Your TAXES

[Conundrum]

Probably just texts a thumbs up or down on a monthly basis.

[bfree]

Sounds like you're getting a good handle on this stuff.

Overall lesson learned from this year’s tax picture: we need do whatever we can (excluding my hyperbolic tax shelters) to get back to itemizing deductions. I think will start with changing retirement contributions.

Standard vs. Itemize, very little of that is within your control. It is what it is. Charitable donations are a good one, but other than that, you'd be letting the tail wag the dog to try to get to itemizing. Retirement contributions don't impact standard vs itemize at all. If you're on the fence, you can try to "bunch deductions" and alternate standard vs itemize every other year. You'd pay property taxes 3x in one year and 1x in the next year (rather than typical 2x every year), for example, but many people can't do that (either escrow or the county just doesn't allow it). Standard deduction is fine. Yeah it felt like a raw deal for those that end up with a list of itemized deductions that fall just under the new standard deduction (I'm in the same boat) but it is what it is. At least I don't have to bother keeping receipts for anything. "Can I print you a receipt for your donation?" me: "nah pitch it". 90% of people take the standard deduction now, and the whole point was to simplify taxes a bit. A good thing.

[Timberridge]

Probably just texts a thumbs up or down on a monthly basis.

Keeps things simple. I like that.

[Bunion 2020]

Standard VS Itemized, if self employed:

https://www.keepertax.com/posts/can-...iness-expenses

[fastfred]

He at least gives you something on a piece of paper showing where you stand each Q, even if it's handwritten?

Every month I get a report suppose to understand it

Sent from my SM-A546V using Tapatalk

[schuss]

Suze has long been in that camp. Dave too; it’s one of the things they agree most on. I think that article heading contained a key Freudian slip “higher earnings, tend to lead to higher taxes” that shouldn’t be a “tend.” I would argue it is a “must.” I think that’s the crux of a lot of people’s gripe. We are getting a very large rift between wealth levels; this same trend brought down the Roman Republic and then subsequently the Empire too later. As an open market advocate, I think that is one thing if that wealth is built through trade and providing goods and services that people demand; this is good. It’s a completely different situation when wealth and power fix the game in their favor. I know this will always be the way things are and thus effective government needs to mitigate this. Take Swift. Lover her and have no problem with her becoming a billionaire and sucking up my money every time I play her songs on iTunes. Now if she takes some of her billions and lobbies and funds politicians that would change the rules and make it harder for future promising stars; then fuck that. This is what the 2018 Tax Code did. Many middle earners lost long held deductions while the super wealthy gained some new and quite novel; fucking airplane maintenance?! I know I keep bringing it up but come on.

Me Side tracking even further into Poly Assing this thread, the changing of The Fed board’s term limits is catastrophic for our long range monetary policy because that erodes the insulation our central bank had from political influence, but oh well, “in the long run we are all dead” as Keynes taught us right? Isn’t it also funny that we only really started to really worry about inflation when the bulk of Baby Boomers retired? We been running pretty hot for a long time right up to then. Things that make you go hmm.

Regarding the w4 being intentionally fucked, that seems a bit conspiracy theory for me. That’s the kind of intervention politicians usually don’t get. I would like to think our hard working civil-service-bureaucrat schmucks that designed it are just really good with tables and numbers and probably can’t fathom why it’s a challenge for lay people.

Jono, thank you. Always can count on you to cut through rationally.

Eh, the Fed is already political and has been since at least Greenspan. They're definitely wonkier and semi-independent, but there was a reason Powell didn't raise rates more during Trump, and it had nothing to do with with the conditions.

[Timberridge]

Every month I get a report suppose to understand it

Sent from my SM-A546V using Tapatalk

Is it possible you could millionaire many times over and just not realize it based on the complexity of the report?

[Hood26]

Right again Bfree on the retirement funds, I should have been more clear I want to first adjust retirement to get that taxable income lower (try and stay in the 22% bracket since we are projected to enter the 24% as is) and thus help the standard deduction be more impactful. I am interested in exploring SALT more; don’t think it will apply, but Oregon takes a good chunk; side note the Oregon Kicker will save us a little this year. Also true about trying to get back to itemizing could be the tail waging the dog, but there are a few to explore nonetheless.

Fastfred, I hope your advisor is helping you stay within the 50/30/20 rule. 50% for what you need, 30% for what you want (think dining out and personal and recreational and vacation) and then 20% should be investments. $420 a month is considerable, so hope you are getting your monies worth and he has his costs not justified as a need.

[Foggy_Goggles]

Ha...I do my own bookkeeping but the CPA keeps me compliant. I simplify shit as much as possible to try and keep my bill down. S Corp is pretty manageable.

Once a quarter they ask a couple of questions and email back how much the is gonna come out of my account. Minimizing your tax exposure is smart. Spending money on things you don't need to pay less taxes is stupid.

Business tax deductions is basically on the honor system. At the Fortune 500 Level salespeople fly half way around the globe to go to a conference, play golf and eat steak dinners. All considered business expense. Hillybilly contractors take Friday off and go snowmobiling with their friends. Whats the difference?

[Foggy_Goggles]

Ha...I do my own bookkeeping but the CPA keeps me compliant. I simplify shit as much as possible to try and keep my bill down. S Corp is pretty manageable.

Once a quarter they ask a couple of questions and email back how much the is gonna come out of my account. Minimizing your tax exposure is smart. Spending money on things you don't need to pay less taxes is stupid.

Business tax deductions is basically on the honor system. At the Fortune 500 Level salespeople fly half way around the globe to go to a conference, play golf and eat steak dinners. All considered business expense. Hillybilly contractors take Friday off and go snowmobiling with their friends. Whats the difference?

[J. Barron DeJong]

Eh, the Fed is already political and has been since at least Greenspan. They're definitely wonkier and semi-independent, but there was a reason Powell didn't raise rates more during Trump, and it had nothing to do with with the conditions.

Hmmm…. Core PCE (the Fed’s preferred inflation measure) increased at an average rate of about 1.7% from Jan 2017 thru Jan 2020 (then Covid hit). The Fed’s inflation target is 2%, so they were running below target. Why would they have raised rates?

On the other hand core PCE is now back down to 2%, and has been trending down for a reasonable amount of time. Fed should have cut.

[Timberridge]

I always like the wide lanes in our threads. We have the ability to bounce freely between macroeconomics and mountain town advisory fees.

[schuss]

Hmmm…. Core PCE (the Fed’s preferred inflation measure) increased at an average rate of about 1.7% from Jan 2017 thru Jan 2020 (then Covid hit). The Fed’s inflation target is 2%, so they were running below target. Why would they have raised rates?

On the other hand core PCE is now back down to 2%, and has been trending down for a reasonable amount of time. Fed should have cut.

The overheated housing market and other bad market behavior from the prolonged zero or near-zero rate environment? Like you just have to look at the current clusterfuck of housing, technology companies and other areas to see how it was just a shitstorm.

[Bunion 2020]

On the other hand core PCE is now back down to 2%, and has been trending down for a reasonable amount of time. Fed should have cut.

Respectfully disagree. Plenty of time to make certain inflation is trending the right direction.

[J. Barron DeJong]

The overheated housing market and other bad market behavior from the prolonged zero or near-zero rate environment? Like you just have to look at the current clusterfuck of housing, technology companies and other areas to see how it was just a shitstorm.

The Fed has a legally mandated goal when setting monetary policy: low and stable inflation, and full employment.

So even if they wanted to take into account how low rates affect certain markets, they aren’t legally allowed to.

But, assuming they could, you have to consider the counterfactual of what would have happened if they had raised rates: likely tens of millions more unemployed, slower economic growth, slower wage growth (especially for low earners, who finally closed some of the inequality gap during those years), possibly recession, maybe deflation?

Just because low rates caused some undesirable outcomes doesn’t mean higher rates wouldn’t have caused different more undesirable outcomes.

[J. Barron DeJong]

Respectfully disagree. Plenty of time to make certain inflation is trending the right direction.

It’s just my opinion (and the opinion of many people I trust) so no issue with disagreeing, but I’m concerned they’re getting way behind the curve. Inflation has been falling very fast, it’s basically down to where they want it (though data is noisy month to month, so can’t be 100% certain), and unemployment has been trending up.

Given the lags in effect, and that the current rates are well above the expected long run ‘neutral rate’ I think they could have easily justified a cut.

[Foggy_Goggles]

Assuming inflation is under control, chose your favorite metric, what general level of interest rates would do the most to combat wealth inequality? Too me, that is a bit of the unspoken challenge. A well performing economy appears to be benefiting fewer and fewer. It sure seems to me that the asset owning class keeps winning and everyone else keeps losing.

[J. Barron DeJong]

Assuming inflation is under control, chose your favorite metric, what general level of interest rates would do the most to combat wealth inequality? Too me, that is a bit of the unspoken challenge. A well performing economy appears to be benefiting fewer and fewer. It sure seems to me that the asset owning class keeps winning and everyone else keeps losing.

The lowest possible rates that keep inflation in check. That’s the rate that maximizes employment.

Not having a large pool of unemployed workers is what forces employers to fight for workers - especially low-wage workers - by raising wages.

[Hood26]

I keep hearing 30yr mortgage rates of about 5% as the number that could get many of us in “golden handcuff” low rates to be interested in moving or investing in a rental property. 5% too seems accessible to a lot of first time buyer. Easiest accessible asset that brings the greatest benefit is home.

Federal Funds Rate is sitting 5.25-5.5 and has had 11 recent increases to get here.

I know I don’t know it all, but I think it’s time to slowly get back on the throttle since inflation has slowed and consumer confidence has improved.

I also know every time I show my wife a house for sale she is like, eh maybe if the rates get to 5sh.

[Timberridge]

I also know every time I show my wife a house for sale she is like, eh maybe if the rates get to 5sh.

She's telling you she doesn't love it. I think we've been so conditioned with abnormally low interest rates, we've forgotten the 30yr fixed has averaged about 7.5% since 1972 or so.

[Master of Energy]

Single person LLC, she is a CPA that only does taxes, Bozeman.

H&R Block charges like a grand for that and they ain’t cpas.

assuming she does a good job you should never leave

[Foggy_Goggles]

Not having a large pool of unemployed workers is what forces employers to fight for workers - especially low-wage workers - by raising wages.

So the increasing wealth gap during historically low rates were not connected? Honest questions. I guess my opinion is that objectively, the system does not appear to be working for many. And that's not to say the Fed either can or should do anything about it.

Its just an observations that while the economy is "good" more and more people seem to be "not good" financially.

[BCMtnHound]

She's telling you she doesn't love it. I think we've been so conditioned with abnormally low interest rates, we've forgotten the 30yr fixed has averaged about 7.5% since 1972 or so.

I remember my folks trying to manage a variable rate mortgage at 22% in late 70’s/early 80’s. And this was when value of median wage was far greater against the average cost of purchasing a property.

[J. Barron DeJong]

So the increasing wealth gap during historically low rates were not connected? Honest questions. I guess my opinion is that objectively, the system does not appear to be working for many. And that's not to say the Fed either can or should do anything about it.

Its just an observations that while the economy is "good" more and more people seem to be "not good" financially.

I’m pretty confident that the low rates was not what caused increasing inequality.

The period of low rates was to try and bring back workers:



That massive drop in employment after 2008 is what depressed wages and increased inequality. Inequality finally started coming down ~2017 when employment finally got to a high level again.

(Note that the continual increase from 1950 was basically women entering the workforce. And the huge negative spike in 2020 was Covid layoffs.)

[bfree]

But low rates do tend to make the stock market soar, which I imagine is a large driver of inequality