The Billfold » taxes http://thebillfold.com Everything About Money You Were Too Polite To Ask Thu, 23 May 2013 17:23:52 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 The Crazy Bag People Inside of Us http://thebillfold.com/2013/05/the-crazy-bag-people-inside-of-us/ http://thebillfold.com/2013/05/the-crazy-bag-people-inside-of-us/#comments Mon, 20 May 2013 18:40:33 +0000 Mike Dang http://thebillfold.com/?p=30116 Mike Dang


“Plastic shopping bags are an enormous problem for New York City,” said Ron Gonen, the deputy commissioner of sanitation for recycling and waste reduction, noting that the city pays $10 million annually to send 100,000 tons of plastic bags that are tossed in the general trash to landfills in South Carolina, Ohio and Pennsylvania. That, he points out, “is amazing to think of, because a plastic bag doesn’t weigh much at all.”

Quick, how many plastic bags do you have under your sink or stuffed in a drawer in your home? Probably a lot. I bring reusable bags with me to the grocery store but still manage to have a bunch crammed under my sink (they are from the drugstore, or shops like Bed Bath and Beyond, or from all those times I randomly decided to pick up something from the grocery store and didn’t have bags with me). Some cities like Austin have already banned plastic bags, while many others have fees of five cents per bag or more to incentivize shoppers to switch to reusable ones. Also, sorry for giving you our garbage, other states.

Photo: taberandrew

23 Comments]]> Mike Dang


“Plastic shopping bags are an enormous problem for New York City,” said Ron Gonen, the deputy commissioner of sanitation for recycling and waste reduction, noting that the city pays $10 million annually to send 100,000 tons of plastic bags that are tossed in the general trash to landfills in South Carolina, Ohio and Pennsylvania. That, he points out, “is amazing to think of, because a plastic bag doesn’t weigh much at all.”

Quick, how many plastic bags do you have under your sink or stuffed in a drawer in your home? Probably a lot. I bring reusable bags with me to the grocery store but still manage to have a bunch crammed under my sink (they are from the drugstore, or shops like Bed Bath and Beyond, or from all those times I randomly decided to pick up something from the grocery store and didn’t have bags with me). Some cities like Austin have already banned plastic bags, while many others have fees of five cents per bag or more to incentivize shoppers to switch to reusable ones. Also, sorry for giving you our garbage, other states.

Photo: taberandrew

23 Comments]]> http://thebillfold.com/2013/05/the-crazy-bag-people-inside-of-us/feed/ 23 On Health Care Costs, Second Homes and Taxes http://thebillfold.com/2013/05/on-health-care-costs-second-homes-and-taxes/ http://thebillfold.com/2013/05/on-health-care-costs-second-homes-and-taxes/#comments Wed, 08 May 2013 21:00:49 +0000 Markham Lee http://thebillfold.com/?p=29287 Markham Lee


The first of April was an anniversary for me of sorts, because it marked the end of my first year on an employer-sponsored health plan since 2005. Before then, I’ve always paid for my own health insurance on the private market either due to being self-employed, or being in a situation where the coverage my employer provides is lower in quality than the insurance I can buy on my own due to some combination of it being cheaper and/or providing superior coverage.

When I first bought my own insurance in ’05 it was actually pretty good—my premiums were about $144 per month, low co-pays, a $500 reasonable deductible and coverage for things like massages, chiropractor adjustments and physical therapy. However prices increased sharply every year after that, and by the end, I was paying $244 with a $5,000 deductible.

(Note: Since health care cost increases are often laid at the feet of Obamacare, I’ll simply make note of the fact that most of the cost increases occurred prior to Obama taking office let alone the ACA. Things were fairly stable over the last couple of years.)

Despite the “paying more and receiving far less” scenario, the thing that always irritated me the most about health insurance and health care costs is that it’s easier to deduct a vacation home than it is to deduct your medical costs. Especially since between a weird metabolic disorder (that is thankfully well on its way to reversing itself) and some foot surgeries, I’ve racked up some significant medical costs over the years. I never quite understood the logic behind the fact that our government has decided that we should get a taxpayer subsidy for vacation homes, but not for our health care costs.

I know that some conservative of anti-government dependence types will bristle at the idea of calling a tax deduction a taxpayer subsidy, but make no mistake: Anything that involves tax deductions is a subsidy.

Paying for health care premiums on the private market can be frustrating come tax time because unlike when you’re on an employee-sponsored plan your premiums aren’t tax deductible. The savings that come from the tax deduction are fairly significant: Let’s say that your effective tax rate (% of your gross income that goes to taxes as opposed to your top marginal rate or tax bracket) is 25% and your insurance premiums are $200/paycheck, being able to deduct those premiums = a 25% discount or a true cost of $150/paycheck. However if you’re a W2 employee who pays for a non-employee sponsored health care plan, you don’t get the benefit of that deduction or discount.

In a world where an increasing large number of people are working as contractors or temps who may find themselves in situations like I was where paying for private insurance equals vastly superior coverage, this puts you into a bit of a financial quandary. A quandary that wouldn’t exist if all health insurance were treated as fully deductible regardless of how you bought it.

The situation is better for self-employed individuals but with a few wrinkles, according to IRS publication 535 a self-employed person can deduct their health insurance costs if:

• They don’t have the option of getting health insurance through a spouse’s plan
• The plan is established either in the name of the self-employed person, or the business they operate.
• Their business showed a profit that year, a requirement that the deductibility of other business expenses (E.g. paperclips) doesn’t hinge on.

The permutations of the above hit me a few years ago. Up until about five years ago I used to do consulting work via a self-employed 1099 or “corp to corp” arrangement, meaning the company (usually a third party between me and the actual client) paid either my LLC or me directly and I handled my own taxes, benefits and insurance. This meant as long as I had the “name right” for my health insurance I deduct away. However those days are long gone, because for a variety of reasons the major clients in the area aren’t too keen on allowing their consulting firms pay their contractors via these types of arrangements anymore. Everyone has to be a W2, and with that hundreds if not thousands of people like me lost the ability to deduct their insurance premiums.

This is not to say that the technology consulting and staffing firms in my area don’t provide health insurance but that mileage varies, you might get great insurance, you might get good insurance at the cost of a pay cut that exceeds the value of the insurance or the insurance might just be rubbish AND require a pay cut.

I got really lucky with my current employer.

The other piece of this is that a small business owner whose spouse’s employer has awful health insurance, might be find themselves in a situation where they’re losing a tax deduction for no other reason than the fact that they wanted to purchase a better product for themselves or their families.

Taking away a tax deduction simply due to how you choose to buy a product constitutes a punitive tax.

The final wrinkles are that your business has to show a profit for you to deduct your health insurance premiums, and your deduction can’t exceed your business’ earned income. E.g. if you lost $5K last year you can deduct your other business expenses, but not your insurance premiums. If you only made $2K and your health insurance premiums totaled $3K (mine were $2,900 in 2011), you’d only be able to deduct the first $2K.

It’s important to note that these rules apply to self-employed individuals who operate either as sole proprietors, or sub-section “S” corps where all the corporation’s (or business’) income is passed on to the owners via their individual income taxes. These rules don’t apply to C-Corps (most mega corporations), who can deduct 100% of their health care costs whether they’re from health insurance or reimbursing people for out of pocket costs (as long as the plan doesn’t favor owners). This is not to say that self-employed people can’t form C-Corps, but it often comes with other tax implications that make what is very appealing to well multi-million dollar companies not so appealing to say someone whose small business makes $60k/yr. I.e. your profits getting taxed at the corporate level and via the salary you receive from your company.

When it comes to the deductibility of health care premiums, the entire situation seems arbitrary if not punitive. No one should be losing the ability to deduct their health insurance simply because they didn’t meet a set of nebulous criteria where how you buy a product is more important than the product itself; in fact taking away the tax deduction in certain cases constitutes a punitive tax.

Consider the choice I had to make back in ’10: make about $15k/yr less to receive crappy deductible insurance, or not get the deduction (which effectively means I’m subsidizing the insurance of people who get the deduction) to get good insurance and take home more cash. It’s also worth noting that many of my co-workers didn’t know they even had the choice to buy something better on the private market, until someone asked me a question about our company’s plan and I said I wasn’t on it.

While some of the tax credits included in the “Affordable Health Care Act” for small businesses and lower income individuals purchasing private insurance are a start, more must be done so that health insurance premiums are 100% tax deductible, period.

I would argue that the deductibility of health care costs in general is far worse than the insurance premium situation.

According to IRS Publication 502 you’re only able to deduct medical expenses that exceed 7.5% of your adjusted gross income; e.g. you have an adjusted gross income of $50K/yr, you can only deduct medical expenses that exceed $3,750. Making it worse is that you’d have to itemize those deductions to claim them, meaning they have to exceed the current standard tax deduction to be valuable. If you’re single that means that you’d need spend more than $5,900 over the $3,750 to see a benefit, and if you’re married you’d need to spend more than 11,800 + 3,750 or $15,550.00 to see a benefit.

When you consider that 55% of US households earn $50K/year or less, and that $15.5K = 31% of their gross income before taxes, the tax code is positing that a fairly typical household should all but spend itself into bankruptcy before it can deduct its medical expenses.

Meanwhile per IRS publication 936 you can deduct the interest on a vacation home (with certain limitations around how much time you spend there) provided your total mortgage debt for your primary and secondary home doesn’t exceed $1,000,000. Mind you the same issues with the standard deduction come into play (which calls into question the old saw of always buy a house for the tax deduction, but that’s another essay), but it doesn’t change the fact that there are far fewer restrictions on primary and secondary mortgages than health care costs.

Call me crazy, but I don’t think that the mortgage interest for a vacation home should be more deductible than health insurance costs, especially when some of the criteria to earn the deductions are as flimsy as purchasing health insurance through your employer instead of the private market. Better yet why should taxpayers who are struggling with medical bills have to subsidize someone’s vacation home with their tax dollars?

According to a recent Harvard Study 62% of bankruptcies are due to medical expenses, and 78% of those people had insurance. Allowing all medical expenses to be deducted without having to meet the 7.5% standard would go a long way towards easing some of that pain.

I think the solution to this problem is pretty simple: The tax code should be updated to allow all health care costs whether they’re for out of pocket costs or insurance to be 100% tax deductible, period. For the record I understand that doing this may not make any real difference to people who don’t pay taxes, and it will have a cost as far as tax revenue. But I have a solution to the latter part of the equation too: cover the cost by phasing out some of the tax deductions on people with hyper-expensive homes and vacation homes. Of all the things I want to subsidize with my tax dollars, vacation homes and mansions aren’t one of them, I’d much rather subsidize health care.

 

Markham Lee is a freelance writer based in Seattle who has spilled pixels on topics ranging from music, relationships, television, and those instances where life is stranger than fiction. He’s also working on a science fiction novel he hopes to finish before 2020. His work has been published by Nerve.com, The Frisky, Pop Matters, and Seeking Alpha. You can find more of his writing on his blog, and some of his more random, yet semi-intelligent thoughts on Twitter. Photo: U.S. Navy

15 Comments]]> Markham Lee


The first of April was an anniversary for me of sorts, because it marked the end of my first year on an employer-sponsored health plan since 2005. Before then, I’ve always paid for my own health insurance on the private market either due to being self-employed, or being in a situation where the coverage my employer provides is lower in quality than the insurance I can buy on my own due to some combination of it being cheaper and/or providing superior coverage.

When I first bought my own insurance in ’05 it was actually pretty good—my premiums were about $144 per month, low co-pays, a $500 reasonable deductible and coverage for things like massages, chiropractor adjustments and physical therapy. However prices increased sharply every year after that, and by the end, I was paying $244 with a $5,000 deductible.

(Note: Since health care cost increases are often laid at the feet of Obamacare, I’ll simply make note of the fact that most of the cost increases occurred prior to Obama taking office let alone the ACA. Things were fairly stable over the last couple of years.)

Despite the “paying more and receiving far less” scenario, the thing that always irritated me the most about health insurance and health care costs is that it’s easier to deduct a vacation home than it is to deduct your medical costs. Especially since between a weird metabolic disorder (that is thankfully well on its way to reversing itself) and some foot surgeries, I’ve racked up some significant medical costs over the years. I never quite understood the logic behind the fact that our government has decided that we should get a taxpayer subsidy for vacation homes, but not for our health care costs.

I know that some conservative of anti-government dependence types will bristle at the idea of calling a tax deduction a taxpayer subsidy, but make no mistake: Anything that involves tax deductions is a subsidy.

Paying for health care premiums on the private market can be frustrating come tax time because unlike when you’re on an employee-sponsored plan your premiums aren’t tax deductible. The savings that come from the tax deduction are fairly significant: Let’s say that your effective tax rate (% of your gross income that goes to taxes as opposed to your top marginal rate or tax bracket) is 25% and your insurance premiums are $200/paycheck, being able to deduct those premiums = a 25% discount or a true cost of $150/paycheck. However if you’re a W2 employee who pays for a non-employee sponsored health care plan, you don’t get the benefit of that deduction or discount.

In a world where an increasing large number of people are working as contractors or temps who may find themselves in situations like I was where paying for private insurance equals vastly superior coverage, this puts you into a bit of a financial quandary. A quandary that wouldn’t exist if all health insurance were treated as fully deductible regardless of how you bought it.

The situation is better for self-employed individuals but with a few wrinkles, according to IRS publication 535 a self-employed person can deduct their health insurance costs if:

• They don’t have the option of getting health insurance through a spouse’s plan
• The plan is established either in the name of the self-employed person, or the business they operate.
• Their business showed a profit that year, a requirement that the deductibility of other business expenses (E.g. paperclips) doesn’t hinge on.

The permutations of the above hit me a few years ago. Up until about five years ago I used to do consulting work via a self-employed 1099 or “corp to corp” arrangement, meaning the company (usually a third party between me and the actual client) paid either my LLC or me directly and I handled my own taxes, benefits and insurance. This meant as long as I had the “name right” for my health insurance I deduct away. However those days are long gone, because for a variety of reasons the major clients in the area aren’t too keen on allowing their consulting firms pay their contractors via these types of arrangements anymore. Everyone has to be a W2, and with that hundreds if not thousands of people like me lost the ability to deduct their insurance premiums.

This is not to say that the technology consulting and staffing firms in my area don’t provide health insurance but that mileage varies, you might get great insurance, you might get good insurance at the cost of a pay cut that exceeds the value of the insurance or the insurance might just be rubbish AND require a pay cut.

I got really lucky with my current employer.

The other piece of this is that a small business owner whose spouse’s employer has awful health insurance, might be find themselves in a situation where they’re losing a tax deduction for no other reason than the fact that they wanted to purchase a better product for themselves or their families.

Taking away a tax deduction simply due to how you choose to buy a product constitutes a punitive tax.

The final wrinkles are that your business has to show a profit for you to deduct your health insurance premiums, and your deduction can’t exceed your business’ earned income. E.g. if you lost $5K last year you can deduct your other business expenses, but not your insurance premiums. If you only made $2K and your health insurance premiums totaled $3K (mine were $2,900 in 2011), you’d only be able to deduct the first $2K.

It’s important to note that these rules apply to self-employed individuals who operate either as sole proprietors, or sub-section “S” corps where all the corporation’s (or business’) income is passed on to the owners via their individual income taxes. These rules don’t apply to C-Corps (most mega corporations), who can deduct 100% of their health care costs whether they’re from health insurance or reimbursing people for out of pocket costs (as long as the plan doesn’t favor owners). This is not to say that self-employed people can’t form C-Corps, but it often comes with other tax implications that make what is very appealing to well multi-million dollar companies not so appealing to say someone whose small business makes $60k/yr. I.e. your profits getting taxed at the corporate level and via the salary you receive from your company.

When it comes to the deductibility of health care premiums, the entire situation seems arbitrary if not punitive. No one should be losing the ability to deduct their health insurance simply because they didn’t meet a set of nebulous criteria where how you buy a product is more important than the product itself; in fact taking away the tax deduction in certain cases constitutes a punitive tax.

Consider the choice I had to make back in ’10: make about $15k/yr less to receive crappy deductible insurance, or not get the deduction (which effectively means I’m subsidizing the insurance of people who get the deduction) to get good insurance and take home more cash. It’s also worth noting that many of my co-workers didn’t know they even had the choice to buy something better on the private market, until someone asked me a question about our company’s plan and I said I wasn’t on it.

While some of the tax credits included in the “Affordable Health Care Act” for small businesses and lower income individuals purchasing private insurance are a start, more must be done so that health insurance premiums are 100% tax deductible, period.

I would argue that the deductibility of health care costs in general is far worse than the insurance premium situation.

According to IRS Publication 502 you’re only able to deduct medical expenses that exceed 7.5% of your adjusted gross income; e.g. you have an adjusted gross income of $50K/yr, you can only deduct medical expenses that exceed $3,750. Making it worse is that you’d have to itemize those deductions to claim them, meaning they have to exceed the current standard tax deduction to be valuable. If you’re single that means that you’d need spend more than $5,900 over the $3,750 to see a benefit, and if you’re married you’d need to spend more than 11,800 + 3,750 or $15,550.00 to see a benefit.

When you consider that 55% of US households earn $50K/year or less, and that $15.5K = 31% of their gross income before taxes, the tax code is positing that a fairly typical household should all but spend itself into bankruptcy before it can deduct its medical expenses.

Meanwhile per IRS publication 936 you can deduct the interest on a vacation home (with certain limitations around how much time you spend there) provided your total mortgage debt for your primary and secondary home doesn’t exceed $1,000,000. Mind you the same issues with the standard deduction come into play (which calls into question the old saw of always buy a house for the tax deduction, but that’s another essay), but it doesn’t change the fact that there are far fewer restrictions on primary and secondary mortgages than health care costs.

Call me crazy, but I don’t think that the mortgage interest for a vacation home should be more deductible than health insurance costs, especially when some of the criteria to earn the deductions are as flimsy as purchasing health insurance through your employer instead of the private market. Better yet why should taxpayers who are struggling with medical bills have to subsidize someone’s vacation home with their tax dollars?

According to a recent Harvard Study 62% of bankruptcies are due to medical expenses, and 78% of those people had insurance. Allowing all medical expenses to be deducted without having to meet the 7.5% standard would go a long way towards easing some of that pain.

I think the solution to this problem is pretty simple: The tax code should be updated to allow all health care costs whether they’re for out of pocket costs or insurance to be 100% tax deductible, period. For the record I understand that doing this may not make any real difference to people who don’t pay taxes, and it will have a cost as far as tax revenue. But I have a solution to the latter part of the equation too: cover the cost by phasing out some of the tax deductions on people with hyper-expensive homes and vacation homes. Of all the things I want to subsidize with my tax dollars, vacation homes and mansions aren’t one of them, I’d much rather subsidize health care.

 

Markham Lee is a freelance writer based in Seattle who has spilled pixels on topics ranging from music, relationships, television, and those instances where life is stranger than fiction. He’s also working on a science fiction novel he hopes to finish before 2020. His work has been published by Nerve.com, The Frisky, Pop Matters, and Seeking Alpha. You can find more of his writing on his blog, and some of his more random, yet semi-intelligent thoughts on Twitter. Photo: U.S. Navy

15 Comments]]> http://thebillfold.com/2013/05/on-health-care-costs-second-homes-and-taxes/feed/ 15 Are You Going to Jail Like Lauryn Hill http://thebillfold.com/2013/05/are-you-going-to-jail-like-lauryn-hill/ http://thebillfold.com/2013/05/are-you-going-to-jail-like-lauryn-hill/#comments Tue, 07 May 2013 16:15:05 +0000 Logan Sachon http://thebillfold.com/?p=29137 Logan Sachon

Maybe! If you didn’t FILE your taxes, you might go to jail like Lauryn Hill. But if you DID file your taxes and just haven’t paid them yet, you will not go to jail like Lauryn Hill. (Everything I know about tax law I learned from this 2008 LegalZoom page.) (I’m not going to jail.) (I hope you aren’t going to jail either.)

2 Comments]]> Logan Sachon

Maybe! If you didn’t FILE your taxes, you might go to jail like Lauryn Hill. But if you DID file your taxes and just haven’t paid them yet, you will not go to jail like Lauryn Hill. (Everything I know about tax law I learned from this 2008 LegalZoom page.) (I’m not going to jail.) (I hope you aren’t going to jail either.)

2 Comments]]> http://thebillfold.com/2013/05/are-you-going-to-jail-like-lauryn-hill/feed/ 2 How Elementary School Kids (Plan To) Do Money http://thebillfold.com/2013/05/how-elementary-school-kids-plan-to-do-money/ http://thebillfold.com/2013/05/how-elementary-school-kids-plan-to-do-money/#comments Thu, 02 May 2013 18:15:08 +0000 Julie Beck http://thebillfold.com/?p=28833 Julie Beck


My friend Sarah’s little brothers Nick and Alex are 10 and eight years old, respectively. Sarah is one of my best and oldest friends, so I’ve known Alex since he was born and Nick since he was just a kneebiter. With their parents’ permission, of course, they kindly took some time out from their busy schedules of watching Adventure Time and playing video games to chat with me about their career aspirations, taxes and how best to manage one’s money.

What do you guys want to be when you grow up?

Alex: Ninja.

Nick: I’ll be a pilot. Wait, actually a basketball player and a pilot.

How come?

Alex: Because it’s cool. You can have swords.

Nick: Because my favorite sport is basketball and it was always my dream of playing it. And then I can fly jets and planes. I’m also going to be a cowboy and other people.

What other people?

Nick: Well, um, I’m going to be noticed.

Why are people going to notice you?

Nick: I’m going to do good deeds, stuff like that. I’m going to look good for all the people.

And they’re just going to love it so much that they’ll give you money?

Nick: Yeah. And I’m going to be the cleanest and put deodorant on 10 times a day.

The deodorant company will pay you for smelling so good because of their deodorant?

Nick: You can also buy the deodorant sticks at Kroger for probably only one dollar.

If they pay you because you’re making it popular, that’s called a sponsorship. If you’re a super attractive male model and you wear their deodorant all the time and you’re like “I love this deodorant,” then they might give you money.

Nick: Sweet.

Alex, what’s the best part of being a ninja?

Alex: Helping people. Stopping bad guys.

What kind of training do you need to do that?

Alex: Maybe, you know those things that you do, it’s like high, those things for practicing for boxing?

You mean the hanging bags?

Alex: The hanging bags. Maybe also train in cutting lots of things with my sword.

Are you guys going to make a lot of money?

Alex: Yes.

Nick: Yes.

Where are you going to get it from?

Alex: The bank.

Nick: People.

Nick, how are you going to split your time between being a basketball player and a cowboy and a pilot?

Nick: I’m going to do it over the weekends.

You’re just going to work all the time?

Nick: Yeah, but on some of the weeks I’m just going to take breaks and on Saturdays.

What are you going to do on your breaks?

Nick: Buy video games and play them.

What else are you going to buy?

Nick: I’m also going to buy stuff that we need and pay my taxes. ‘Cause the government ain’t shuttin’  down my house.

You don’t want them to do that.

Nick: That would be stupid ’cause they would also shut down your power. That would be the stupidest thing in your life.

If you don’t have power you can’t play your video games.

Nick: And even worse, they would shut down the TV.

Alex, how do you feel about taxes?

Alex: I don’t know what taxes are.

When you are older and you have a lot of income, you have to give some of it to the government.

Alex: I don’t like it. If he tries it, well, if he doesn’t give me anything back, I won’t.

You won’t? You’re not going to pay your taxes? What if they come to your door, and they knock on your door and say you haven’t paid your taxes, what are you going to do?

Alex: I don’t know. That’s wasting money.

Nick: I’ll rescue you. I’ll beat them up into sandwiches.

Where are you guys going to live?

Alex: Right by this house.

Nick: A place that’s near my parents’ house.

Nick, if you’re going to be a cowboy and a pilot, will you have to travel a lot?

Nick: Yeah.

What places do you want to visit?

Nick: Maybe I’ll visit Canada, if anybody needs a ride there.

I’ll let you know if I need a ride.

Nick: Alright.

Am I going to get free rides in the plane because I’m your friend?

Nick: Yes.

Do you think it’s better to save your money or spend it?

Nick: Save and spend, both.

Alex: Save.

How come?

Nick: Because you need to save your money for taxes and I’m going to spend my other money on really fun stuff.

Alex: ‘Cause there might be an expensive thing I want.

Do you have any money right now?

Nick: No, I don’t have any money in my wallet.

Alex: Yes, I don’t know exact.

Nick, did you spend it all?

Nick: Yes.

What did you buy?

Nick: Video games.

Which video games?

Nick: Um, the only video game that I can remember that I bought is Batman: Arkham City. And it’s not LEGO. It’s real.

Alex, are you saving up for something?

Alex: A Nerf gun shotgun.

Are those expensive?

Alex: Yes. Meijer’s has it, I don’t know exactly what place they’re at.

Would you guys ever go into business together?

Alex: Maybe. Yes.

Nick: If he’s not too mean.

 

Julie Beck is a writer and editor in Chicago. She’s going to hold Nick to that promise of free plane rides.

16 Comments]]> Julie Beck


My friend Sarah’s little brothers Nick and Alex are 10 and eight years old, respectively. Sarah is one of my best and oldest friends, so I’ve known Alex since he was born and Nick since he was just a kneebiter. With their parents’ permission, of course, they kindly took some time out from their busy schedules of watching Adventure Time and playing video games to chat with me about their career aspirations, taxes and how best to manage one’s money.

What do you guys want to be when you grow up?

Alex: Ninja.

Nick: I’ll be a pilot. Wait, actually a basketball player and a pilot.

How come?

Alex: Because it’s cool. You can have swords.

Nick: Because my favorite sport is basketball and it was always my dream of playing it. And then I can fly jets and planes. I’m also going to be a cowboy and other people.

What other people?

Nick: Well, um, I’m going to be noticed.

Why are people going to notice you?

Nick: I’m going to do good deeds, stuff like that. I’m going to look good for all the people.

And they’re just going to love it so much that they’ll give you money?

Nick: Yeah. And I’m going to be the cleanest and put deodorant on 10 times a day.

The deodorant company will pay you for smelling so good because of their deodorant?

Nick: You can also buy the deodorant sticks at Kroger for probably only one dollar.

If they pay you because you’re making it popular, that’s called a sponsorship. If you’re a super attractive male model and you wear their deodorant all the time and you’re like “I love this deodorant,” then they might give you money.

Nick: Sweet.

Alex, what’s the best part of being a ninja?

Alex: Helping people. Stopping bad guys.

What kind of training do you need to do that?

Alex: Maybe, you know those things that you do, it’s like high, those things for practicing for boxing?

You mean the hanging bags?

Alex: The hanging bags. Maybe also train in cutting lots of things with my sword.

Are you guys going to make a lot of money?

Alex: Yes.

Nick: Yes.

Where are you going to get it from?

Alex: The bank.

Nick: People.

Nick, how are you going to split your time between being a basketball player and a cowboy and a pilot?

Nick: I’m going to do it over the weekends.

You’re just going to work all the time?

Nick: Yeah, but on some of the weeks I’m just going to take breaks and on Saturdays.

What are you going to do on your breaks?

Nick: Buy video games and play them.

What else are you going to buy?

Nick: I’m also going to buy stuff that we need and pay my taxes. ‘Cause the government ain’t shuttin’  down my house.

You don’t want them to do that.

Nick: That would be stupid ’cause they would also shut down your power. That would be the stupidest thing in your life.

If you don’t have power you can’t play your video games.

Nick: And even worse, they would shut down the TV.

Alex, how do you feel about taxes?

Alex: I don’t know what taxes are.

When you are older and you have a lot of income, you have to give some of it to the government.

Alex: I don’t like it. If he tries it, well, if he doesn’t give me anything back, I won’t.

You won’t? You’re not going to pay your taxes? What if they come to your door, and they knock on your door and say you haven’t paid your taxes, what are you going to do?

Alex: I don’t know. That’s wasting money.

Nick: I’ll rescue you. I’ll beat them up into sandwiches.

Where are you guys going to live?

Alex: Right by this house.

Nick: A place that’s near my parents’ house.

Nick, if you’re going to be a cowboy and a pilot, will you have to travel a lot?

Nick: Yeah.

What places do you want to visit?

Nick: Maybe I’ll visit Canada, if anybody needs a ride there.

I’ll let you know if I need a ride.

Nick: Alright.

Am I going to get free rides in the plane because I’m your friend?

Nick: Yes.

Do you think it’s better to save your money or spend it?

Nick: Save and spend, both.

Alex: Save.

How come?

Nick: Because you need to save your money for taxes and I’m going to spend my other money on really fun stuff.

Alex: ‘Cause there might be an expensive thing I want.

Do you have any money right now?

Nick: No, I don’t have any money in my wallet.

Alex: Yes, I don’t know exact.

Nick, did you spend it all?

Nick: Yes.

What did you buy?

Nick: Video games.

Which video games?

Nick: Um, the only video game that I can remember that I bought is Batman: Arkham City. And it’s not LEGO. It’s real.

Alex, are you saving up for something?

Alex: A Nerf gun shotgun.

Are those expensive?

Alex: Yes. Meijer’s has it, I don’t know exactly what place they’re at.

Would you guys ever go into business together?

Alex: Maybe. Yes.

Nick: If he’s not too mean.

 

Julie Beck is a writer and editor in Chicago. She’s going to hold Nick to that promise of free plane rides.

16 Comments]]> http://thebillfold.com/2013/05/how-elementary-school-kids-plan-to-do-money/feed/ 16 Great Clipart, Turbotax http://thebillfold.com/2013/04/great-clipart-turbotax/ http://thebillfold.com/2013/04/great-clipart-turbotax/#comments Tue, 16 Apr 2013 21:15:21 +0000 Logan Sachon http://thebillfold.com/?p=27745 Logan Sachon

Design Brief: The “your tax extension has been accepted by the IRS” email is a celebration of procrastination, but also a condemnation of procrastination. The journey is not over—it has only just begun. The clipart should reflect this.

Make it festive, but violent (nails? knives?)
Needs vaguely phallic elements (“you are fucking yourself”)
Allude to “burning money” without being burning money (element of fire?)
Obviously there should be an image of a fat stack of tax forms to remind recipient, “you have accomplished nothing”
Anthropomorphization of tax forms??? (smile? smirk? frowny face?)
Soothing color palette (“see you soon”)

11 Comments]]> Logan Sachon

Design Brief: The “your tax extension has been accepted by the IRS” email is a celebration of procrastination, but also a condemnation of procrastination. The journey is not over—it has only just begun. The clipart should reflect this.

Make it festive, but violent (nails? knives?)
Needs vaguely phallic elements (“you are fucking yourself”)
Allude to “burning money” without being burning money (element of fire?)
Obviously there should be an image of a fat stack of tax forms to remind recipient, “you have accomplished nothing”
Anthropomorphization of tax forms??? (smile? smirk? frowny face?)
Soothing color palette (“see you soon”)

11 Comments]]> http://thebillfold.com/2013/04/great-clipart-turbotax/feed/ 11 The Tax Most People Forget to Pay http://thebillfold.com/2013/04/the-tax-most-people-forget-to-pay/ http://thebillfold.com/2013/04/the-tax-most-people-forget-to-pay/#comments Tue, 16 Apr 2013 16:15:49 +0000 Mike Dang http://thebillfold.com/?p=27700 Mike Dang

“Its a lot of fun,” Daniel Gottfried, a lawyer at Rogin Nassau in Connecticut, told me “I go through my credit card receipts … page by page.”

He finds something he bought from Amazon last May for $22.98. He didn’t get charged sales tax on the purchase, which means he owes the state of Connecticut $1.40 for that purchase.

Chana Joffe-Walt reports that most Americans—except for tax lawyers and accountants—forget to pay use taxes when they file our taxes every year. Use taxes are taxes we’re suppose to pay when we buy tax-free items online from retailers like Amazon, or from out of state.

In New York, Amazon charges sales tax at the point of sale so we don’t have to go through our statements to figure out what we bought on Amazon and how much we owe the state for those purchases, but there are plenty of other states where buyers don’t have to pay any taxes (currently, nine states are subject to taxes). I am generally a law-abider, but like the majority of people who don’t pay their use taxes, I doubt that I would spend hours going through statements to figure out what I owed, or find the process fun like Daniel Gottfried does. I’m curious to know if anyone reading this post goes through their statements to do just this.

Photo: alisdair

18 Comments]]> Mike Dang

“Its a lot of fun,” Daniel Gottfried, a lawyer at Rogin Nassau in Connecticut, told me “I go through my credit card receipts … page by page.”

He finds something he bought from Amazon last May for $22.98. He didn’t get charged sales tax on the purchase, which means he owes the state of Connecticut $1.40 for that purchase.

Chana Joffe-Walt reports that most Americans—except for tax lawyers and accountants—forget to pay use taxes when they file our taxes every year. Use taxes are taxes we’re suppose to pay when we buy tax-free items online from retailers like Amazon, or from out of state.

In New York, Amazon charges sales tax at the point of sale so we don’t have to go through our statements to figure out what we bought on Amazon and how much we owe the state for those purchases, but there are plenty of other states where buyers don’t have to pay any taxes (currently, nine states are subject to taxes). I am generally a law-abider, but like the majority of people who don’t pay their use taxes, I doubt that I would spend hours going through statements to figure out what I owed, or find the process fun like Daniel Gottfried does. I’m curious to know if anyone reading this post goes through their statements to do just this.

Photo: alisdair

18 Comments]]> http://thebillfold.com/2013/04/the-tax-most-people-forget-to-pay/feed/ 18 Once I Wanted to Be the Greatest at 1 Thing http://thebillfold.com/2013/04/once-i-wanted-to-be-the-greatest-at-1-thing/ http://thebillfold.com/2013/04/once-i-wanted-to-be-the-greatest-at-1-thing/#comments Thu, 11 Apr 2013 16:15:07 +0000 Logan Sachon http://thebillfold.com/?p=27383 Logan Sachon

Thursday is a great day to do that 1 thing you don’t want to do but also don’t want to continue thinking about doing. 

Last week my 1 thing was to write a do 1 thing post and I didn’t do it. But that’s fine. It’s a new day. A new 1 thing.

My 1 thing for today is to think about my taxes. I don’t have to do them. I just have to think about them. Just sit and ponder them for awhile. They have to be done, sometime. That’s for sure. Let that sink in. What do I need to do? When do I need to do it by? I’m going to think about all this and more, today. Right now. In five minutes. Here is the link to file an extension. That sounds like a great 1 thing. I suppose actually doing my taxes could be another thing I could do. I’ll think about that.

26 Comments]]> Logan Sachon

Thursday is a great day to do that 1 thing you don’t want to do but also don’t want to continue thinking about doing. 

Last week my 1 thing was to write a do 1 thing post and I didn’t do it. But that’s fine. It’s a new day. A new 1 thing.

My 1 thing for today is to think about my taxes. I don’t have to do them. I just have to think about them. Just sit and ponder them for awhile. They have to be done, sometime. That’s for sure. Let that sink in. What do I need to do? When do I need to do it by? I’m going to think about all this and more, today. Right now. In five minutes. Here is the link to file an extension. That sounds like a great 1 thing. I suppose actually doing my taxes could be another thing I could do. I’ll think about that.

26 Comments]]> http://thebillfold.com/2013/04/once-i-wanted-to-be-the-greatest-at-1-thing/feed/ 26 Gay Marriage and Taxes http://thebillfold.com/2013/04/gay-marriage-and-taxes/ http://thebillfold.com/2013/04/gay-marriage-and-taxes/#comments Thu, 11 Apr 2013 13:55:59 +0000 Mike Dang http://thebillfold.com/?p=27360 Mike Dang

It’s easy, however, to calculate the difference between the counterfactual returns that my husband and I have completed and the ones we have actually mailed to the IRS. Simple arithmetic shows that in 2011, we paid $5,675 more than we would have if the federal government had recognized our marriage, and in 2012, $4,250 more. (I benightedly write for a living and my husband, though he also writes, has a proper job; couples like us with a significant income disparity usually come in for a marriage bonus, not a penalty, when paying taxes.) There’s something a little sordid about these dollar amounts. Whatever the cost of being gay in America may be, they don’t correspond to it. But I find their perspicuity, however petty and inadequate, somewhat fascinating. Numbers are so definite, even when their meaning isn’t.

At Slate, Caleb Crain talks about the difficulties of filing taxes as a gay married couple when there’s a disconnect between states and the federal government on the legality of gay marriage. The numbers speak for themselves.

5 Comments]]> Mike Dang

It’s easy, however, to calculate the difference between the counterfactual returns that my husband and I have completed and the ones we have actually mailed to the IRS. Simple arithmetic shows that in 2011, we paid $5,675 more than we would have if the federal government had recognized our marriage, and in 2012, $4,250 more. (I benightedly write for a living and my husband, though he also writes, has a proper job; couples like us with a significant income disparity usually come in for a marriage bonus, not a penalty, when paying taxes.) There’s something a little sordid about these dollar amounts. Whatever the cost of being gay in America may be, they don’t correspond to it. But I find their perspicuity, however petty and inadequate, somewhat fascinating. Numbers are so definite, even when their meaning isn’t.

At Slate, Caleb Crain talks about the difficulties of filing taxes as a gay married couple when there’s a disconnect between states and the federal government on the legality of gay marriage. The numbers speak for themselves.

5 Comments]]> http://thebillfold.com/2013/04/gay-marriage-and-taxes/feed/ 5 For Those Who Need Last Minute Tax Questions Answered http://thebillfold.com/2013/04/for-those-who-need-last-minute-tax-questions-answered/ http://thebillfold.com/2013/04/for-those-who-need-last-minute-tax-questions-answered/#comments Wed, 10 Apr 2013 20:00:55 +0000 Mike Dang http://thebillfold.com/?p=27336 Mike Dang

If you have a last minute tax question, expert accountant Gail Rosen will be answering them at The Guardian tomorrow at 1 p.m. EST. You can submit your questions here.

3 Comments]]> Mike Dang

If you have a last minute tax question, expert accountant Gail Rosen will be answering them at The Guardian tomorrow at 1 p.m. EST. You can submit your questions here.

3 Comments]]> http://thebillfold.com/2013/04/for-those-who-need-last-minute-tax-questions-answered/feed/ 3 PR Emails That Would Like To Remind Us That It’s Tax Season http://thebillfold.com/2013/03/pr-emails-that-would-like-to-remind-us-that-its-tax-season/ http://thebillfold.com/2013/03/pr-emails-that-would-like-to-remind-us-that-its-tax-season/#comments Fri, 29 Mar 2013 15:15:48 +0000 Logan Sachon http://thebillfold.com/?p=26462 Logan Sachon

TO: LOGAN
SUBJECT: WHEN TAX SEASON IS TAXING
An invitation to a Google Hangout on “how to navigate finances and financial stress skillfully.”

 

TO: LOGAN
SUBJECT: Last Minute Tax Tips
“With last minute tax preparations underway, preparing your tax documents too fast is a dangerous proposition often resulting in costly oversights and errors.”

 

TO: LOGAN
SUBJECT: RETURN ON REFUND: Personal Finance During Tax Season
“As you know, we are in the middle of tax season and many are wondering how to best utilize their tax returns.”

 

TO: LOGAN
SUBJECT: 4 Smart Ways to Spend Your Tax Refund
“It’s the time of year that many Americans look forward to: tax refund season!  The school of thought for most people is usually one of two theories on what to do with that money: use it to pay off credit cards, other expenses or put it in savings; or go wild, treat yourself to something nice like a vacation or shopping spree and enjoy it.”

 

TO: LOGAN
SUBJECT: Timely, Tax Season Tips
“Tax season means a higher threat of identity theft – as consumers relay personal information through email and regular mail. I thought you might have interest in timely tips for protection.”

 

TO: LOGAN
SUBJECT: $weet $avings for Tax $eason
“With tax season in full swing, there’s nothing like crunching last year’s numbers to remind you of all the cost saving techniques you simply forgot to implement. But don’t let the paperwork bog you down, it’s just a matter of dollars and sense.”

 

Delete

0 Comments]]> Logan Sachon

TO: LOGAN
SUBJECT: WHEN TAX SEASON IS TAXING
An invitation to a Google Hangout on “how to navigate finances and financial stress skillfully.”

 

TO: LOGAN
SUBJECT: Last Minute Tax Tips
“With last minute tax preparations underway, preparing your tax documents too fast is a dangerous proposition often resulting in costly oversights and errors.”

 

TO: LOGAN
SUBJECT: RETURN ON REFUND: Personal Finance During Tax Season
“As you know, we are in the middle of tax season and many are wondering how to best utilize their tax returns.”

 

TO: LOGAN
SUBJECT: 4 Smart Ways to Spend Your Tax Refund
“It’s the time of year that many Americans look forward to: tax refund season!  The school of thought for most people is usually one of two theories on what to do with that money: use it to pay off credit cards, other expenses or put it in savings; or go wild, treat yourself to something nice like a vacation or shopping spree and enjoy it.”

 

TO: LOGAN
SUBJECT: Timely, Tax Season Tips
“Tax season means a higher threat of identity theft – as consumers relay personal information through email and regular mail. I thought you might have interest in timely tips for protection.”

 

TO: LOGAN
SUBJECT: $weet $avings for Tax $eason
“With tax season in full swing, there’s nothing like crunching last year’s numbers to remind you of all the cost saving techniques you simply forgot to implement. But don’t let the paperwork bog you down, it’s just a matter of dollars and sense.”

 

Delete

0 Comments]]> http://thebillfold.com/2013/03/pr-emails-that-would-like-to-remind-us-that-its-tax-season/feed/ 0