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Subject Author Date
50% Tax Rate. How Does This Happen? runtwoday 01-29-2008
Posted by dpb on January 29, 2008, 6:35 pm
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 Harlan Lunsford wrote:
...

> 1099's? You mean as in reporting your income? If so, they are suppose
> to be "out" by January 31st.

"Supposed to" and "are" aren't necessarily consonant... :)

I've several annually that are lucky to arrive by the ides of April,
what more 1Feb...fortunately, they're similar enough from year to year
and not grossly-distorting of results, but all the same...

--

--
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<< that may be imposed upon the taxpayer. >>
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Posted by Jonathan Kamens on January 29, 2008, 8:51 pm
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>1099's? You mean as in reporting your income? If so, they are suppose
>to be "out" by January 31st.

Got this email from Vanguard yesterday:

>**Trouble viewing this e-mail? View it as a webpage at:**
>http://www.vanguard.com/web/email/080129_VBS_DelayedTaxForm_Voy2.html
>
>----------------------------------------------
>Your brokerage Forms 1099 to mail in February
>----------------------------------------------
>Your 2007 Vanguard Brokerage Services(R) Tax Information Statement,
>which contains Forms 1099 for your brokerage account, will start to
>mail and be posted on Vanguard.com on February 15, 2008--approximately
>two weeks later than last year. Forms 1099 could include Forms
>1099-INT, 1099-DIV, 1099-B, 1099-OID, and 1099-MISC. Read more:
>[personalized URL elided]
>
>Please note that Forms 1099-R and 1099-Q will start to mail
>and be available online on January 29, similar to last year.
>
>View the 2007 tax mailing schedule. Go to:
>[personalized URL elided]
>
>The later mailing of your Tax Information Statement is consistent
>with brokerage industry trends and is an attempt to minimize the
>number of revised tax forms that get sent out because of income
>reclassifications or data corrections by security issuers. Please
>note that, despite the later mailing, you may still receive revised
>brokerage Forms 1099.

--
Help stop the genocide in Darfur!
http://www.genocideintervention.net/

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Harlan Lunsford on January 29, 2008, 9:41 pm
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Jonathan Kamens wrote:
>> 1099's? You mean as in reporting your income? If so, they are suppose
>> to be "out" by January 31st.
>
> Got this email from Vanguard yesterday:
>
>> **Trouble viewing this e-mail? View it as a webpage at:**
>> http://www.vanguard.com/web/email/080129_VBS_DelayedTaxForm_Voy2.html
>>
>> ----------------------------------------------
>> Your brokerage Forms 1099 to mail in February
>> ----------------------------------------------
>> Your 2007 Vanguard Brokerage Services(R) Tax Information Statement,
>> which contains Forms 1099 for your brokerage account, will start to
>> mail and be posted on Vanguard.com on February 15, 2008--approximately
>> two weeks later than last year. Forms 1099 could include Forms
>> 1099-INT, 1099-DIV, 1099-B, 1099-OID, and 1099-MISC. Read more:
>> [personalized URL elided]
>>
>> Please note that Forms 1099-R and 1099-Q will start to mail
>> and be available online on January 29, similar to last year.
>>
>> View the 2007 tax mailing schedule. Go to:
>> [personalized URL elided]
>>
>> The later mailing of your Tax Information Statement is consistent
>> with brokerage industry trends and is an attempt to minimize the
>> number of revised tax forms that get sent out because of income
>> reclassifications or data corrections by security issuers. Please
>> note that, despite the later mailing, you may still receive revised
>> brokerage Forms 1099.
>
Ah yes; I was thinking in terms of 1099misc form principally but of
course remember last year , maybe year before too, when Vanguard and
some other mutuals got special dispensation for the extra time.

ChEAr$,
Harlan Lunsford, EA n LA

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Phil Marti on January 29, 2008, 11:25 am
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"runtwoday" wrote:

> Using my tax prep software I added $16 in bank interest to my return.
> Taxable income (1040 line 43) increased from $52,026 to $52,042 as
> expected. However Tax (1040 line 46) increased from $5,810 to %5,818.
>
> So that $16 interest caused my tax to increase by $8. I paid 50% tax on
> that $16. How does this happen?

Short answer:

The structure of the Tax Tables

Long answer:

It happened because you made the mistake of looking at only one entry on a
tax return that compiles everything on it in determining your tax. It's a
meaningless exercise. To see what I'm talking about, start a new return and
input that interest income as the first income item. Using your logic,
you'll see that you don't pay a penny of tax on that income.

As for why your tax would increase by $8 because of a $16 increase in
taxable income, it's because of the tax tables. If you go low-tech and look
at the Tax Tables in the 1040 instructions you'll see that in your income
area, the Married, Filing Jointly tax increases by either $7 or $8 for each
move to the next $50 range. That's because you're in the 15% bracket, so
every $100 of additional income increases your tax by $15.

If you look at the Tax Tables you'll find that your taxable income doesn't
yield the tax that your software is calculating. (For taxable income of
$52,042 the tax table shows a tax of $7,021.) That tells me that tax is not
coming from the tax tables but from one of the many worksheets that can be
involved in calculating tax. To see exactly how your tax was calculated,
right-click on line 44.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Taxlover on January 29, 2008, 11:47 am
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> Using my tax prep software I added $16 in bank interest to my return.
> Taxable income (1040 line 43) increased from $52,026 to $52,042 as
> expected. However Tax (1040 line 46) increased from $5,810 to %5,818.
>
> So that $16 interest caused my tax to increase by $8. I paid 50% tax on
> that $16. How does this happen?
>
That's nothing, I have had my tax go up by adding deductions. I have to
play with them to find which are good and which are bad!

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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