Home › Forums › Financial Markets/Economics › Tax whine
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EconProf.
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March 17, 2014 at 6:56 AM #21009March 17, 2014 at 7:40 AM #771945
UCGal
ParticipantTurbo tax says my tax rate (fed income) was less than 12%. That’s not terrible. I don’t like paying taxes – but I do like freeways, education, a safety net for those less fortunate, etc.
Will probably pay a higher percentage next year for two reasons – losing the mortgage interest deduction (should have house paid off) and DH retired so no more deferring income into 401k/IRA for him… instead we pay on what he pulls out… and we’ll be pulling out extra to do roth conversions.
March 17, 2014 at 7:42 AM #771947scaredyclassic
Participantmy dad was always happy to pay taxes. he said it meant he was making money.
March 17, 2014 at 7:42 AM #771946
CoronitaParticipantHow the heck are you folks getting a 12% tax rate on fed. Mine is close to 19% and that’s with itemized deductions.
I must be doing my taxes wrong
March 17, 2014 at 7:50 AM #771949no_such_reality
Participant[quote=flu]How the heck are you folks getting a 12% tax rate on fed. Mine is close to 19% and that’s with itemized deductions.
I must be doing my taxes wrong[/quote]
No, your taxes are the taxes of a person with high income.
UCGal is working the plan to have more life without realizing income. It’s the financial independence plan, you greatly simplify your life if you figure out how to happily live on less income.
March 17, 2014 at 8:50 AM #771952zk
Participant[quote=UCGal] I don’t like paying taxes – but I do like freeways, education, a safety net for those less fortunate, etc.
[/quote]
That’s something you don’t hear nearly enough.
March 17, 2014 at 12:07 PM #771960joec
Participant[quote=scaredyclassic]my dad was always happy to pay taxes. he said it meant he was making money.[/quote]
Your dad is a smart man. Since I’m dead broke, make no money and am very poor, my effective tax rate will be negative this year (according to Turbotax) I’d think…Course, I can’t find a way to avoid paying FICA so it’s actually higher.
For comparison, Warren Buffet had a 11% effective tax rate in 2010.
Mitt Romney, whose AGI in 2011 was $20.9 million and whose effective federal tax rate was 15.4%.
http://money.msn.com/tax-planning/whats-your-real-tax-rate
You probably have too much “wage” income flu taxed at extremely high rates.
One reason that it’s smart tax planning to find ways to minimize “earned income” vs. other types of income.
March 17, 2014 at 12:19 PM #771943CoronitaParticipantDon’t even get me started……
Tax time is a constant reminder of how stupid I am for at least being partly dependent on being a W2 salary slave…
March 17, 2014 at 12:36 PM #771962CoronitaParticipantEvery year, I visit a different accountant (one accountant I keep around just for kicks)… That’s after I’ve done my own taxes on turbotax… just to see if I’m doing my taxes wrong…
Every year, the accountant pretty much, charges me $300-400, spends 1 maybe 2hrs reviewing my taxes, and tells me… Nope, you’re pretty much screwed….
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. And with a tech company that changes quickly, I’ve learned never to hold on *that* long to realize LT capital gains (otherwise, it might end up being a LT capital loss…lol…)…
And property taxes (or any paid taxes) end up washing out on my itemized deductions from AMT…..
Short term trading (not day trading) doesn’t help either….
My neighbor owns his own medical practice.. Don’t even get me started on all the tax incentives he has…
“Paying fair share of taxes”… Don’t even get me started….
Anyway, got to go pick up a customer from the airport now..
March 17, 2014 at 12:37 PM #771963CoronitaParticipant…sorry. my numbers were off…
In 2012, my federal was 22%, my state was 7%
I forget… 19% was something that happened in 2011…..
Beat that, whiners! 🙂
March 17, 2014 at 12:45 PM #771966SK in CV
Participant[quote=flu]
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. [/quote]Any logical reason that RSU’s shouldn’t be treated this way? It’s yours. It can’t be taken back. It has value. You have to pay tax on it just like everyone else who gets cash in their paycheck.
March 17, 2014 at 12:53 PM #771967CoronitaParticipant[quote=SK in CV][quote=flu]
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. [/quote]Any logical reason that RSU’s shouldn’t be treated this way? It’s yours. It can’t be taken back. It has value. You have to pay tax on it just like everyone else who gets cash in their paycheck.[/quote]
(Waiting at the airport.)
How is that different from in-the-money vested stock options?
Suppose I had 1000 shares of ISO stock options that with strike price of $50/share that vested today when the FMV of QCOM stock is $77/share, for which I exercise but don’t sell.
How is this any different than if I had 350 shares of RSU’s that vested today @ $77/share, but don’t sell?
March 17, 2014 at 1:01 PM #771968livinincali
Participant[quote=flu][quote=SK in CV][quote=flu]
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. [/quote]Any logical reason that RSU’s shouldn’t be treated this way? It’s yours. It can’t be taken back. It has value. You have to pay tax on it just like everyone else who gets cash in their paycheck.[/quote]
(Waiting at the airport.)
How is that different from in-the-money vested stock options?
Suppose I had 1000 shares of ISO stock options that with strike price of $50/share that vested today when the FMV of QCOM stock is $77/share, for which I exercise but don’t sell.
How is this any different than if I had 350 shares of RSU’s that vested today @ $77/share, but don’t sell?[/quote]
It’s not different but one is deffer-able and the other one isn’t. Some tax breaks are better than just being able to deffer the taxes. I.e. primary homestead cap gains exemption versus a 1031 exchange.
Above average to high W2-income is the easiest minority group with deep pockets to go after. Expect it to get worse so maybe you’re better off with the RSU that get taxed right away than deferring it into the future.
Your only choice is to work less and live with less.
March 17, 2014 at 1:05 PM #771969Participant[quote=flu][quote=SK in CV][quote=flu]
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. [/quote]Any logical reason that RSU’s shouldn’t be treated this way? It’s yours. It can’t be taken back. It has value. You have to pay tax on it just like everyone else who gets cash in their paycheck.[/quote]
(Waiting at the airport.)
How is that different from in-the-money vested stock options?
Suppose I had 1000 shares of ISO stock options that with strike price of $50/share that vested today when the FMV of QCOM stock is $77/share, for which I exercise but don’t sell.
How is this any different than if I had 350 shares of RSU’s that vested today @ $77/share, but don’t sell?[/quote]
If you’re paying AMT, then it wouldn’t be much different at all. The difference between option strike price and value at date of vesting is subject to AMT. So you’d have to pay tax on the ISO value almost the same way you pay on the RSU’s.
March 17, 2014 at 1:10 PM #771970CoronitaParticipant[quote=SK in CV][quote=flu][quote=SK in CV][quote=flu]
I’m getting killed absolutely at taxable income… Ever since companies switched over from stock options to RSU’s, I’m absolutely getting reamed. Shares that vest that I don’t sell end up getting counted as taxable income.. [/quote]Any logical reason that RSU’s shouldn’t be treated this way? It’s yours. It can’t be taken back. It has value. You have to pay tax on it just like everyone else who gets cash in their paycheck.[/quote]
(Waiting at the airport.)
How is that different from in-the-money vested stock options?
Suppose I had 1000 shares of ISO stock options that with strike price of $50/share that vested today when the FMV of QCOM stock is $77/share, for which I exercise but don’t sell.
How is this any different than if I had 350 shares of RSU’s that vested today @ $77/share, but don’t sell?[/quote]
If you’re paying AMT, then it wouldn’t be much different at all. The difference between option strike price and value at date of vesting is subject to AMT. So you’d have to pay tax on the ISO value almost the same way you pay on the RSU’s.[/quote]
True, but you do have one option with options that you don’t have with RSU. You can simply elect not to exercise after you vest, even though those “options” are yours and cannot be taken back too.
Oh well, I am not empowered to effect change anyway, so it’s a moot point.. And paying 29% or more on X is still better than paying 10% of nothing….
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