Some recent comments about Social Security give me concern about the future for working Americans in the near future. And despite the fact that recent articles focused on the (legal) changes in SS benefits, only in the final paragraph was this statement:
"The Social Security Administration also announced Tuesday that 9.9 million workers will face higher taxes next year because the maximum amount of Social Security earnings subject to the payroll tax will rise from $87,900 to $90,000. In all, an estimated 159 million workers will pay Social Security taxes next year."
So while people continue to complain about the low *increase* in benefits and promise not to raise the retirement age, the true effect is that millions more will pay 6% and their employers will pay 6% on an additional $250+ per year.
The reality is that people been paying into a system of transfers from workers to retired. It will only increase in the future without significant reform.
Friedrich August Hayek founded a society of scholars called the Mont Pelerin Society.
The central values of civilization are in danger. Over large stretches of the earth’s surface the essential conditions of human dignity and freedom have already disappeared. In others they are under constant menace from the development of current tendencies of policy. The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power. Even that most precious possession of Western Man, freedom of thought and expression, is threatened by the spread of creeds which, claiming the privilege of tolerance when in the position of a minority, seek only to establish a position of power in which they can suppress and obliterate all views but their own.
My response to Jacob's comment became long enough to be another post, and I decided to categorize this as 'Stewardship', which is a topic I am passionate about. Hopefully more will follow in this area; now back to Jacob's question.
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The simple answer is, I'm not; because doing taxes is completely backward-looking it's impossible to 'do' them now. The real answer is that I'm projecting what my taxes *will* most likely be.
Why? To calculate my 'free' loan (my likely return) to the Federal and State governments and therefore to determine the number of withholdings. For instance, what if I determine I'll get a return. Should I or my spouse continue to pay the current level of withholdings? No.
Also, it helps me see how I'm doing with respect to the likelihood of itemizing deductions. And ask the question - how much more do I need to give (cash charity) in order to itemize and therefore take advantage of further deductions (Goodwill, etc).
By putting it all in Excel it also enables me to determine other info - specifically I'm working out how large a partial rollover should be from a Traditional IRA account (formerly a 401k) to a Roth IRA and balance out what would have been a return. (i.e. use a tax return to balance the additional tax because of the conversion). Tax tables would make this type of scenario planning a pain.
If income and giving is fairly consistent then this type of planning only needs to be done once or twice a year. If major transitions occur (job changes, new pre-tax deductions, new tax credits, etc) then the planning can be used to assess the impact.
In a slightly larger scope, the government provides tax forms in PDF, not Excel. So over the last few years I've worked on and off each tax season to develop them for my own use.