Schools taxes, property taxes, income tax

[Z33]

That's really the number from your form 1040, line 63?

Yes, I went to the effort of posting the line but it had a little too much info and it was 2013 which was even worse...

This year between the wife and: $18,940 paid in federal Via with holding. $5,682 Paid in state via with holding

Plus an additional 1,896 between federal and state that I was short.

All in I paid $26,518


Edit to add: We have no kids, mortgage deduction on a 130K a couple rentals I "break even on" and thats about it.

 

[jharkin]

That doesn't sound so bad now, i thought you menat federal alone... I pay that much right now on one income.. when my wife goes back to work the hit will get a lot worse.

 

[Adios Pantalones]

NH has a high property tax rate, but relatively low assessed values. We pay like $5700 on a $220K assessed property (2 acres, 1600 sq ft house).

Our income taxes are pretty high. We pay over $4k quarterly on top of the no deduction withholding rate. Being honest is not great for the wallet, but excellent for peace of mind.

I am skillfully dodging a political discussion right now

 

[Ashful]

One thing worth noting is that living in an old house is a great way to keep your property taxes down, at least in our locale. I'm paying about about 30% less than my neighbors for my beautiful old stone farm house, normalizing for square footage and acreage, versus their cardboard and stucco McMansions. According to one of our local assessors, that's standard practice, to devalue old homes in assessed value.

I'd best avoid the income tax discussion.

 

[Swedishchef]

Wow. Lots of people pay lots of taxes around here.. A few things:

1- WTF is this "mortgage deduction" crap?! Insane.
2- In Canada we have MUCH higher income tax rates...In Quebec (the province with by FAR the best social programs out there..if you take advantage of them) I pay roughly 38% in taxes. BUT our taxes pay for medicare, roads, schools, etc. Property tax is simply taxes for services from the town: garbage removal, recycle pickup, outdoor rinks, etc etc.
3- We all earn different amounts of money, are somewhat content and we all love burning wood

Andrew

 

[Swedishchef]

We pay about $1,000 now

God Bless Newfoundland!

 

[joes169]

WI isn't too bad, especially from what I've seen of the Northeast here. For property taxes, we have a mill rate of 0.0139. About 60% of that goes to schools, 17% to the County, 16% to the Township, and a little percentage to the State. We've actually seen a slight decrese in taxes over the last few years.

As for income taxes, with a few businesses and investments on our return, it's too complicated to even understand.......

 

[Swedishchef]

I understand that taxes are the very things that better our country and our society

+10000.
My FIL used to complain about taxes alll the time. Then 3 years ago he went for heart surgery at a renown cardiac institute. Triple bypass. They flew him there from here on a medical jet, he was 2 weeks in the hospital, they flew him back and it cost $0 on site. Now his wife has chronic leukaemia and is taking all kinds of treatments. She takes a pill form of chemotherapy every 2 weeks and does an IV chemotherapy treatment once a month...the other day was her first IV treatment: a pharmacist, 2 doctors and 3 nurses were there for the first 30 minutes to make sure all was OK. EVen 90% o f her medication is paid by the province.

My FIL just got back all the income tax he paid over 45 years.

Andrew

 

[woodgeek]

I pay about $6500 school tax and $700 to my town, both are my 'property tax' on a 2300 sq ft falling apart house. I also pay 'city tax' to Philadelphia, about 3.7% of my income, just for the privilege of working there, not that I live there or use the schools.

When I moved here my buddy starting razzing me about my high taxes, which were double his. Then he moved and his are nearly double mine on a smaller house.

 

[ironpony]

4000 in ohio on 490,000 assessed, 800 in st Croix on 600,000 assessed, income taxes x00,000

 

[drz1050]

Canada may have a slightly higher tax rate, but if you look at what you get for it, you have FAR greater value.
Income tax doesn't tell the whole story here either, not even close..
I wish I had free trash pickup.

 

[Grisu]

Hmm... maybe the definition I posted abouve you could call upper middle class if you want.. When you said you where in the 30% marginal bracket did you mean federal or federal+state? If you are at that level federal alone for taxable income I think you would be at the level of paying on the order of $$ quoted above unless im really screwing up my math...

Now you got me curious. I really don’t know why our taxes seem to be so different. First, I was wrong about the tax bracket. Looked it up and it is 25%. Nevertheless, my actual fed income taxes are a far cry from that. Here are my calculations based on the return for 2013:

Total income: 100% (W-2 plus capital income, interest etc. 1040, line 22)

Taxes as % of total income:

Fed income tax: ________5.6% (1040, line 61; after claiming 2 kids, mortgage and state tax deductions)
Social Security: ________6.5%
Medicare: _____________1.5%
State income (VT): ______2.2%
Property: ______________4.1%
Local sales tax: _________2.5% (estimated on 40% of income spent on taxable goods which is probably overstating it)
Gasoline tax (fed+state): _0.2%
Total: ________________18.5% of income.

Not sure if I forgot something but can’t think of anything else that would make a substantial difference. Maybe I am doing something wrong but my taxes have been that way for several years and so far the IRS has not complained.

 

[Grisu]

One thing worth noting is that living in an old house is a great way to keep your property taxes down, at least in our locale. I'm paying about about 30% less than my neighbors for my beautiful old stone farm house, normalizing for square footage and acreage, versus their cardboard and stucco McMansions. According to one of our local assessors, that's standard practice, to devalue old homes in assessed value.

I guess that is considered a heating bill subsidy.

mortgage deduction on a 130K

Would the standard deduction not work better for you then? We are not too far off when mortgage interest is so low that we can just use the standard deduction.

 

[Grisu]

Everyone grouses about taxes (include me in the club). But the older I get (and remember that means the more I have to "protect") the more I understand that taxes are the very things that better our country and our society. I believe that paying taxes is my responsibility as a citizen of the United States of America! I (and the Good Man) have been the beneficiaries of a wonderful publically funded education and continuing to fund schools only makes good sense. We drive on roads that were publically funded and are maintained by public funds. We have not directly benefitted from public water and sewer projects, but funding clean water and air is OK with us!

I am glad you see it that way. What determines our higher living standard compared with previous centuries is the human capital (accumulated knowledge through education and research) and real capital (infrastructure, housing, factories etc.) passed on from previous generations. Especially on the human capital side, the state plays an important role in maintaining and adding to that wealth.

NOW, do I think there is inequity in the present system of taxation? you bet your boots I do! In light of the fact that we have no children have we been required to pay "more" into the system than our household has immediately derived than those with kids have likely had to pay, is it "unfair"? probably! Are we OK with that? YUP! Why? because it's "for the greater good". Doing so will benefit our society and it will allow the younger members of our society to enjoy the benefit so many of us have already enjoyed! Consider the motto of our country, you guys... E pluribus Unum. It's not about "me" it's about "US"!

It is not just for the "greater good" but also to your own benefit. When you were young you were producing more than you were consuming. That way the old could still consume while not producing (working). Now, you are consuming while the young are over-producing. The more the young produce (e. g. through higher mechanization, better products etc.) the more you can consume. Financial assets ("money") determine who gets how much from the cake. Productivity determines how big the cake will be.

 

[Seasoned Oak]

One thing worth noting is that living in an old house is a great way to keep your property taxes down, at least in our locale. I'm paying about about 30% less than my neighbors for my beautiful old stone farm house, normalizing for square footage and acreage,

Thats the secret , If i were in a new 3000SF home around here id be paying 400-600% more. Re taxes. One BIG reason the old houses are much cheaper is they have not done a reassessment for 25 years. It cost too much. But if you just had a new house built you will get that new assessment all by yourself .

 

[mass_burner]

Yes, I'd be on the "paying taxes is good" band wagon if our tax money wasn't wasted in ridiculous and obscene ways.

 

[jharkin]

Now you got me curious. I really don’t know why our taxes seem to be so different. First, I was wrong about the tax bracket. Looked it up and it is 25%. Nevertheless, my actual fed income taxes are a far cry from that. Here are my calculations based on the return for 2013:

Total income: 100% (W-2 plus capital income, interest etc. 1040, line 22)

Taxes as % of total income:

Fed income tax: ________5.6% (1040, line 61; after claiming 2 kids, mortgage and state tax deductions)
Social Security: ________6.5%
Medicare: _____________1.5%
State income (VT): ______2.2%
Property: ______________4.1%
Local sales tax: _________2.5% (estimated on 40% of income spent on taxable goods which is probably overstating it)
Gasoline tax (fed+state): _0.2%
Total: ________________18.5% of income.

Not sure if I forgot something but can’t think of anything else that would make a substantial difference. Maybe I am doing something wrong but my taxes have been that way for several years and so far the IRS has not complained.

Aha!! I see it now. Line 22 is not the same as your real gross income for the year... the wages/tips line from the W2 that you start with already excluded pre-tax witholding on your paycheck like 401k, 403b, health insurance premiums, health savings, child care savings, etc and so forth.

If I caculatedted my % taxes against that figure it would be quite a bit lower than what I mentioend above, as I have big deductions for 401k and health insurance premiums.


EDIT: I responded to fast this morning.. This actually doesn't make sense either. Line 22 is less than your raw gross income (it already excludes things withheld in your check like 401k and health insurance premiums). for the year so your taxes as a % of overall income would calculate higher even based on that denominator.

The only thing I can figure now is that you used either line 22 or your overall total raw income to figure the marginal tax bracket you are in and thus you are actually in a lower marginal bracket than you think. (you should use taxable income to figure the marginal bracket - i believe its line 43 you want).

Either that or a lot of your income is long term capital gains taxed at low rates... I dunno.

 

[Ashful]

Thats the secret , If i were in a new 3000SF home around here id be paying 400-600% more. Re taxes. One BIG reason the old houses are much cheaper is they have not done a reassessment for 25 years. It cost too much. But if you just had a new house built you will get that new assessment all by yourself .

That may be part of it, but in my case, my house has been reassessed right around the same year as the newer houses, due to a major addition at that time. It was also a full assessment, not just incremental. So, the old house still wins!

Yes, Grisu... I probably offset that savings in heating costs!

 

[jharkin]

That may be part of it, but in my case, my house has been reassessed right around the same year as the newer houses, due to a major addition at that time. It was also a full assessment, not just incremental. So, the old house still wins!

Yes, Grisu... I probably offset that savings in heating costs!

Around here they have field adjusters who drive around looking for improvements and they adjust everyone's valuation every year, new or old. I think I might get a slightly lower valuation than a house of similar size and amenities in new construction just because the building is considered "functionally obsolete" at this age... (just love that word ... my home inspection report was full of it)

 

[Adios Pantalones]

Around here they have field adjusters who drive around looking for improvements and they adjust everyone's valuation every year, new or old. I think I might get a slightly lower valuation than a house of similar size and amenities in new construction just because the building is considered "functionally obsolete" at this age... (just love that word ... my home inspection report was full of it)

Time to paint some potholes in the driveway

 

[Jags]

Time to paint some potholes in the driveway

Get this guy - he is really good.

 

[Grisu]

Aha!! I see it now. Line 22 is not the same as your real gross income for the year... the wages/tips line from the W2 that you start with already excluded pre-tax witholding on your paycheck like 401k, 403b, health insurance premiums, health savings, child care savings, etc and so forth.

If I caculatedted my % taxes against that figure it would be quite a bit lower than what I mentioend above, as I have big deductions for 401k and health insurance premiums.


EDIT: I responded to fast this morning.. This actually doesn't make sense either. Line 22 is less than your raw gross income (it already excludes things withheld in your check like 401k and health insurance premiums). for the year so your taxes as a % of overall income would calculate higher even based on that denominator.

You mean lower? Higher income, same net tax = lower percentage tax of total income.

The only thing I can figure now is that you used either line 22 or your overall total raw income to figure the marginal tax bracket you are in and thus you are actually in a lower marginal bracket than you think. (you should use taxable income to figure the marginal bracket - i believe its line 43 you want).

Either that or a lot of your income is long term capital gains taxed at low rates... I dunno.

Your edit just killed most of my response but yes, if our total income would be higher than what is on line 22 the actual tax burden would be even lower (line 22 already contains taxable capital gains btw. and is negligible in our case).

Honestly, I never cared much about in which tax bracket I am. What I know is that with a combined income above the one which your wife would have I pay less than 20% in total taxes on our income. That does not even count tax-free/deferred contributions to healthcare, retirement, child care etc that our employer is paying and should also be considered income. (E. g. 401k contribution is non-taxed, future income for us; not a tax.)

Line 43 already takes into account a bunch of tax breaks you are getting and is not the total income you have. Just adding up all the salaries ending up in your bank account over the year should easily exceed that number.

Just take you last year's tax returns and W-2(s) and see what percentages you come up with. I would be really surprised should your numbers look much different.

 

[Adios Pantalones]

Get this guy - he is really good.
View attachment 154559

Exactly what I was thinking

 

[jharkin]

Line 43 already takes into account a bunch of tax breaks you are getting and is not the total income you have. Just adding up all the salaries ending up in your bank account over the year should easily exceed that number.

Yes, what I am saying is that line 43 represent the actual share of income that gets taxed - and this is what determines the marginal bracket you are in.

Just take you last year's tax returns and W-2(s) and see what percentages you come up with. I would be really surprised should your numbers look much different.

I can tell you off the top of my head that last year the federal income tax I paid was 11% of my total gross income (not line 22 of the 1040, thats lower because my employer already subtracts 401, insurance and HSA from the total wages line)- probably about 12% if you use the AGI line on 1040. If I add up all taxes I paid to all levels except for sales tax I come up with around 25% of gross income.

If I used the total income line from 1040 as denominator and also tried to guess at sales tax I think my figure for all taxes would be more like 30%..


FWIW... i guess we beat this to death.

 

[ironpony]

just scan and post all your paperwork and we ill sort it out for you. We can fill out your forms for the best refund scenario. Then we could calculate your exact tax rate for you.


kidding DO NOT do it.