxes low (don't we all?). My question is why is "profit" reported to the IRS different than "profit" reported to shareholders? Is not someone being cheated? Apparently not, the law and accounting principles allow it.

In my opinion, our Congressional leaders, both Republican and Democrat, have been derelict in their duties the past few years, but especially for the past 12 months. To not have a budget in place when the year is over half-gone is absurd. They need to get back to working together to govern, and leave the politicking to the party chairmen.

Happy filing day to all and remember you have an extra weekend this year to finish you taxes.

This is a photography blog, and I am not a writer, so its back to pictures next post.

1 comment:

Sylvia K said...

I can sense your frustration and I do so understand!! For the past three years I would get an increase in my social security and then it was immediately "taxed" and the increase disappears. I'm not getting considerably less SS than I did four years ago. It's frustrating, but like you I usually try to focus on my photography and the only rocks I sling are the quotes on my blog. That doesn't change the situation, but it's good to know that over the years many have felt the same!! Hope the rest of your week goes well!