Thursday, July 04, 2024

When the IRS says you paid too much.

I recently got a computer generated letter that I had filled out my income tax form incorrectly. My requested refund, from withholding, was way too small. Turns out I didn't owe any taxes so I got the entire withholding back.

Yes, figuring out taxes can be complicated. This discrepancy had to do with how much tax I owe on my Social Security income. I guess I owe no tax on that due to my overall income bracket. It can be convoluted how things are explained.

The withholding was from my pension income, but I got it all back. I don't mind paying some taxes, but apparently, I didn't owe income tax this year.

Conservatives often say that the rich pay most of the income taxes that run the government while liberals say that the rich don't pay enough taxes.

When one looks at the figures, both sides are likely telling different sides of the truth. I would guess that the rich have most of the money so they pay most of the taxes. Low income people often pay no income tax. The middle class pays quite a bit in taxes also.

One's circumstances really effect taxes. If someone has lots of business expenses, they often get to write off those expenses, making it look like the rich get off tax free. On the other hand, if their businesses were taxed to death; consumers would loose the goods, services and jobs that those businesses provide.

As for the fairness of the overall economy, it doesn't tend to be fair for many reasons. I keep hearing that folks who own assets are wealthy compared to those who just work. In other words things like real estate can go way up in value compared to wages.

I try and always look at the big picture, but sometimes I don't pay that much attention to what seems like the triviality of my own personal finances.

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