The same goes for IA, except we have to pay state tax on all of our federal refund.

 

hehee WA doesn't have a state income tax....I don't have to pay anything on my refunds.

I set my with holdings so if something happens and my 'normal' deductions aren't there we still wont owe.

As for the who pays for what....it's a mess and it will always be a mess and there isn't anything we can do about it anymore. To many egg heads have had to many fingers in the pot. They don't even know where the pot is to **** in anymore

 

You have to pay taxes on a refund if you deducted the state tax in the prior year.

Suppose you deducted 1000 in state income taxes for 2006, but got a refund from the state of 400 dollars, but paid to you in 2007.

Well since the 'correct' deduction should have been 1000 - 400,or 600, then the 400 you got back becomes income to the feds. The state has a line that factors the 400 out before you compute state tax.

Now, if you didn't itemize in 2006, but took the standard deduction, then the refund is NOT taxable by the feds.

It all really makes sense, or at least as much sense as the tax law makes.

bunkyt

PS Ifanyone is paying taxes to the state on his federal refund, he ought to see a tax preparer. I have never heard of any state charging taxes on federal refunds,and I'd suspect that if you were paying state taxeswith federal refunds included as income, you should be able to file amended returns (probably for 5 years) to get the tax back.

 

I've heard it said that the largest government agency, next to the military of course is the IRS.
I'd love to see something like the fair tax plan implimented. I don't know all the in's and out's about it, except that it's based on what you spend rather that what you earn. Mr. Neal Bortz has written a book on the matter that would likely be on the best seller list this time of year!

Another matter........12 years ago, I worked for a tug boat company here in New Orleans. Every two weeks I received my paycheck which was the net amount of the gross of my earnings. Never actually saw the taxes taken out like most people. No big deal.
Toady, I'm a pilot and I earn and receive the total gross amount each month, and every quarter I mail to the state as well as the feds a good chunck of change. Desipline keeps me out of trouble, but it sure is a drag to actually have to sit down and write a check that often and mail it off. I'm not talking about the physical effort to do this, just the fact that I personally am sending alot of cash that is sometimes put to good use, and sometimes NOT being used wisely. The pork waste kills me.

All in all, I have a good life for my family and myself. I'm blessed and thankful. But there must be a more sensible way to accomplish paying and spending our tax dollars!

Hey Mayfair..............your timeing is impeccable on this posting. Got everyone up in arms about this time of year!

 

Mr Neal has writen another book about the Fair Tax, one that explains SB25 and another that explains to the critics why they are wrong.

Ive thumbed through the first book and realy like it. havent gotten my hands on the second one yet.

 

Ya know Drew, the more folks talk about this issue, maybe the politicians will start to listen.

Abosolute power is additive and they love the power of taking more and more money and spending it as they wish. Damn crackheads!

 

also some polititians want to take money from the oil companies. . .only bad things can happen from this since the oil companies will just pass the tax onto us.