Turbotax for Federal and State Taxes

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					                                    TAXES & GENERATIONAL EQUITY
                    A TurboTax Analysis of Two Hypothetical Brooklyn, New York Couples; 2007 data

                                                                                                                     Ms. Hopeful at
                                                         Mr. & Ms. Mr. Young & Ms.                 With Baby          Home: Less
Item                                                   Senior Voter Younger Hopeful                  Hopeful               Income
CHARACTERISTICS

Persons In Household by Age                                   68, 68               28, 28            28, 28, 2             28, 28, 2

Total Money Income                                $        100,000      $       100,000     $       100,000      $          75,000
 From Pensions                                    $         35,585      $           -       $           -        $             -
 From Investments, Say 401K                       $         33,425      $           -       $           -        $             -
 From Social Security                             $         30,990      $           -       $           -        $             -
 From Self Employment, Net                        $            -        $        75,000     $        75,000      $          75,000
 From Job                                         $            -        $        25,000     $        25,000      $             -

Child Care Expenses                                                                         $          5,000
Wealth, Non-Money Income, Housing                      Substantial          Almost None         Almost None          Almost None
                                                         Medicare &
 Health Insurance                                     Retiree Benefit              None                None                 None
                                                            Employer         Maybe Social        Maybe Social         Maybe Social
 Retirement Plan                                             Pension             Security            Security             Security

 Savings, Say 401K                                $        835,625      $            -      $            -       $             -
 Own Home? & Value 1                              $        625,000           Rented 1BR          Rented 1BR            Rented 1BR

  Annual Rent 1                                   $             -   $             23,544 $            23,544 $              23,544
  Non-Tax Ownership Costs 1                       $           2,425 $                 -   $               -   $                 -
    Insurance                                     $           1,028           by landlord         by landlord           by landlord
    Water & Sewer                                 $             348           by landlord         by landlord           by landlord
    Heat and Hot Water                            $           1,049           by landlord         by landlord           by landlord
FEDERAL TAXES                                     $          11,791 $             22,664 $            22,214 $              17,138
 Percent of Total Money Income                                11.8%                22.7%               22.2%                 22.9%

Taxable Income 2                                  $          95,352     $         77,201    $         73,801     $          48,801

Income Tax                                        $          11,791     $         10,154    $          9,704     $           6,541
Payroll Tax                                       $             -       $         12,510    $         12,510     $          10,597

 Self Employment Tax                              $             -       $         10,597    $         10,597     $          10,597
 Employee Share of FICA                           $             -       $          1,913    $          1,913     $             -
  (Social Security)                               $             -       $          1,550    $          1,550     $             -
  (Medicare)                                      $             -       $            363    $            363     $             -
STATE AND LOCAL TAXES 3                           $           2,378     $         10,926    $         10,814     $           8,008
 Percent of Money Income                                       2.4%                10.9%               10.8%                 10.7%

Taxable Income 4                                  $             -       $         79,701    $         78,701     $          53,701

New York State Income Tax                         $             -    $             4,666    $          4,597     $           2,886
New York City Income Tax 5                        $            (290) $             1,680    $          1,637     $             542
NYC Unincorporated Business Tax 6                 $             -    $             1,029    $          1,029     $           1,029

Estimated Property Tax Paid 7                     $           2,668 $                -      $            -       $             -
 Property Tax With Regular Star                   $           3,200
 Bloomberg Check                                  $             400
 Spitzer Check                                    $             132
Estimated Property Tax Included in Rent 7         $             -   $              3,551 $             3,551 $               3,551
TOTAL FEDERAL, STATE & LOCAL TAX 3                $          14,169 $             33,590 $            33,028 $              25,146
 Percent of Money Income                                      14.2%                33.6%               33.0%                 33.5%

Additional Housing Costs                          $           2,425     $         19,993    $         19,993     $          19,993
Money Available for Everything Else               $          83,405     $         46,418    $         46,980     $          29,861
Notes
1. Home value based on recent sales of one-family rowhouses in Windsor Terrace Brooklyn, adjusted for the end of the housing
bubble. My own estimated ownership costs; for tenants, landlords typically cover these (but not electric and phone). Rent for a
one-bedroom apartment in the area based on an apartment advertised in the New York Times in 2007 -- $1,800 per month --
adjusted upward at 9% based on my firm's apartment rent data. The ad said the landlord was looking for someone with an
annual income at least 40 times the monthly rent, which is a standard. The Hopefuls would qualify.
2. Both take the standard deduction, as itemization is not worth it. Deductions (as opposed to credits and exclusions from
income altogether) only help the shrinking number of upper middle class people who earn enough that their deductions are
more than the standard deduction, but not so much that they are covered by the Alternative Minimum Tax. The first $10,400 in
Social Security income is excluded from taxable income, an amount that is not adjusted for inflation -- this break will be
worthless when the Hopefuls are old.
3. Excluding sales and use taxes, which are in addition to the taxes discussed here. Corporations the Senior Voters have
invested in also pay corporate income taxes, reducing their return. Ms. Hopeful's employer contributes the other half of the
payroll tax, plus unemployment and workman's compensation taxes, on her behalf. Whether those taxes actually reduce
employer profits or reduce worker wages depends on supply and demand and relative power in the labor market.

4. Social Security is not taxable income in New York. Neither are pensions for those over 65, or at any age if the recipient is a
retired public employee. Both are taxed by the federal government (with an exclusion for Social Security) and most states with
income taxes. Given that New York also provides some of the sweetest Medicaid benefits around for non-poor seniors, it is
clear that they are better off here than perhaps anywhere else. Others, however, could do better in many, many places.
5. As part of the STAR program, residents of New York City, where income taxes rather than property taxes are the largest part
of the tax burden, get a small break. TurboTax seems to believe that even seniors with no city tax due still receive a school
income tax credit, and are due a refund. Is that right?
6. Mr. Hopeful is required to pay a second local income tax, the UBT, on his self-employment income. In addition, he pays both
the employer and employee half of Social Security and Medicare. More and more, businesses hire young people as self-
employed "freelancers" even though they are employees in all but name, denying them benefits such as health insurance that
are provided to older workers classified as employees. In NYC, they are hit with the UBT as well, a second tax public
employees, corporate employees, non-profit employees, the retired, and those living off investment income do not pay. How is
this treatement justified?
7. According to the NYC Dept. of Finance, the average rental apartment in Brooklyn had an average market value per unit of
$88,597 and an average tax per unit of $1,419.82 last year. For sales in Park Slope South, near our one-family Senior Voter
rowhouse example, 242 units in walk-up apartment buildings changed hands in the year to January 2008, for an average price
of $221,581. Scaling up the taxes per unit, the Young Hopeful's rent has to cover a landlord tax bill of $3,551 per year. In this
example, the Senior Voters do not qualify for Enhanced STAR or the city's senior citizen tax abatement, because their income is
too low. They do qualify for "middle class STAR" under current income guidelines.
8. Here I subtract the portion of the Hopeful's rent that the landlord pays in property tax, and add for the Senior Voters the
housing expenses covered by the Hopefuls' landlord.
Tax Reduction Benefits

STAR -- the New York State School Tax Relief Program
Senior Citizen Homeowners' Exemption (SCHE)
Veterans' Exemption
Disabled Homeowners' Exemption (DHE)
Clergy Exemption
Cooperative and Condominium Tax Abatement

STAR -- the New York State School Tax Relief Program
There are two types of STAR benefit: Basic STAR and Enhanced STAR. Basic STAR is available to all resident owners of 1-,
2-, and 3-family houses, condominiums, and cooperative apartments and has no income or age limit. In addition, owners
of 4-, 5, and 6-family homes where the owner resides in the building may also be eligible for Basic STAR, with the
exemption only applying to the portion of the building occupied by the owner. Seniors (age 65 or over as of December
31st of the exemption year) with a household income of $70,650 or less may be entitled to Enhanced STAR, which offers a

Most homeowners who have basic STAR save about $200 a year on their property taxes. Enhanced STAR generally offers
a tax savings of $375 per year to eligible recipients.

STAR Exemption Brochure
"Answers to the Most Frequently Asked Questions about the Basic and Enhanced STAR (School Tax Relief) Property Tax
Exemptions"
See information

Senior Citizen Homeowners' Exemption (SCHE)
Owners of 1-, 2-, and 3-family houses, condominiums, or cooperative apartments that are age 65 or older, and whose
federal adjusted gross income, reduced by unreimbursed medical expenses, is less than $35,400 a year may qualify for a
reduction to their assessed value of 5% - 50% (depending on income). Homeowners who receive SCHE also automatically

If a husband/wife or siblings own the property, only one owner needs to be 65 or over to qualify for SCHE. In all other
instances of co-ownership, all owners must be 65 or over to qualify.
New York City (all 5 Boroughs)
Determine Your 2007 Middle Class STAR Rebate Amount

The 2007 Middle Class STAR Rebate Program provides two types of rebates:



 A Middle Class STAR rebate is available for homeowners who receive the basic STAR exemption on their property tax
 bill. Rebate amounts are determined based on a combination of factors, including the income bracket for your property,
 the tax rate for the school district where the property is located, and the city, village or town where the property is located.


 A rebate is also available for homeowners who are senior citizens 65-years or older and receive an enhanced
 STAR exemption on their property tax bills. Rebate amounts are determined based on a combination of
 factors, including the tax rate for the school district where the property is located, and the city, village or town
 where the property is located.




To determine your rebate amount select the county, school district and locality you live in below. Based on your selection, rebat
displayed for each income bracket for basic STAR recipients and the rebate amount for enhanced STAR recipients.

Select the county
        you live in
                      NYC


                      2005 Combined Incomes for all Resident
                                 Over     Over
                       Up to   $120,000 $175,000      Over   Enhance
                      $120,000    and      and      $250,000    d
                                 up to    up to
                               $175,000 $250,000


Rebate Amounts        $131.52     $98.64       $65.76      $0.00      $103.16

 Mitchell Lama         $43.84     $32.88       $21.92      $0.00       $34.39
Rebate Amounts
 on their property tax
cket for your property,
 the property is located.




sed on your selection, rebate amounts will be
STAR recipients.

				
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