Welcome to My World

Ah, tax day. That most hair-pulling, gut-wrenching day of the year when you’re forcibly reminded just how much of your daily toiling at the grindstone goes to (supposedly) the “greater good” of society.

I’ve only ever had a sizable tax bill like this once before in my entire life, and that was back in 2000 when my ex-wife and I hatched a plan to buy ourselves a house in Colorado — the theory went something like this:

• Claim 6 exemptions instead of 2 on my W-2 form to reduce the total taxes taken out of each paycheck, so that when we actually buy the house, all the interest we pay will be deductible and it’ll all balance out.

While that idea actually does work (remembering though that the reduced withholding increases what you’ll owe at year’s end, and the interest only reduces the taxable income you get taxed on) if you follow through, it sets you up for hilarious failure when you don’t actually buy a house. Whoops.

That year I forked over about $4,000 to the IRS, and I paid a heavy price to do it — we didn’t actually have that cash available, so I had to cash out my 401(k) to pay it. There wasn’t even enough in there after the early withdrawal penalty to cover the whole bill, so even with that offset I still ended up paying the IRS about $50 a month for the rest of the year to settle the rest. Yeah, even when they say “it’s okay, you can pay in installments,” you’re getting dinged with interest (not a biggie) and penalties (a whopping biggie).

This year, the $3,500 tax bill (last year I did all contracting work) hurts, but doesn’t cripple — back in 2000 I’d have been in big trouble had anything major come up. This time, at least, I didn’t have to borrow money or pillage a retirement fund (which I don’t actually have, heh) to pay the tax bill. Of course I get $600 of that back in May as part of the “economic stimulus” plan (it didn’t work the first time, so I’m not sure why the powers that be think it’ll work this time … try raising interest rates so my online bank can pay rates that match inflation at least; maybe ending this hyper-expensive and useless war would help, oh, and so would ending the war on drugs, but now I’m really dreaming ). That softens the blow a little.

I was reading a rant from someone else bitching about having to pay $9,000 extra in taxes, but after noticing his blog explicitly states it’s intended for folks with six figure net incomes and that his rant about the extra taxes included a statement that he paid over a hundred thousand bucks this year in taxes, I have absolutely zero sympathy for him He’s got the money to hire an accountant, a lawyer, a tax guy, and a financial planner all at once, paid handsomely, to manage and grow his money, then shelter many of the earnings, including in holding corporations and family limited partnerships, so the world isn’t shedding many tears for his plight

With an effective tax rate between 20 and 30 percent, that means he brought home between $350k to $500k last year. Bleh. He could buy and sell my ass a dozen times and have leftover cash, so while I empathize with the general pain of having to write the government any kind of check, I don’t think he’s “suffering” in the same way as many others are today

Still, last year’s taxes are out of the way, and this year’s have been accounted for in a much more sane fashion. I shouldn’t end up owing anything next April; I’ll be one of the early filers