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January 09, 2010


Cop Car

Bogie--Sorry about the apparent hit to your paychecks; but, it may be just that - an apparent hit. (Well...the hit isn't just apparent, but the affect on your total taxes may be only apparent.)

I have received notices from several sources in the last few weeks that the Federal withholding formula had been changed. This is not, of course, the same as a change in taxes. It looks to me like the Feds want to get their hands on more money, sooner, as a way to ameliorate the Feds' cash-flow concerns. (It doesn't help your cash flow concerns, though, I'm sure.) As always, I could be/might be/probably am wrong!


Regardless of the reason, higher taxes are higher taxes, a change in the 'formula' notwithstanding. Of course the folks in the feddle gummint will call it something else, but NOT a tax increase.

Cop Car

DCE--Awe...I stand by my statement, above. It isn't a tax increase if your total taxes on the 1040 form do not increase from what they would have been. Withholding takes the money, but (from Taxes 101) if one don't owe the taxes at the end of the year, when taxes are reconciled, part of the withheld money is returned. If the withheld money does not cover one's total tax bill, the "extra" withholding just reduces the size of the check that one sends in; but, withheld taxes are not the same as paid taxes. I think of them as installment payments.

Taxes are owed on income at the time it is earned. I don't know of anyone else who lets me keep what I owe them until the year ends (+3.5 months!) For instance, I must pay my insurance ahead of time.

Cannot one still, to a certain extent, juggle the amount of withholding by juggling the number of exemptions on one's W-2? As retirees, we reconcile (pay) taxes quarterly, and have taxes withheld from periodic income sources, so I've somewhat lost track of this maneuver.

P.S. Not withstanding the above, if we don't start raising taxes, and stop spending money on bailouts etc, I shall be even more PO'd than I am now!


"Cannot one still, to a certain extent, juggle the amount of withholding by juggling the number of exemptions on one's W-2?""

Technically yes. Sadly, every time I have tried to add 1 deduction (not add 1 more deduction - claim 1 total deduction) we have ended up owing more than the minimum allowed - leading to a 12% penalty. So, no, we can't keep any of our money past when it is owed (much less lessen the immediate tax bite).

I jsut want them to stop spending money - unfortunately our taxes are headed much higher (they have to to pay for the medical boondoggle), but nothing else will increase (excedt the age at which one can retire. I, for one, never expect to hit that age because either it will have hit 100 or there will no longer be SS benefits). I don't see our poor little 401ks being able to support us, since that will be used to buy the madatory insurance.

Cop Car

Bogie--I hear you on the 401Ks. Mine were cashed in nearly as soon as I could do so without penalty. My IRAs haven't done all that well, either, except for some of the stocks in them. I would be in poor shape had I not lived well below my means (1981, and on) in order to sock away money that I invested. As hard hit as I was by the stock market plunge, I am still much better off for having invested in it. (My houses, along the way, have been the worst investments, but worth it for the pleasure/tranquility they gave me!) I can't say about your dad's stuff since I've no idea what he has or where.

Cop Car

Bogie--My above comment reads that I'm pretty self-satisfied, doesn't it? Actually, where I ended up in life was more a matter of luck than anything (heck - my investment strategy was to invest randomly!) I suppose that with a little more luck I could have been wealthy, and with a little less luck I could have been still scrambling, today. Each person just has to stumble through life to the best of her/his ability, hopefully, enjoying the journey as much as possible. I've surely enjoyed my journey, and you helped make it all the more enjoyable, thank you.

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