Why Allow Joint Tax Returns?

[OnePercenter]

Interest on a mortgage is deductible. There is no itemization needed



What do National Parks have to do with anything. Last time I was at one I had to pay to get in,pay for backpacking permits etc. If you think only people with kids go to national parks you are sadly mistaken.

The mention of National Parks was to illustrate your self-centeredness.

If you think that entrance and permit fees come anywhere close to the actual costs your sadly mistaken.

What do kids have to do with my post?

I didn't mention kids in response to parks idiot.

You wrote: "If you think only people with kids go to national parks you are sadly mistaken."

I said there should be no deduction for kids. If you want to have kids go ahead but just because a person doesn't have kids is no reason to force them to pay higher taxes.

So self-centered you are. Then you should itemize. Failure to tax plan is your fault.

Just as choosing not to own a home is no reason to force people to pay higher taxes.

It should make you happy that most homeowners don't make enough money to itemize interest so they aren't enjoying it either.

What on earth is so hard to understand about that?

I can't understand it. I'm not self-centered. I feel sorry for people like you.

And if fees charged by National parks don't cover costs maybe it's time to raise them.

And make entry fees to high for most Americans? Hey Mr. Watt, Why don't we sell our national parks to foresters?

 

[OnePercenter]

I think that the taxes should be more fair between businesses and people. Businesses only pay taxes on net income while individuals are charged taxes on gross income. Either charge taxes on gross for all or on net for all. I am in the business of living and all my "living" expenses should be tax deductable just like business expenses are deductable for businesses.

So your saying that a person that make $50k per year pays taxes on $50k per year? If you've been doing that I suggest you take your last seven years of tax returns to a tax professional cause you're owed some money. FYI, make sure the tax professional has CPA after his/her name. NOT a time to cheap out.

If you want to get paid for living, then become a one-percenter....We do.

 

[OnePercenter]

I think that the taxes should be more fair between businesses and people. Businesses only pay taxes on net income while individuals are charged taxes on gross income. Either charge taxes on gross for all or on net for all. I am in the business of living and all my "living" expenses should be tax deductable just like business expenses are deductable for businesses.

When you sell your labor there is no expense associated.

Transportation and insurance aren't costs? Both are fully subsidized.

if I sell a product I get taxed on the money I make selling that product.

If I pay $10 and sell it for $20 I only made 10 why should I be taxed on 20?

You're not. What you paid for the product is fully subsidized so your only taxed on the profit.

If you're smart you'll create two companies, one for procurement and another for sales. You can have two markups, and two subsidies!

When you buy a product a Walmart, the item you're buying is marked up four times: Procurement, distribution, transportation, and finally the store.

 

[Skull Pilot]

The mention of National Parks was to illustrate your self-centeredness.

If you think that entrance and permit fees come anywhere close to the actual costs your sadly mistaken.

What do kids have to do with my post?

You wrote: "If you think only people with kids go to national parks you are sadly mistaken."



So self-centered you are. Then you should itemize. Failure to tax plan is your fault.



It should make you happy that most homeowners don't make enough money to itemize interest so they aren't enjoying it either.



I can't understand it. I'm not self-centered. I feel sorry for people like you.

And if fees charged by National parks don't cover costs maybe it's time to raise them.

And make entry fees to high for most Americans? Hey Mr. Watt, Why don't we sell our national parks to foresters?

You're not self centered yet you like the idea of forcing people to pay more taxes simply because they don't have kids or own a home?

You want to force people who don't have kids or own a home to subsidize you via higher taxes and you're not a greedy asshole?

Taking more from others so as to leave yourself with more is the very definition of self centered.

 

[editec]

Wrong.

How to Deduct Mortgage Interest

Mortgage interest is an itemized tax deduction. To deduct your mortgage interest, you must file a Schedule A along with a Form 1040 tax return. Your lender should provide you with a Form 1098 that details how much interest your paid on your mortgage loan during the tax year. Enter the amount reported in Form 1098 on Line 10 of your Schedule A. If you prepaid your January mortgage in December, or if you paid other interest not reported on Form 1098, enter that additional amount on Line 11 of Schedule A.

Semantics.

It's an extra form just like a 1099R, Misc etc.

That is somewhat misleading. Yes, there is an extra form, but there's more to the story. The tax code gives everyone a "standard deduction"; an amount you get regardless of whether you have deductions like mortgage interest or taxes. For 2012 the standard deduction for joint filers is $11,400. Unless you have deductions in excess of that $11,400, you receive no benefit from them. So for instance, if you have a $150,000 mortgage at, say, 4%, you will pay about $6,000 in interest. You also probably have deductible property taxes; say $3,000. Unless you have some other deductible items, you would take the $11,400 already given and you get zero benefit from the mortgage deduction. Even if you have other deductions, you only get a benefit to the extent they exceed the $11,400. I'd be willing to bet that more than half of homeowners get no benefit from their mortgage interest deduction.
Anyway, it's not "unfair" to others to get a mortgage deduction. Renters get a benefit from the fact that their landlords are able to deduct mortgage interest as a business expense, theoretically lowering the amount the landlord needs to charge to make a profit.

Correct.

You see, SKULL? It's not semantics, it's mathematics.

According to the Tax Policy Center of the Urban and Brookings institutes, only about 30 percent of taxpayers itemize, rather than take the standard deduction.

The Pew report found that Maryland taxpayers take greatest advantage of the mortgage deduction, with 37 percent having claimed it in 2010. Connecticut comes in a close second, at 34 percent. North Dakota and West Virginia taxpayers derive the least benefit, with claim rates of 15 percent.

source

 

[PaulS1950]

I think that the taxes should be more fair between businesses and people. Businesses only pay taxes on net income while individuals are charged taxes on gross income. Either charge taxes on gross for all or on net for all. I am in the business of living and all my "living" expenses should be tax deductable just like business expenses are deductable for businesses.

When you sell your labor there is no expense associated.

if I sell a product I get taxed on the money I make selling that product.

If I pay $10 and sell it for $20 I only made 10 why should I be taxed on 20?

When I work I have expenses that I have to meet to keep myself ready to work just like as a businessman I had expenses to keep a business running. I still pay rent in both conditions, I have to eat to keep my health up, I have a vehicle that I have to maintain, clothes, tools and much more. Granted that some of this is deductible but there is much that is not. As a businessman I could deduct my rent and utilities and every expense that was associated with the business. As a worker I don't get to deduct those things even though they keep me fit to work. Even the eight of twenty four hours each day that I am at work I can't deduct them. As someone who has been on both sides of the taxation issue I would not take away the deductions that a business has but I do think that it would be fair to extend the living expenses for working people. My business is living, but I have to be prepared to work to support that ability.

 

[Skull Pilot]

I think that the taxes should be more fair between businesses and people. Businesses only pay taxes on net income while individuals are charged taxes on gross income. Either charge taxes on gross for all or on net for all. I am in the business of living and all my "living" expenses should be tax deductable just like business expenses are deductable for businesses.

When you sell your labor there is no expense associated.

if I sell a product I get taxed on the money I make selling that product.

If I pay $10 and sell it for $20 I only made 10 why should I be taxed on 20?

When I work I have expenses that I have to meet to keep myself ready to work just like as a businessman I had expenses to keep a business running. I still pay rent in both conditions, I have to eat to keep my health up,

You would have to live somewhere if you didn't have a job. You would have to eat if you didn't have a job. So those are not work related expenses.

I have a vehicle that I have to maintain, clothes, tools and much more.

If you use your vehicle for work you can get a mileage write off. If you have to buy clothes like uniforms for work you can write those off.

As a businessman I could deduct my rent and utilities and every expense that was associated with the business. As a worker I don't get to deduct those things even though they keep me fit to work.

A business can only write off utilities for the place of business not for the home of the business owner. If there were no heat or electricity at a business people and customers could not work or transact business there.

Even the eight of twenty four hours each day that I am at work I can't deduct them. As someone who has been on both sides of the taxation issue I would not take away the deductions that a business has but I do think that it would be fair to extend the living expenses for working people. My business is living, but I have to be prepared to work to support that ability.

Your business is not living because you would live whether or not you had a job.

 

[oldfart]

the tax rate bands are twice as wide on a married joint return as on a single or married separate return.

The part emboldened above is a fallacy. Married filing jointly is not just double the singles table. Married people are counted as only a fraction of a single...much like slaves were prior to Abolition.

Good catch; I must have missed a memo. Actually since the tax tables are built into software, I rarely actually do the tax computation itself. For the amounts under the $400,000 ($450,000 for married joint returns) limit of the American Taxpayer Relief Act of 2012, the rates remained at 2012 levels.

Suppose two taxpayers file a joint return with $100,000 of taxable income each. The tax liability would be $43,779. If they each filed a married separate return, the liability would be $21,889.50 each or $43,779 again. But if they were unmarried and filed two returns as single, the liability would be $21,460.50 each or $42,921, $858 less than as married either jointly or separately. Not a lot, but significant.

 

[jwoodie]

Great idea. Let's force working people to file even more tax forms and waste more time!

Is it really that difficult to grasp this concept?

 

[jwoodie]

No. Allowing joint tax returns raises the taxable income for the purpose of tax increase structure. An individual making $150,000 a year is taxed at a different rate than an individual making $200,000 a year. A married couple where one makes $150,000 and one making $50,000 a year will each pay taxes at a lower rate than one person making $250,000 a year. Join them and tax the whole at the higher rate. It's called the marriage penalty.

The mechanism to avoid the marriage penalty is to file Married Filing Separately. But most people don't realize that the finances actually have to be kept separate, this includes separate bank accounts, separate checks to pay the household bills. Separate contributions for major purchases. Failure to keep adequate records could subject a married couple to income tax evasion and perjury charges as they might have filed taxes separately, but the money was always commingled.

Do you understand now?

OK, I give up. This concept is obviously too difficult for this forum.

 

[PaulS1950]

The biggest reason for joint tax returns is that people share joint property and lives that are based on joint income.

 

[Polk]

Anyway, it's not "unfair" to others to get a mortgage deduction. Renters get a benefit from the fact that their landlords are able to deduct mortgage interest as a business expense, theoretically lowering the amount the landlord needs to charge to make a profit.

That's true, but it's still not as generous at the mortgage deduction.

 

[Polk]

Actually, married couples where one earner has a higher income and one has a lower income pay a lower tax rate than they would individually. It's where you have two earners making similar amounts that the current code results in higher taxes.

You are correct, with a clarification. The tax LIABILITY for two earner families is not affected by how the income is earned by each taxpayer. But because the withholding tables have the standard deduction and exemptions built into them (i.e. they assume that the only income is the income they are withholding on, ignoring a spouse's income, second job, or any other income like Social Security or dividends received) the more even the distribution of income between spouses and the higher the income, the more will be underwitheld. So this returns are more likely to owe money, but the liability is no higher.

Excellent point. Thanks for adding that.

 

[BillyV]

Anyway, it's not "unfair" to others to get a mortgage deduction. Renters get a benefit from the fact that their landlords are able to deduct mortgage interest as a business expense, theoretically lowering the amount the landlord needs to charge to make a profit.

That's true, but it's still not as generous at the mortgage deduction.

Really? In what way is the mortgage deduction more generous than deducting mortgage interest as a business expense?

 

[Polk]

Anyway, it's not "unfair" to others to get a mortgage deduction. Renters get a benefit from the fact that their landlords are able to deduct mortgage interest as a business expense, theoretically lowering the amount the landlord needs to charge to make a profit.

That's true, but it's still not as generous at the mortgage deduction.

Really? In what way is the mortgage deduction more generous than deducting mortgage interest as a business expense?

From the perspective of the renter? Because they're not getting the full benefit of the deduction.

 

[Skull Pilot]

That's true, but it's still not as generous at the mortgage deduction.

Really? In what way is the mortgage deduction more generous than deducting mortgage interest as a business expense?

From the perspective of the renter? Because they're not getting the full benefit of the deduction.

The perspective of the renter doesn't matter.

The renter is nothing but a customer. Do you say retail customers aren't getting the full value of the mortgage interest deduction a business owner gets for a store?

 

[Polk]

Really? In what way is the mortgage deduction more generous than deducting mortgage interest as a business expense?

From the perspective of the renter? Because they're not getting the full benefit of the deduction.

The perspective of the renter doesn't matter.

The renter is nothing but a customer. Do you say retail customers aren't getting the full value of the mortgage interest deduction a business owner gets for a store?

Since we're talking about the market for housing, the perspective of the renter absolutely matters. We were discussing how the ability to deduct mortgage interest creates incentives toward purchasing and how that is a subsidy for buyers.

 

[PaulS1950]

Renters pay rent for anothers property. The property owner gets to deduct the interest from the loan. He also gets to deduct the insurance premiums and out of pocket expenses for repairs, maintenance and replacement of fittings and furnishings to keep the place rentable. If there is depreciation in the property then he can deduct that as well.

The home owner get to deduct interest, taxes, insurance and maintenance and repairs but not replacements - that counts against the capital gains when he sells the house.

Since the renter doesn't own the property he gets to deduct insurance only.

 

[BillyV]

That's true, but it's still not as generous at the mortgage deduction.

Really? In what way is the mortgage deduction more generous than deducting mortgage interest as a business expense?

From the perspective of the renter? Because they're not getting the full benefit of the deduction.

Well, let’s examine that statement. Two landlords have houses for rent; both have a mortgage at the same amount and rate and both incur interest costs of $5,000 per year, and for the sake of argument both are in the 40% tax bracket. Both want to make enough rent to make their cash flow neutral, i.e. the renter pays exactly the costs of the mortgage principal and interest (ignoring other costs for simplicity). Now, landlord 1 can deduct the $5,000 cost of his mortgage interest and therefore his 40% tax savings ($2,000) allows him to rent his property for about $167/month less than landlord 2, who can’t deduct the interest in this example. The renter benefits to the full amount of the deduction. This is true in every case at any positive market rent regardless of the goal of the landlord (whether to be cash flow neutral or make a bigger profit); his cash cost is always less and therefore in a competitive market the rent should reflect that.

In the same vein, the renter benefits from the landlord’s ability to deduct insurance, depreciation and repairs, none of which are available to the homeowner. The homeowner benefits only to the extent that his mortgage payment includes an amount of principal that provides him with equity in the residence, and may qualify for a deduction for interest (although as stated, this is by no means assured due to the availability of the standard deduction and likely more than half do not benefit). So in fact, the tax code benefits renters far more than homeowners. To be sure, there are many advantages to homeownership that have nothing to do with taxes, such as control over the property and the permanence of your rights to remain (unlike a tenant who can be removed) and the potential for increases in market value (tempered by the potential for decreases, as was seen recently), but not because of a generous tax code.

 

[BillyV]

Renters pay rent for anothers property. The property owner gets to deduct the interest from the loan. He also gets to deduct the insurance premiums and out of pocket expenses for repairs, maintenance and replacement of fittings and furnishings to keep the place rentable. If there is depreciation in the property then he can deduct that as well.

The home owner get to deduct interest, taxes, insurance and maintenance and repairs but not replacements - that counts against the capital gains when he sells the house.

Since the renter doesn't own the property he gets to deduct insurance only.

No, the homeowner cannot deduct insurance or maintenance and repairs; only interest and property taxes. And the renter cannot deduct insurance, either. In both cases those are considered "personal" expenses and are not deductible.