Taxes. If there is something more annoying in life, I haven’t experienced it.
Well, yes. I have. Even more annoying than paying taxes is planning badly for them.
Three years ago I retired one-third of the way into into the tax year. Somehow, I managed to underestimate my tax withholding on my retirement pay. Partly due to the combination of having earned income and retirement pay in the same year.
And it was a big underpayment. Enough to spend close to a month in one of those San Francisco hotels where the staff speaks with phony French accents.
To avoid a reprise the next year, I upped the amount withheld on my pensions. But that was also the same year I returned to Oregon to train my replacement. Once again, two sources of income.
When tax time rolled around, I was short. And off to Washington went another month-stay at a five star hotel.
Last year, I was certain I had it nailed. My sole income was from my retirement, and I knew I had finally reached a nice equilibrium. When I filled out my 1040 in January, it informed me a refund would be on my way. A small refund. But, a refund, nonetheless.
That is until I noticed I had skipped a line. The only change in income I had last year was my Social Security. And I had no idea why I was asked to include that amount on my tax return. After all, I thought, Social Security is a non-taxable event. Or so I had been told.
When I added my Social Security payments to the rest of my income, once again, I owed another stay at a chi-chi hotel.
It turns out that my Social Security payments did two things. 85% of the payments are taxable as income. And that 85% bounced me into a higher tax bracket.
In the recesses of my mind, I remember that mandarin of Congress, Dan Rostenkowski, being trapped in his limousine by angry placard-wielding seniors. He had been a prime driver for taxing Social Security benefits for “wealthier” seniors.
At the time, I thought it was a good idea. The revenue would help balance what was then a burgeoning deficit.
Well, we all know what happened. Congress spent the revenue -- just as it does with every tax increase. We now have even a bigger deficit. And I am one of those placard-wielding seniors.
I had planned on filling my taxes in January. To get that big refund, mind you.
Now, I will wait until I am about to sail away from New Orleans.
Maybe the government can use my payment to ransom me if I am kidnapped in Egypt.
Well, yes. I have. Even more annoying than paying taxes is planning badly for them.
Three years ago I retired one-third of the way into into the tax year. Somehow, I managed to underestimate my tax withholding on my retirement pay. Partly due to the combination of having earned income and retirement pay in the same year.
And it was a big underpayment. Enough to spend close to a month in one of those San Francisco hotels where the staff speaks with phony French accents.
To avoid a reprise the next year, I upped the amount withheld on my pensions. But that was also the same year I returned to Oregon to train my replacement. Once again, two sources of income.
When tax time rolled around, I was short. And off to Washington went another month-stay at a five star hotel.
Last year, I was certain I had it nailed. My sole income was from my retirement, and I knew I had finally reached a nice equilibrium. When I filled out my 1040 in January, it informed me a refund would be on my way. A small refund. But, a refund, nonetheless.
That is until I noticed I had skipped a line. The only change in income I had last year was my Social Security. And I had no idea why I was asked to include that amount on my tax return. After all, I thought, Social Security is a non-taxable event. Or so I had been told.
When I added my Social Security payments to the rest of my income, once again, I owed another stay at a chi-chi hotel.
It turns out that my Social Security payments did two things. 85% of the payments are taxable as income. And that 85% bounced me into a higher tax bracket.
In the recesses of my mind, I remember that mandarin of Congress, Dan Rostenkowski, being trapped in his limousine by angry placard-wielding seniors. He had been a prime driver for taxing Social Security benefits for “wealthier” seniors.
At the time, I thought it was a good idea. The revenue would help balance what was then a burgeoning deficit.
Well, we all know what happened. Congress spent the revenue -- just as it does with every tax increase. We now have even a bigger deficit. And I am one of those placard-wielding seniors.
I had planned on filling my taxes in January. To get that big refund, mind you.
Now, I will wait until I am about to sail away from New Orleans.
Maybe the government can use my payment to ransom me if I am kidnapped in Egypt.
Note -- By the way, several of you have asked through e-mail if I had any damage from yesterday’s earthquake. I didn’t even feel it. And surprisingly, as large as it was, there seems to have been very little loss in Mexico.
