Sharing a personal tax story, is gov't too big?

[w¡n9Nµ7 §£@¥€r 123]

I have a philosophy in life that guarantees very low bills and high savings. It is a two-tier strategy: NO MORTGAGE EVER and ALWAYS LOW CREDIT CARD DEBT. With these two things I am sure that down the road (later in life) I will be living very well.

I have always paid my cards off in full each month, so I'm with you there. How does your wife feel about the mortgage bit though? I have a mortgage and at this point believe home ownership was a mistake ("too late", says BofA - "pay me!"). But when I do sell this place one day to some poor schmuck who doesn't know any better, I am going to have to get another mortgage because the spousal unit has become convinced (by her fellow female spousal units) that home ownership is some la-di-da dream and that renting is something po' folk do. So what's your secret?

[웃 910]

My thoughts are that you clearly have never had any exposure to taxes. A $70k Tax bill on $200k income is 35%, while being a little high is not out of line. Taxes are not stealing, and no, they can't just look the other way just this time.

I'd like to see you get a bill for $20,000 or more from the IRS. See how much you love your precious gov't then.

$70,000 is "a little high" but "not out of line". :bonk:ARE YOU JOKING! Maybe 1 out of every 500,000 people could pay a $70,000 tax bill! And I doubt you are one of them!!!

Edited April 13, 2010 by Lord Infamous

[ValerieA 350]

Sorry, m'Lord. Did not mean to offend. My only experience with gov't taxation comes from Canada, where they tax us early and often. For some reason, they do not trust the taxpayer and require the source to deduct taxes, whether it is employment or cashing out retirement funds. However, it sounds like this money was invested - and he should have a huge capital loss, shouldn't he?

Most people do not have a huge bill come tax time because most people earn employment income, which has taxes deducted at source, so they do not have to worry about saving money for taxes. The government gets to earn interest on our money. My supposition (bite me if I am wrong) is that most people will not have lump sums paid to them that they would have to set money aside for. If they do, they should know the basic rule - any income is taxable, whether it be legal or illegal gains. Assume no exceptions until tax time.

[w¡n9Nµ7 §£@¥€r 123]

I'd like to see you get a bill for $20,000 or more from the IRS.

Having a total federal tax liability of 20K is not all that unusual if you have a 2-income household.

[w¡n9Nµ7 §£@¥€r 123]

$70,000 is "a little high" but "not out of line". :bonk:ARE YOU JOKING! Maybe 1 out of every 500,000 people could pay a $70,000 tax bill! And I doubt you are one of them!!!

If Rob early-withdrew his tax deferred savings without a qualifying reason to do so, of course he'd be able to pay the 70K penalty. Why am I so sure? Because he'd be sitting on it.

[The_Dude 1,142]

I'd like to see you get a bill for $20,000 or more from the IRS. See how much you love your precious gov't then.

$70,000 is "a little high" but "not out of line". :bonk:ARE YOU JOKING! Maybe 1 out of every 500,000 people could pay a $70,000 tax bill! And I doubt you are one of them!!!

I have received a tax bill, nearly that size. I took it in stride though as I knew what my mistake was.

I love how you turn your father's tax ** up into some sort of indictment on taxes and the government. I bet somehow, some way, you blame obama for this. Sorry, that is the price it costs to live in this country, if you dont' like it, move to Zimbabwe. Whether I could pay a $70k tax bill is irrelavent as I wouldn't be so stupid as to cash out a tax shelter and not expect penalties and taxes. Paying 35% tax on income is no outrageous, that is virtually the norm across the board.

[웃 910]

No I don't blame Obama for this. I'm not nearly as political as you. I think Obama was a much better candidate than McCain. The days of having an old man in the highest office are over.

Now you, on the other hand, are GLUED to the left wing agenda.

You are stuck like a duck:bonk:

You will never open your eyes to the other side....Your eyes are sealed shut.

[one...two...tree 2,762]

A couple responders are saying 'you and your dad' this, 'you and your dad don't know that'....'what were you guys thinking', 'you don't know about taxes', etc..

IT IS NOT ME!!! I am just sharing the story. I have a philosophy in life that guarantees very low bills and high savings. It is a two-tier strategy: NO MORTGAGE EVER and ALWAYS LOW CREDIT CARD DEBT. With these two things I am sure that down the road (later in life) I will be living very well.

Back to the story. Yes he knew there was a penalty. He has multiple accountants. I'm not sure he knew the exact price tag he would pay but he knew he would pay a penalty. And the reason he pulled out is because his savings went from about $1.5 million at the peak of the bull market (OCT 2007) to $400,000 by December 2008.........He probably would be up to about $700,000 or $800,000 if he held through 2009 but when you see your statement go from millionaire down to $400,000 (still a huge amount but not quite $1.5M) then I could see why he would want to get out.

I think capital gains taxes should be at 0%, 5%, or MAXIMUM 10% for families that make less than $500,000.

I'm not in the position yet where I would have to pay over $20,000 come tax time but most people are broke and in debt! Now maybe some of you guys are paying $30,000 or better every tax year (I highly doubt it). So you must have a couple hundred grand set aside to pay taxes each year. MOST PEOPLE don't have that. And I am betting that most of the people on here either didn't pay any taxes, are getting a paycheck back in the mail from the gov't, or are paying much less than $10,000. It's just a fact that most people do not have lump sums of money set aside to pay lump sums in taxes every tax year. Most people are struggling and living check to check, in debt up to their eyeballs!

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It still doesn't make sense...sorry. He could have just moved his retirement funds into more secure investments. It wasn't capital gains taxes that bit your Dad in the ####### - it was early withdrawal penalties on money he never paid taxes on to begin with.

[The_Dude 1,142]

No I don't blame Obama for this. I'm not nearly as political as you. I think Obama was a much better candidate than McCain. The days of having an old man in the highest office are over.

Now you, on the other hand, are GLUED to the left wing agenda.

You are stuck like a duck:bonk:

You will never open your eyes to the other side....Your eyes are sealed shut.

OK, i'm going to say this slowly, so that even you can comprehend this. I know it is probably easier for you to imagine Mitt Romney explaining this, so if that is a device that works for you, then so be it. Read your original post again and see who is the one making the anti-government rant? Again, from the original post, who is the one showing absolutely no acuity of how taxes work? Again, that would be you.