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Originally Posted by mlmpetert
It was my junior year at VCU, I had to take a tax accounting class as part of my major. Sec. 183 Hobby Loss Rules. Basically the IRS doesn’t want people to have “businesses” that are in fact hobbies taking the deduction from their other income sources. Example. You make 150k at your sole crushing job. Your spouse runs a “business” like a nursery, farm, craft making, car restoring, painting or something else that takes up time but doesn’t earn money. People used to call these hobbies business so they could deduct the losses against the income their spouse earned. I think in the 70’s the IRS put a stop to this by adding in the Sec 183 Hobby Loss Rules. Basically you can take losses (cost of business) against the income your hobby earns, but you cant take it against the other income earned in your household unless your hobby makes more then it losses in a 3 out of a 5 year period. This is true for all but one exception. If your hobby involves horses (breading, racing, showing, ext). If horses are your hobby you are in luck; you only have to earn a profit for your hobby in 2 out of 7 years for it to be considered a business to take a tax deduction.
I remember my teacher telling me the details around this. I think there was a senator that had family members with horses so he put in this earmark. It was at that point that I lost a lot faith in government and despised our tax system not only because of its complexity but now also because of its “unfairness”. Don’t fool yourself into thinking our code is progressive, its not. Only rich people own horses.
Back when I was 15 and had my first W2 earning job I quickly learned to dislike taxes like most everyone else. Back then it was not just because of the decrease in what you take home but the complexity surrounding them. I think it took me a good 3 or 4 jobs before I could finally fill out my withholding forms (W-4) without help, because of the terminology. I did 1040EZ's until 3 years ago and the first time I remember doing it I thought it was complicated as all hell (the 1040EZ!). Ive always done my taxes the old fashion way, because im somewhat of a masochist and it keeps me fresh on knowing limits and stuff, but this year I have a complex tax situation and I might break and use turbo tax. I haven’t decided yet. I am also a procrastinator.
My other big beef is capital gains. Why should capital gains be taxed? If you told a Founding Father his after tax money (money he already paid taxes on) that he used to invest in someone or something would be taxed again on any gains it earned, he would challenge you to a duel. He really would. Taxes on capital gains is almost as absurd as taxes on interest.
I work with a CPA and his big beef with taxes is the intellectual property America has that’s tied up in tax code. As of 2006 there were 1,274,000 accountants. Most accountants out there, particularly ones with credentials, are pretty smart people. Imagine if they were all doctors, entrepreneurs, teachers or something better then bean counters.
Now that most of us are officially tackling tax season, what do you guys hate about taxes the most?
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I agree on mostly just the level of taxes. The Revolution had a good amount to do with taxes on some basic items and man our money passes through the govt's hands so much it's ridiculous.
Can anybody defend property tax, estate tax, etc logically other than "it gives the govt much needed money" in the least?
And yes, politicians are after their own interests as well as those of their supporters (re: large financial) and if you ask me, that should not be allowed. Earmarks and the like only serve to screw up what could be progression as far as policy and partisan ties. If there's ever a "I'll vote on this, but only if you do this for blah blah" it should be criminal. I understand that politicians have to lobby for their local causes but it's ridiculous the amount of money and vote-swaying that things like this bring. You get politicians who sign off on a bill and then don't vote for it. Aren't they supposed to be choosing what's best for us?