TOPIC: No filing of tax returns if salary is only income

Hence the discussion to solicit feedback and facts. It's ok to be wrong and get corrected by someone who knows the topic. I am surely not a tax-expert nor claim to be

Anways, it's W4 (thanks Manoj for correcting me) and even if it's not mandatory every year, it can still be submitted every-year when your family (dependents) or financial situation changes.

infact there's already a column to enter estimates for nonwage income like interest/dividends on the form.

Tax wrote:

This type of statements would do any good with Congressman. Every Citizen. Getting the facts right is the first thing

Satish,

Tax deduction on Home Mortgage interest is good for economy. House prices will further drop if Home Mortgage is not deductible. Government keeps on increasing the expenses (wars, larger government, more rules) and now to cover for huge deficit, it is looking for more taxes. I worry that politicians may use simplification/elimination as an excuse to increase the taxes or remove deductions.


satish wrote:

I was reading an interesting article in Businessweek where Tea party backed senators are suggesting to start with a clean slate for tax rules. They suggest absolutely no tax deduction at all and all earnings are taxed. They claim that removing the home mortgage interest deduction would cut tax percentage for average income family by 5%. I feel that, it is very extreme measure but that would simplify the tax rules and allow for accurate withholding of tax at the root (be it an employee - w2 or contractor - w9). Accurate tax withholding would eliminate unnecessary filing!!

satish wrote:

They claim that removing the home mortgage interest deduction would cut tax percentage for average income family by 5%.

How will removing the home mortgage interest deduction cut tax or tax percentage. It would increase tax liability of families who itemize and claim this deduction.

I personally support removing this deduction and compensate it with a higher standard deduction. Why should homeowners get an advantage over renters? and why should homeowners who have paid off their homes should be disadvantaged compared to those who haven't?

I could not find the original article to check the numbers that I quoted. So, I did a rough calculation. Uncle Sam collected about $2.5 Trillion in taxes in 2007. Biggest contributor was income taxes at around $1.08 Trillion. The mortgage interest deduction for 2007 was about 90 billion dollars. So Government can still get the same income ($2.5 Trillion) and spread the $90 Billion to everyone instead of wealthy home owners (cut taxes by around 5% for everyone). Here are some links on how I came up with the number. www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm
thehousinggurublog.com/?p=785

Manoj,

You are NOT a good guy unless HIGHER STANDARD deduction is more than Mortgage Interest I pay.

On a serious note, it is to encourage people to buy their own house. Buying home and in turn buying goods for home (furnitures, lawn supply....etc..long list) is good for economy. That is the rationale behind it.

I think there shall be more deductions and tax credits. For example, I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

You know like me, the overhead of running the government - the money government officials use for perks from our money. Lesser they have better it is for us.

Manoj wrote:

I personally support removing this deduction and compensate it with a higher standard deduction. Why should homeowners get an advantage over renters? and why should homeowners who have paid off their homes should be disadvantaged compared to those who haven't?[/quote]

Satish,

1. With this proposal also 5% cut will be for wealthy too. 5% is big number for someone earning a lot but it is not much for lower income person.

2. 5% may cut just for a year and remove deduction. Next year, government will increase the taxes.

satish wrote:

I could not find the original article to check the numbers that I quoted. So, I did a rough calculation. Uncle Sam collected about $2.5 Trillion in taxes in 2007. Biggest contributor was income taxes at around $1.08 Trillion. The mortgage interest deduction for 2007 was about 90 billion dollars. So Government can still get the same income ($2.5 Trillion) and spread the $90 Billion to everyone instead of wealthy home owners (cut taxes by around 5% for everyone). Here are some links on how I came up with the number. www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm
thehousinggurublog.com/?p=785

A wrote:

... I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

That's ludicrous! although you're well within your right to demand or like to have anything you want.

Manoj,

I know it is not likely to happen but there are a lot of us who support parents living overseas and parents cannot come here because of visa. Concept of family can be redefined.

My point is we (Salalried Honest Tax Payer) should ask for legitimate avenues to pay less.


Manoj wrote:

A wrote:

... I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

That's ludicrous! although you're well within your right to demand or like to have anything you want.

A wrote:

2. 5% may cut just for a year and remove deduction. Next year, government will increase the taxes.

The government has not increased taxes in a long time. Bush cut taxes and they haven't gone up yet, and not for another 2 years. In fact payroll taxes have come down by 2% this year. Don't complain too much about paying taxes. Your taxes buy you a lot of stuff such as better infrastructure, better security, education, research etc.

Manoj,

Few more items that you did not add:-

Wars...
Spending money on unnecessary programs...
Donation to Pakistan for buying arms..

If you make a list of unnecessary spending, you will see it is far more than necessary spending. Give people your money to spend, they will make decisions on their whims.

Manoj wrote:

A wrote:

2. 5% may cut just for a year and remove deduction. Next year, government will increase the taxes.

The government has not increased taxes in a long time. Bush cut taxes and they haven't gone up yet, and not for another 2 years. In fact payroll taxes have come down by 2% this year. Don't complain too much about paying taxes. Your taxes buy you a lot of stuff such as better infrastructure, better security, education, research etc.

A wrote:

Manoj,

Few more items that you did not add:-

Wars... US is out of combat operations in Iraq. So, we are not spending as much money as we used to. Many people including I agree that this war was unnecessary. You are not the only one!

Spending money on unnecessary programs... name them, unnecessary for you may be desirable for others like you demand to have govt. subsidize your taking care of your parents back home through tax deductions

Donation to Pakistan for buying arms.. The Kerry Lugar bill that you are referring to was not an aid for buying weapons. US has not given money to Pakistan for buying a weapon in several years.

You can claim your non-working parents living in the USA as dependents even if they are not GC holders. You need to get their ITIN from INS in lieu-of SSN and you have to show that they live with you majority of the time here in the US for a fiscal year (6 months or more).

A wrote:

I think there shall be more deductions and tax credits. For example, I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

A wrote:

Manoj,

I know it is not likely to happen but there are a lot of us who support parents living overseas and parents cannot come here because of visa. Concept of family can be redefined.

My point is we (Salalried Honest Tax Payer) should ask for legitimate avenues to pay less.

I disagree. Maybe because I don't support my parents. They saved enough money to look after them in their retirement. I don't think US govt. should even allow such a thing as it will open gates to sending money to a foreign country in the name of supporting parents w/o any proof of need for support. Even single guys will start keeping a "on-paper-family" in some former Soviet country and claim exemptions. Just another loop hole in our tax code.

Get them here, get them a SSN/TIN, and claim exemptions. Otherwise, support them, but don't expect everyone else to share your burden.

Fave5,

Six months is the key word here. Immigration officer on airport never issues stay for more than six months on a visitor visa. If you know otherwise, let me know.

Fave5 wrote:

You can claim your non-working parents living in the USA as dependents even if they are not GC holders. You need to get their ITIN from INS in lieu-of SSN and you have to show that they live with you majority of the time here in the US for a fiscal year (6 months or more).

A wrote:

I think there shall be more deductions and tax credits. For example, I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

If the parents have been staying here in consecutive years then you can claim some credit for prior years:

eg:
FY2010 - 5months
FY2009 - 5months (* 0.5) = 2.5mths credit
FY2008 - 5months (* 0.25) = 1.25 mths credit
You can add-up and if the total is greater than 6 months than you are good to claim them as dependents.

It's been a while for me - but do read-up the IRS guidelines on the credit factor. I had done a detail study on this but again it's been a while for me.



A wrote:

Fave5,

Six months is the key word here. Immigration officer on airport never issues stay for more than six months on a visitor visa. If you know otherwise, let me know.

Fave5 wrote:

You can claim your non-working parents living in the USA as dependents even if they are not GC holders. You need to get their ITIN from INS in lieu-of SSN and you have to show that they live with you majority of the time here in the US for a fiscal year (6 months or more).

A wrote:

I think there shall be more deductions and tax credits. For example, I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

Manoj,

I agree about potential fraud. I personally do not have parents to support but it is a major expense for a number of people I know. They cannot bring their parents here for more than 3 months or max 6 months.

About expecting everyone else to share burden, well there are some people with 5 or 6 children, do you want a cap on that?

People who have more money and resources, those are ones who pay least tax. There are many loop holes for a businessman to avoid paying tax, none for a salaried employee.

Manoj wrote:
I disagree. Maybe because I don't support my parents. They saved enough money to look after them in their retirement. I don't think US govt. should even allow such a thing as it will open gates to sending money to a foreign country in the name of supporting parents w/o any proof of need for support. Even single guys will start keeping a "on-paper-family" in some former Soviet country and claim exemptions. Just another loop hole in our tax code.

Get them here, get them a SSN/TIN, and claim exemptions. Otherwise, support them, but don't expect everyone else to share your burden.[/quote]

A wrote:

Fave5,

Six months is the key word here. Immigration officer on airport never issues stay for more than six months on a visitor visa. If you know otherwise, let me know.

Nothing stops them from coming back!

Fave5,

Thanks. That is very good information. I will check it out.

Fave5 wrote:

If the parents have been staying here in consecutive years then you can claim some credit for prior years:

eg:
FY2010 - 5months
FY2009 - 5months (* 0.5) = 2.5mths credit
FY2008 - 5months (* 0.25) = 1.25 mths credit
You can add-up and if the total is greater than 6 months than you are good to claim them as dependents.

It's been a while for me - but do read-up the IRS guidelines on the credit factor. I had done a detail study on this but again it's been a while for me.



A wrote:

Fave5,

Six months is the key word here. Immigration officer on airport never issues stay for more than six months on a visitor visa. If you know otherwise, let me know.

Fave5 wrote:

You can claim your non-working parents living in the USA as dependents even if they are not GC holders. You need to get their ITIN from INS in lieu-of SSN and you have to show that they live with you majority of the time here in the US for a fiscal year (6 months or more).

A wrote:

I think there shall be more deductions and tax credits. For example, I would like Tax Credit/Deductions to support non working Parents living in the USA or in another country.

"on paper family" - well said!

Although, now that the GCs are not being processed by majority of the employers (atleast in the IT Sector), the H1 immigrants still continue to contribute social security from payroll which for most of them are not going to avail any SS benefits after retirements or for that matter unemployment benefits as well.

Isn't that a disparity?

Manoj wrote:

A wrote:

Manoj,

I know it is not likely to happen but there are a lot of us who support parents living overseas and parents cannot come here because of visa. Concept of family can be redefined.

My point is we (Salalried Honest Tax Payer) should ask for legitimate avenues to pay less.

I disagree. Maybe because I don't support my parents. They saved enough money to look after them in their retirement. I don't think US govt. should even allow such a thing as it will open gates to sending money to a foreign country in the name of supporting parents w/o any proof of need for support. Even single guys will start keeping a "on-paper-family" in some former Soviet country and claim exemptions. Just another loop hole in our tax code.

Get them here, get them a SSN/TIN, and claim exemptions. Otherwise, support them, but don't expect everyone else to share your burden.