Taxes are unconstitutional and mean.

Reading this was taxing.

 

Most states do this. You deduct the taxes you paid (not what you owed) on your tax return. The next year, if you paid more with last years' return, you add the amount to Taxes you paid. If you get a refund, its counted as income, as you had previously deducted it under taxes you paid last year, and did not pay tax on that money.

If you don't do this, you have to do your state taxes before you can figure out what you paid, which will lock you into a loop that can't be broken.

 

^^

It's federal taxes withheld that's deducted from your gross income for state tax purposes. Federal refund is then considered income for purposes of your state taxes in the next tax year because it is money you deducted from your gross income and thus didn't pay state income tax on.

 

I guess I should add that this only comes into play if you itemize your deductions. If you take the standard deduction, then that is considered to include the tax you paid to state/fed.

You still pay the feds on state refunds, you do not pay the state on these. You do not pay the feds on federal refunds, you pay the state on fed refunds. That's about clear as mud, but you pay tax on refunds to the agency that didn't send you the refund.

 

I mean, isn't sales tax the same thing? you get taxed when you earn it and then taxed when you spend it...

 

I see the point but certainly they are not the same. Passing on an inheritance is not spending. It is giving. There is no consideration. That is there is no exchange of goods for money.
But it is an opportunity for the government to take some money as it changes hands.
I give my kids money regularly. There is no tax on it. But there would be if I was dead.

 

Dude, you guys are ballers. Those of you passing along (or more likely, receiving) almost $5.5 MILLION is serious company. I had no idea I was in the esteemed company of the top 0.2% of the country. Wow. I guess that explains the countless threads on new trucks, trailers, and motorcycles during the off season. High rollers indeed.

I am neither promoting or discounting, or participating in a political or non-general conversation other than passing along information regarding tax code. No opinion (except for the rich-ass ballers) is expressed or implied.

 

I won't have to worry about inheritance taxes. I think the only thing I'll get when the 'rents die, is a stack of bills!

 

I

must have missed something
Who on this thread mentioned getting or giving $5.5 million?

 

I was just commenting on folks nattering about the estate/inheritance tax, so I looked it up and the national tax only comes into play at $5.5 million. Anything lower than that is exempt from the national tax. Except that I did look into it further and the state version has a much lower exemption amount, so maybe there is something to the estate tax (at the state level) being onerous. But, I won't ever see a dime from any estate, I will likely (as stated by @eggfooyoung) just get a stack of bills from my parent's estate.

 

I think there's a limit for a gift if you're alive also. My first boss in the HVAC industry had a very wealthy father, and I remember he would write him a check for like $9999 every year because it was the maximum tax free gift to family. or some such thing.

Most people misunderstand inheritance tax. As mentioned here, it kicks in around $5.5m, and most states don't have inheritance tax.

The reason a lot of people think they're taxed on inheritance is that it's frequently in the form of a 401k or other retirement plan, and there has been no tax paid on the deposits. Naturally, when distributions are taken, or the account is cashed out, tax is due on the receipts.

 

As it turns out, the IRS wasn't at fault for the situation leading to the original post. They received my check, and presented it to my bank on time. Turns out it was my bank who blew it. I transferred the money needed to cover the check from savings to checking, and for some reason the bank put a hold on the funds because they wanted to "verify" the transfer with me. No one called me, the hold wasn't lifted, and the bank bounced my check. No phone call, nothing. They said it was all automated. That was the biggest check I've written in a long time, you'd think it would flag some kind of review by an actual human.

You can imagine the combination of panic and anger that I was feeling standing there listening to them tell me I just bounced a check to the motherf#cking US treasury. They told me it was their mistake, and not to be upset because they'd refund me the $26 fee. Gee thanks, but I think you're missing the point.

The check has since cleared, but I can't wait to see how this plays out...

 

Oops
Put my reply in wrong.

 

I'll try again. Sorry, I'm new here....




I thought there was legislation passed a while back to limit how long a bank could hold a check before making the funds available but had an experience recently like yours that would indicate I am wrong.
After finishing siding and roofing from hail storm damage I submitted final bill to the insurance company who then issued a check to the homeowner with their mortgage company on the payee line as well. The mortgage company held the check for a week saying they needed to do an inspection which they never did. They released the check to the homeowner who immediately deposited the $20k in their bank. The bank cleared a small amount $1000 or so and put a 7 day hold on the rest of the funds. When I questioned the homeowner he showed me the deposit slip clearly showing the hold.
I suggested he change banks but there was nothing I could do.
I bank with the infamous Wells Fargo who clears my deposits overnight regardless of amount (not usually more than $40k but there have been exceptions)
My contracts all stipulate payment on completion with a penalty for payments not received at the time of completion.
Since this was clearly not the homeowners fault I did nothing but wait.
I wonder how a bank would feel if you wrote them a check for your mortgage but told them not to cash it for 7 days.
So does anybody know if there is a legal statute addressing banks holding funds?

 

And yes there is an annual gift limit to each family member though it is up from the $10k you mention to somewhere around $12k.
Which is another load of tax crap. If my kid needs help financially and I want to give them money why should Uncle Sam get any of it? Why should there be an arbitrary limit that is tax free?

 

The really weird part about my situation is that it wasn't even a check. I transferred the money from a savings account in the same bank. The balance required had been there for months or even years. The whole thing makes no sense to me.

 

Agreed. Total BS. I would close the account and change banks.
Though they may hold funds......