Monday, March 11, 2013

Moolah Monday - Our "Fair" Share

Greetings everyone and Happy Monday!

It is a happy Monday for mie in that this past weekend was super accomplished.  And by that I mean I did my taxes finally.  mostly.  And I went to sleep at 7:30pm on Friday night.  SWEET.

I just wanted to give you a glimpse into what taxes look like from where we sit.

I use Turbo Tax.  If you're not familiar with the tool, here's a brief overview.  It walks you through the process of filling out each of the categories related to taxes in a logical order, not necessarily the order the tax forms lead you through.  As someone who only stopped doing the paper tax forms in 2011 because I honestly LOVED filling out the paper, I can wholeheartedly tell you I love using Turbo Tax.  (This is in no way sponsored and there may be other great products out there...just my experience).  As you enter in information about your family and tax-related situation, you watch as the tax total changes, just like that.  It starts out at 0, but as you go you can directly see the impact of every entry you make into the tool.

The first thing it asks us is about our family situation and whether it has changed.  Here's where I got to delete two kiddos from my home, fix Summer's SSN, and add two new kiddos, #9 & #10 who left in July but made it long enough to claim them.  Easy enough.

I use home and business because we have a rental property so the next section is business-related.  It immediately added $6500ish to my total refund due because last year we had a rental property loss that we weren't able to take.  I went through the time-consuming process of adding up 2012 receipts, digging through paperwork, and even resigning up on my mortgage-company's website for that property and entered everything into the system.  As I did, the total refund grew to $11,000+.

The next section is about income.  I'm not going to share our specific income but I will tell you as a point of reference it is LESS than $250,000, what we kept hearing was the line for "wealthy" individuals during the last election cycle.  I feel we're wealthy because of what we have in Christ and how I know most of the under-developed world lives, but we're not wealthy by American standards; we're not out buying yachts or flying on private jets.  (We're not really flying on planes much as far as that goes...aside from our trip to Hawaii last year we haven't flown anywhere that I can remember since Logan was free...more than 4 years ago).

I entered in our income information, including taxes paid, an amount about DOUBLE what I made working full-time through college, just in case you were thinking we must not have paid taxes already.   Suddenly my tax refund of $11K+ turned into owing $1500.  Why?  Because yet again this year we're not able to take the rental property loss as deduction because our income is too high.

The next section had to do with personal deductions and credits, things like childcare credits, education credits, and itemized deductions.  I'll spare you the boring details but needless to say despite a lot of charitable giving (nearly the amount I earned working full-time through college), foster-care related donations, and several other related items our tax amount turned back into a refund far less than the original amount shown.  This took into account that several things that were mentioned as possible credits we were disqualified for because our income is too high.  As an example, the childcare credit (dependent care...) allows for up-to $3000 per child or $6000 total to be claimed, assuming you spent that much for your children.  We received $1200, despite the fact that we spent at least $6,000 in 2012 on foster care daycare alone, not to mention the childcare for our own 2 children.

Here's my point - that adds up to $15,000 in tax refund that we would have received if our income was slightly less, an amount someone else making slightly less would have received.  Having made slightly less, they would have also paid less in taxes to begin with, BTW.  Instead, we ended up paying an amount in taxes more than what some full-time workers earn in a year.

This is not meant to be a pity-party.  I'm not whining nor am I complaining.  I simply wanted to give one example of what it looks like to be a family working as hard as we are, giving as much as we are both financially and otherwise, when we do our taxes.  I don't think our perspective is well-voiced in the public forum and since this is mine, here it is.

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