How Electronic Tax Returns Have Become the US Standard In the Last Generation – 1990-2013

The last week has seen quite a few articles lamenting the lack of funding at the IRS.  That lack of funding might drive the IRS to multi-generational lows in terms of the number of audits it undertakes (or at least based on the percentage of returns) in the United States, and might (further) reduce staff answering citizen calls for clarification on … [Read more...]

Riding the Market Weather

June 29th, 2006. It was an innocuous day as the stock market was booming in the post-9/11 recovery. The economy was torrid and the unemployment rate was 4.6% in the USA. That fall, I opened up my checking account with Charles Schwab with their floating-rate free checking account (with no minimums or ATM fees) was paying 4.50% interest. That … [Read more...]

How Much Did You Save in 2014? (Part 2)

With my colleague PK writing about his 2014 savings rate, I thought that I would chime in as well. Using a loose definition of savings, where principal pay down of debt is included in the numerator, I have an after-tax savings rate of 53.42%. Without including principal paydown of debt, my strict savings rate would be 31.76%. A Note on … [Read more...]

Is a Tax Refund Really That Bad to Receive?

Ahh, April.  Your taxes are now (or will shortly be) filed, and you've got a tax refund on the way. All's right in the world, right? Well, yes - but in the Personal Financial niche, you can expect the sanctimonious chants of "but you gave the IRS an interest free loan!" to start posthaste - likely before the ACH from the Treasury even hits … [Read more...]

Your New 2013 Tax Rates

Well, glad that Fiscal Cliff thing is over.  Seriously - we sweated a crisis that was created by politicians, that politicians are now happy they averted.  Consider that! Dividend Cliff... Kind of Averted Since most of you readers are also avid investors (check out our stock picks for 2013, and our solid S&P 500 beating performance from … [Read more...]

(Actually Good) 2012 Year End Tax Tips

Reading personal finance web sites is always funny this time of year.  The end of the year is filled with articles about how to save money on taxes in the current year... 2012.  Unfortunately for those recycled articles ("ain't nothing changed 'cept the date!") that isn't such a great idea this next year.  So here goes - things that I have been … [Read more...]

Marginal Tax Rates Versus Effective Tax Rates

Have you ever seen an election season so dedicated to the intricacies of taxes?  Mitt Romney must be glad he paid accountants to run the numbers, since just 4 years ago I seem to recall a number of issues with TurboTax. So yes, I've never heard this much ranting and raving about taxes, even though the last time a very rich person from … [Read more...]

Stop Buying Dividend Stocks!

Subtitle: Until You Read This Article. I'm not one for hyperbole... I'm more of a "here's the data, deal with it" person, but I'll make a vast blanket statement for you today.  You see, you may not care too much either way about the whole 'fiscal cliff' scenario, where an expiration of the so-called Bush Tax Cuts of 2001 and 2003 would reset rates … [Read more...]

Mortgage Interest Deduction A Good Idea?

It has been mentioned here and elsewhere that the mortgage interest deduction in the tax code is a roundabout way of subsidizing banks. If interest rates are determined by supply and demand then the demand for interest rates is only dependent on what a taxpayer's "effective interest expense is". For example, if interest rates are at 4.0% and you … [Read more...]

Uncle Sam the CEO: Visualization of IRS Revenues Collected 1960-2010

"If you drive a car, i'll tax the street. If you try to sit, i'll tax your seat. If you get too cold, i'll tax the heat. If you try to walk, i'll tax your feet." - Stevie Ray Vaughan in Taxman (Ed note: I may like the SRV version better, but, as Jeff points out, George Harrison wrote this song. Go find the Beatles' version if you're … [Read more...]

Who Paid Income Taxes in 2009? The Generational Warfare Edition!

Been reading DQYDJ for a while?  Good.  You know that looking at data from a different angle yields very interesting insights. Here's one interesting thing: the federal income tax code benefits 18 to 35 year olds at the expense of 45 to 65 year olds.  How do I figure?  The IRS helpfully posted data for 2009 (links are xls files) on both the amount … [Read more...]

Give Me Your Wallet! A Visualization of IRS Tax Collection, 1960 – 2010

"In this world nothing can be said to be certain, except death and taxes." - Benjamin Franklin What is less certain is what those taxes will be called - the tax code continues to get more and more complex every year.  The IRS puts out a data report annually about their fiscal year which includes tax collections by the type of tax (Table 6).  These … [Read more...]

(Slight) Oldie but Goodie…

Sorry to miss the news cycle (I bought a house, as I alluded I might in my slightly pessimistic earlier real estate postings), but I wanted to share the perfect example of the incentives and disincentives of tax laws.  As predicted a while ago, California finally passed a law which stated that any out of state businesses which had affiliates in … [Read more...]

More AMT Nastiness

Here at DQYDJ, we like to write about things that have unintended consequences - a perfect example is the Alternative Minimum Tax, which was intended to stop the very rich from having a 0% tax rate.  Of course, since that tax was not indexed for inflation, it has creeped its way into the middle class's check book.  Today we'll link you to an … [Read more...]

The AMT Problem

The Alternative Minimum Tax, a tax enacted in 1969 to set a minimum level of taxation, has had major mission creep - especially in the last 10 years. The Alternative Minimum Tax is a secondary set of tax brackets which disallow certain deductions which are allowed under the normal tax code. The tax was enacted since 155 rich households avoided … [Read more...]