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Why the gently caress does Massachusetts get to tax my D.C. income? I worked for a few weeks over winter break last year in D.C. (because I'm a VA resident I pay VA taxes, not D.C. taxes) but then worked in Boston all summer long. Doing my MA nonresident income tax form they had me add in my earnings from when I was living at home. That doesn't make a whole lot of sense--at the time I was living in VA I wasn't using any MA state services or anything, why should they get a bite out of that apple? Either way, it was like another $600 and probably resulted in a negligible reduction of my MA refund. Both my federal and MA returns are in the mail (I didn't bother filing a VA return, as it would have been for a pittance and I was well below the income threshold) so it doesn't matter anyway, I'm just curious how states where you're not a resident justify taxing income earned elsewhere...
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Mar 15, 2011 03:27
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At what level of income does it make sense to consult a tax professional? I'll be making something in the mid-100's for the next few years, but my parents are pulling at least mid-400's together and still use TurboTax. I know they could sure benefit from a tax guy: they pay the AMT--no one, especially at that very much middle-class level, pays the loving AMT. But they also have complexities like multiple tuitions, mortgages, a half-dozen investment vehicles with various tax implications, etc., that I don't. My situation is a lot simpler, because I rent and have no qualifying expenses. But between federal, state, and local taxes, most of my income falls in a 40% marginal bracket. I can't think of any deductions/credits I'd be eligible for, but is it likely that a pro could scrounge up a few and potentially save me some coinage? I recently found out about a perfectly-legal shenanigan--forgoing the dependent deduction on my parents return in exchange for me claiming the education credit they're ineligible for--which would have saved me around $5k during my college years, even if I'd paid them the value of the lost deduction. Since I just graduated and am only working half the year, I'm wondering if it's possible for us to give this a shot. The only issue is that the $27kish of tuition from my Spring '12 semester was paid in a lump payment in December '11. I know the IRS lets companies use cash or accrual accounting, is it the same for individuals? IE, can we claim the credit because the tuition expense was accrued during 2012?
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Jun 4, 2012 03:47
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Yeah that article explains exactly what I'm talking about, actually. We've been closer to the $300k area anyway but earlier this year saw a ~50% increase so I might have to reform my "lower upper middle class" mindset. But tuition for two kids at Ivy/private schools still eats up $100k out of that annually, obviously we don't get a cent in aid. So wait. Are you telling me tax pros don't have like... Magic money sticks they can shake to save clients tax bills? I don't meant HR block types, but like tax attorney/financial planner guys. I guess it's useless for me to get one because there's pretty much nothing I can do to bring my agi down.
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Jun 5, 2012 15:47
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I only posted that to illustrate the fact that I don't want to be in my parents situation where they're throwing money away because Pops (who has no finance or accounting background) thinks he can do it himself with TurboTax. As for the BMW/Lexus comment--our cars are an '03 Accord and an '09 Focus, which was only bought used because the '99 Corolla we were planning on keeping indefinitely got totalled. Nationally, we're squarely upper-class, no doubt, but we're definitely middle-of-the-road for our area, where the median household income is around $120k (in a country of 1 million + including a large working-class minority population). After deductions for insurance, transportation, and savings, pre-tax AGI was in the mid-200s last year, after federal/state/local taxes the midish-100s, then back out ~$80k in tuition and ~$40,000 in mortgage payments, you're left with under $45k to pay all other expenses for a family of four and save for large purchases. That may seem like a lot, but in a high CoL area ($40k in annual payments sounds like it buys a helluva place, but around here, it gets you 1,800 sqft and a small backyard) it doesn't get you particularly far. I'm not saying we're poor or underwater like the example in the article posted, but that amount affords a decidedly middle-class lifestyle with very little excess. I'm not complaining, because I know I have it better than most, but class distinctions are so relative that it's pointless to make that judgement based on income alone. I also understand that our situation is atypical due to consumption preferences slanted heavily towards saving, debt-free education and avoidance of leverage on non-housing purchases. tolerabletariff fucked around with this message at 19:33 on Jun 7, 2012 |
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Jun 7, 2012 19:31
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