Tax Return is Finished

April 10, 2010 by  
Filed under Taxes

I finished our tax return today. I’m leaving town on Tuesday for a few days so I had to wrap up early. The only thing that surprised me about this year’s return is that we got hit with a small bit of the AMT – alternative minimum tax. This development demonstrates how skewed the AMT has become. We have no tax-sheltering activities except for 401(k) deferrals.  We pay a giant heap of tax every year. The AMT was not designed for people like us yet there it is, raising its ugly head on our return. Thanks Congress for this nice gift of illogic.

We we will be sending another large tax check this year. Doesn’t bother me a bit, as long as we are not penalized for under-withholding. Unlike my friend J. Money at Budgets Are Sexy who spent his refund before receiving it, I consider a tax refund to be a planning failure.  I’m also not a fan of using an accountant for a routine tax return. This year I didn’t even buy TurboTax. Instead, I downloaded the free version of TaxAct and diligently resisted its efforts to upsell me into an upgrade.

A few interesting reads this week:

Moolanomy published a piece about investing lessons to learn from our lost decade.  I agree with the lessons but I’m not so sure the lost decade period has ended.

The AARP offers its take on gold investing. The price of gold peaked in December 2009. Did everyone sell? I don’t think so. The so-called buy indicators (e.g., bad news in the world) haven’t substantially changed but the price has fallen. Sorry gold fans, I just don’t get it. It’s not investing, it’s gambling.

Time Magazine published an article about financially bribing young children to do the right things in school. I don’t care if it “works” for some kids. Let their parents bribe them. Don’t use my money. Better yet, for the kids that must be bribed to perform, let’s pay their parents not to have any more kids.

Also take a look at this week’s Carnival of Personal Finance and Carnival of Money Stories.

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6 Responses to “Tax Return is Finished”
  1. MasterPo says:

    Welcome to the wonderful world of AMT! IMO you’re not “rich” until you’ve had to pay AMT.

    As for gold, I am buying physical gold regardless of price. Not for an investment but for protection against the unknown. The house of cards the American economy is now based on MUST collapse more sooner than later.

    I’m not hiding under the stairs with a shotgun (yet) but if you think a 10-11k Dow and near zero interest rates is going to be the norm for years to come while unemp remains steadily at 10% and the national debt is about to pass $13 TRILLION (and still growing) than you’re living in a box.

    I don’t know if gold is the answer. But it’s the only thing I believe I can do to realistically try to protect my family and fortune.

    God help America.

  2. Pinyo says:

    I’m lucky enough not having to deal with AMT yet, but my tax advisor said I am getting close — not looking forward to it. This year, I avoided a big tax bill with an even bigger SEP IRA deposit. I know I am just delaying the inevitable, but I am happy. :-)

  3. J$ says:

    I was actually planning on owing this year. So technically I went I into debt on my own accord 😉

  4. CheshireProfessor says:

    Mr. Patterson,

    And you expect a readership to believe your financial advice and opinions as credible when you can even figure out how to avoid AMT for yourself?


    • I expect my readership to make their own decisions about their finances, as I do, after reading the opinions of many others. As for the AMT, your question assumes that everyone can do something simple to avoid it. That is just wrong, unless cheating is involved. I managed to reduce our AMT to less than $100. How much effort do you expect someone to expend to go farther than that?

      • CheshireProfessor says:

        For a comprehensive discussion of all the AMT adjustments and tax planning strategies, see chapter 23 of J.K. Lasser’s Your Income Tax. Another top-notch resource is chapter 14 of the PriceWaterhouseCoopers Guide to Tax and Financial Planning which provides a checklist of fourteen strategies for minimizing the AMT.

        Or, one might do well by consulting a competent professional financial and tax adviser.

        The extent of your resulting AMT is information missing from your original article as were your efforts now alluded to enabling you to minimize its impact. Also omitted are the specific deductions that the AMT effectively nullified. Without more complete context it is only your ‘claim’ or ‘deduction’ that the AMT was not designed to be applicable to your situation.

        Sorry that you seem to have taken offense – I intended it as Tough (Money) Love.


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