5 ms·

it amazed me the first time that I filed for US taxes that it involved the use of a look up table

by zht 15y ago

drostie 15y ago
Well, that can to some extent be expected -- trying to describe a progressive taxation algorithm can be much more messy than just saying, "here, look it up." There are much more important WTFs. For example, there are two different tax rates which you might be paying -- one for capital gains and certain dividends, and one for income. The first is always taxed at a lower rate. Meanwhile, you have a "deduction" -- an amount of money that you're allowed to deduct from your return as if you'd never gotten it in the first place. The IRS forms actually implement a worksheet which just says, "subtract your deduction from your income, and if your deduction is larger than your income, subtract whatever else there is from your capital gains." At least, I think that's what it does. As this article shows, you have no conscious idea what the heck you're really doing when the IRS invites you to play Turing Machine.
- chris_wot 15y ago
  I want to be part of a wonderful government system that gives me a tax deduction that is greater than my income! Actually, on second thoughts, I can't speak Greek so I think I'll pass.
  - drostie 15y ago
    Oh, that's easy. Just don't make more than a couple thousand dollars, then your standard deduction in the US system will be greater than your income. ^_^ (Of course, the IRS doesn't actually let their forms go negative.)
    - chris_wot 15y ago
      I have not been acquainted with the American tax system - I live in Australia, which has its own system with its own quirks. What is a standard deduction? It sounds like you get an amount of money back no matter what you paid. Is this true?
      - signalsignal 15y ago
        Yes. The IRS is in the money refunding business.
        billybob 15y ago
        What absolutely makes me want to scream is that, if you pay too much and get some money refunded, they consider that refund income and they tax you on it the next year. It's NOT INCOME. It was already my money. If anything, I should get it back with interest, since they had it for a while.
        smoyer 15y ago
        This is not true for money refunded by the Feds ... But if you deducted the full amount of state or local taxes previously, then you didn't pay taxes on those and a refund is indeed income. It's as easy easy as (not pie) flying with wax and feather wings.
        _delirium 15y ago
        Federal tax refunds are not income. Does the IRS send you a W-2 or 1099 for them? Are you writing them in under "other income" or something? Unless you're doing something seriously weird, they aren't income, aren't reported anywhere as income, and aren't taxable. For state/local taxes, as smoyer points out, if you erroneously deducted a larger amount of state taxes than you actually owe, then, when you get the difference back, you have to correct that on the next year's form, if you had claimed the larger amount as a deduction. If that weren't the case, you could game the system by purposely having your state taxes massively over-withheld, deducting the inflated amount from your federal taxes, then receiving a state tax refund.
      - chronomex 15y ago
        The standard deduction is a way to account for progressive taxation at the very bottom of the scale. The first $5,000-$10,000 of income isn't taxed. If you've donated to charity (also paid school tuition, and other things) in excess of that amount, you can itemize these and deduct them, in which case you don't get to claim the standard deduction. Even if you don't have any deductions to claim, you get the "standard deduction". This reduces your effective taxable income. You only get money refunded if you have a "refundable tax credit". Tax credits lower your tax liability; refundable credits can lower it below zero liability such that you are owed money. One common refundable credit is earned by paying higher education tuition. (It should go without saying that I'm not an accountant; I only play one on the Internet.)
    - jaredsohn 15y ago
      Forms can go negative if you qualify for the earned income tax credit. (http://en.wikipedia.org/wiki/Earned_income_tax_credit http://en.wikipedia.org/wiki/Earned_income_tax_credit) The concept of getting back more money than you paid is called "negative income tax". (http://en.wikipedia.org/wiki/Negative_income_tax http://en.wikipedia.org/wiki/Negative_income_tax)
  - poorpointofview 14y ago
    Just become a big corporation in the US and you can do it!
- dalke 15y ago
  I always thought I was playing more like a pushdown automata than a Turing machine. :)

it amazed me the first time that I filed for US taxes that it involved the use of a look up table

by zht 15y ago

it amazed me the first time that I filed for US taxes that it involved the use of a look up table

Well, that can to some extent be expected -- trying to describe a progressive taxation algorithm can be much more messy than just saying, "here, look it up." There are much more important WTFs. For example, there are two different tax rates which you might be paying -- one for capital gains and certain dividends, and one for income. The first is always taxed at a lower rate. Meanwhile, you have a "deduction" -- an amount of money that you're allowed to deduct from your return as if you'd never gotten it in the first place. The IRS forms actually implement a worksheet which just says, "subtract your deduction from your income, and if your deduction is larger than your income, subtract whatever else there is from your capital gains." At least, I think that's what it does. As this article shows, you have no conscious idea what the heck you're really doing when the IRS invites you to play Turing Machine.

chris_wot 15y ago
I want to be part of a wonderful government system that gives me a tax deduction that is greater than my income! Actually, on second thoughts, I can't speak Greek so I think I'll pass.
- drostie 15y ago
  Oh, that's easy. Just don't make more than a couple thousand dollars, then your standard deduction in the US system will be greater than your income. ^_^ (Of course, the IRS doesn't actually let their forms go negative.)
  - chris_wot 15y ago
    I have not been acquainted with the American tax system - I live in Australia, which has its own system with its own quirks. What is a standard deduction? It sounds like you get an amount of money back no matter what you paid. Is this true?
    - signalsignal 15y ago
      Yes. The IRS is in the money refunding business.
      - billybob 15y ago
        What absolutely makes me want to scream is that, if you pay too much and get some money refunded, they consider that refund income and they tax you on it the next year. It's NOT INCOME. It was already my money. If anything, I should get it back with interest, since they had it for a while.
        smoyer 15y ago
        This is not true for money refunded by the Feds ... But if you deducted the full amount of state or local taxes previously, then you didn't pay taxes on those and a refund is indeed income. It's as easy easy as (not pie) flying with wax and feather wings.
        _delirium 15y ago
        Federal tax refunds are not income. Does the IRS send you a W-2 or 1099 for them? Are you writing them in under "other income" or something? Unless you're doing something seriously weird, they aren't income, aren't reported anywhere as income, and aren't taxable. For state/local taxes, as smoyer points out, if you erroneously deducted a larger amount of state taxes than you actually owe, then, when you get the difference back, you have to correct that on the next year's form, if you had claimed the larger amount as a deduction. If that weren't the case, you could game the system by purposely having your state taxes massively over-withheld, deducting the inflated amount from your federal taxes, then receiving a state tax refund.
    - chronomex 15y ago
      The standard deduction is a way to account for progressive taxation at the very bottom of the scale. The first $5,000-$10,000 of income isn't taxed. If you've donated to charity (also paid school tuition, and other things) in excess of that amount, you can itemize these and deduct them, in which case you don't get to claim the standard deduction. Even if you don't have any deductions to claim, you get the "standard deduction". This reduces your effective taxable income. You only get money refunded if you have a "refundable tax credit". Tax credits lower your tax liability; refundable credits can lower it below zero liability such that you are owed money. One common refundable credit is earned by paying higher education tuition. (It should go without saying that I'm not an accountant; I only play one on the Internet.)
  - jaredsohn 15y ago
    Forms can go negative if you qualify for the earned income tax credit. (http://en.wikipedia.org/wiki/Earned_income_tax_credit http://en.wikipedia.org/wiki/Earned_income_tax_credit) The concept of getting back more money than you paid is called "negative income tax". (http://en.wikipedia.org/wiki/Negative_income_tax http://en.wikipedia.org/wiki/Negative_income_tax)
- poorpointofview 14y ago
  Just become a big corporation in the US and you can do it!
dalke 15y ago
I always thought I was playing more like a pushdown automata than a Turing machine. :)