Compare Sales, Income, and Property Taxes By State – US Map 2011

Property Taxes Paid Map 2011

(Update 2011: I ran a search for this topic and found my own site. Ha! The maps were from 2009, so I updated this post with the updated 2011 information. They appear to have actually taken some of the feedback from earlier comment and improved the general applicability of each chart.)

I ran across some nice visual maps from TaxFoundation.org today. Each one compares a different type of tax across all 50 states. How does your home state choose to extract revenue from its residents? (Yes, extract. They have to pay for things, but I doubt asking gently with a packet of free address labels would work very well for them.)

State Sales Taxes – State and Local (Combined) General Sales Tax Rates, 2011 (Greener is higher)

 

State Income Taxes – Top Marginal State Income Tax Rates By State, 2011

 

State Property Taxes – Median Property Taxes Paid by County, 2005-2009 (Darker is higher)

Click on the images for a bigger source version.

How To Check If You’re Getting the 2% Payroll Tax Cut

As you may know, there is a temporary 2% payroll tax cut in 2011. Instead of the normal 6.2% Social Security tax on gross wages up $106,800 for employees, it is only 4.2%. This is supposed to be reflected automatically in your paycheck, so most people’s paychecks this year should have been a little bit bigger. I say most because at the same time, the Making Work Pay Tax Credit was expired for 2011. Here’s a chart from the Tax Policy Center showing the net savings from last year for your given income:

A single person earning $50,000 would be paying $600 less in taxes in 2011 vs. 2010. This is the net result of gaining the $1,000 payroll tax cut, and losing $400 from the Making Work Pay Tax Credit of 2009/2010.

The law was passed right around the start of the new year, so according to Consumer Reports so there could have been a mix of under-withholding and over-withholding for the first few pay cycles. Employers had until March 31st to get all the withholding sorted out. It’s pretty late in the year already, but still I just did a quick check to make sure that I am still getting that 2% savings. It just takes a minute – find your paycheck stub, and divide the Social Security line by your Gross Pay line. It should equal to 0.042, or 4.2%.

(Update: It could end up a bit less than 4.2% if you have items that are not subject to Social Security tax, like health insurance premiums or Flexible Spending Accounts. But it shouldn’t be more than 4.2%.)

You’ve been putting that extra money to good use, right?

U.S. Government Debt, Income, and Expenses as Percentage of GDP

US Government Income and Expenses as Percentage of GDP Graph

There was plenty of discussion on simplifying the US budget to household-sized numbers, and I have nothing to add, because I have zero interest in being an economist. :) Here’s one more attempt at sharing some digestible information. An interesting site called Department of Numbers has collated numbers from government sources like the Treasury and put them together nicely into a series of charts. Here are two I wanted to point out and also save as a historical snapshot of “what things in 2011 looked like”.

US Government Debt as Percentage of GDP

US Government Income and Expenses as Percentage of GDP

From the top chart, you can see that we are close to a 100% debt-to-GDP ratio. The last time it was this high was World War II. Even in recent “good times” – or at least better times than now – the percentage hasn’t really gone down much. That’s what I mean by “kicking the can down the road”. In the bottom chart, you can see the large gap between government revenue generated (taxes) and expenditures.

I’ll go back to saving 50%+ of my income now, hopefully investing it wisely, and not reading scary bedtime stories like Boomerang!

US Budget Numbers Simplified To The Household Level

Someone sent this to me via e-mail, and I don’t know the original source. From the $38.5 trillion number, that seems to refer to the budget cut deal that averted a US government shutdown in April 2011. In any case, it does make the numbers much more easy to grasp.

Some stats about the US government:

  • U.S. Tax revenue: $2,170,000,000,000
  • Fed budget: $3,820,000,000,000
  • New debt: $ 1,650,000,000,000
  • National debt: $14,271,000,000,000
  • Recent budget cuts: $ 38,500,000,000

Now, remove 8 zeroes and pretend it’s a household budget:

  • Annual family income: $21,700
  • Money the family spent: $38,200
  • New debt on the credit card: $16,500
  • Outstanding balance on the credit card: $142,710
  • Total budget cuts: $385

I know that this is macroeconomics vs. microeconomics. But the orders of magnitude are correct, and it can’t look good to anybody. I’ve never really liked the macroeconomics theory that it’s okay for governments to carry huge amounts of debt as long as it’s “only” a certain percentage of GDP. The idea is that you’ll grow your way out of it. Europe has shown us that entire developed countries can default.

Now, I’m more of a microeconomics guy. I try to figure out the rules of the game and play it the best that I can. I avoid getting emotionally involved in things that I view are out of my control. But to me, it just seems like all the politicians ever do is kick the can down the road. You can’t do that forever.

My Unclaimed Money From State of California Actually Came

State of California Check

Amazingly, less than two months from mailing in my claim submission, the State of California actually sent me a check for my $74.93 in unclaimed money. Thanks guys, sorry you can’t use it to plug your gaping budget hole, but I’m sure you’ll get me back somehow. ;) Here’s an expanded listing of useful websites to see if you’ve got any money waiting for you:

  • USA.gov – Listing of US government-related items, including bank FDIC insurance failures, mortgage insurance refunds, and more.
  • Unclaimed.org – State-by-state unclaimed property listings
  • California Unclaimed Property page
  • MissingMoney.com
  • TreasuryHunt.gov
  • PBGC.gov – Unclaimed pension plan benefits

California vs. Amazon.com in Sales Tax Battle

California, along with many other states, is broke. As part of an attempt to create more revenue, California passed a more aggressive law to force online merchants to collect sales tax. A 1992 Supreme Court decision stated that retailers that don’t have a physical presence in a state don’t have to collect sales taxes for sales to that state. But some states have passed new laws that redefine “physical presence” to include online affiliates and any subsidiaries.

Amazon.com affiliates are the thousands of websites like this one, where if you click on a link to a book or other product and buy something within a certain time frame, I get a commission of a few percent of your purchase. It’s a safe bet that the majority of blogs you read participate, even if the actual revenue is relatively small. But, by California’s new definition, if just one person is both an affiliate and lives in California, then Amazon.com has to start collecting sales tax from everyone in the state. What’s Amazon’s solution? Easy, cut off all CA affiliates immediately. That’s what they’ve done everywhere else. From CNN:

Other states that have passed the so-called “Amazon tax” in recent years include Connecticut, Illinois, New York, North Carolina, Arkansas and Rhode Island. The retailer has dropped the associates program in all these states, except New York, where it has a brought a lawsuit against the state.

Many other merchants that operate online like Overstock.com have been doing the same thing. They’d much rather lose the incremental revenue from affiliates than have to effectively increase prices for all customers from an entire state. For many website owners, Amazon is their primary source of income, and this move will force many of them to pick up and move.

At the same time, not paying sales tax is one of the expected benefits of buying from Amazon. (Even though in many states you’re technically still supposed to calculate and send it in manually, people rarely do.) This understandably annoys the national brick-and-mortar merchants like Walmart or Target.

As both a consumer and an Amazon affiliate, I am a concerned onlooker. These are two behemoths playing a high-stakes game, but I feel empathy towards those small businesses that just lost a huge chunk of their revenue overnight through no fault of their own. They seem to be collateral damage in this battle.

More reading: NYT, IBT

Infographic: Where Did Your Tax Dollars Go?

Tax Day has come and gone (unless you filed an extension). Recently, there was a competition to see who could best “create data visualizations that would make it easier for U.S. citizens to understand how the government spends our tax money”. I’m guessing that most people really don’t know, including myself. The winner was WhereDidMyTaxDollarsGo.com, where you simply type in your income and filing status and off it goes.

I certainly found it very visually appealing. It appears to assume you take the standard deduction. I figured that national defense, Social Security, Medicare, and debt interest payments were going to be a big chunk, but wasn’t really aware of how big the “Income Security” category was. Overall, it reminded me of a less-intimidating version of the US Budget poster.

Last-Minute TurboTax Giveaway – April 18th Deadline

A rep from TurboTax contacted me to help give away three copies of their TurboTax Online software as a last-minute promotion reminding folks that the filing deadline this year is extended to Monday, April 18th due to the usual April 15th being a holiday in the District of Columbia (Emancipation Day). Apparently, 27% of taxpayers wait until the last two weeks to file their returns. I seem to wait longer and longer, especially with all these 1099s to wait for.

The giveaway is for a code redeemable at TurboTax.com and good for one free federal + state preparation and e-file with TurboTax Premier Online 2010 ($87 retail value). This is the level above Deluxe, which has added guidance for investments and those with rental income (Schedule E).

If you’d like to be entered for the giveaway, just leave a comment with a valid e-mail below by 1pm Eastern on Friday, April 15th. You don’t need to include your full name, but one entry per reader please. I’ll randomly pick 3 winners and contact you via e-mail later that same day so you can finish the darn things over the weekend.

Free IRS Tax Filing Extension Instructions 2011 (Online/E-File)

The deadline for filing your federal taxes this year is Monday, April 18th, 2011. If you file for an extension, you will automatically be extended to Monday, October 17, 2011. Here’s how you can e-File a federal extension online in minutes for free.

Option #1: TaxACT

This is how I did my extension last year. Just sign up with TaxACT and e-file your extension for free through them. It’s quick. It’s easy. You don’t even need to actually use them to file your taxes later, although TaxACT is also free for federal taxes with e-File included regardless of income, and is only $14.95 for state returns with free e-File.

(That’s cheaper than TurboTax or TaxCut, although if you’re already familiar with those programs it may be worth the extra bucks to stick with them, since you can save time by importing your previous year’s data.)

Directions
To register with TaxACT, you just need an e-mail and to set your passwords. To go directly to the extension form, click on the “Filing” tab on the top, and then the “File Extension” link right below it (see below). You will then be walked through the Form 4868 in a question-and-answer format. You will then be able to have the form filed electronically instantly (or you can print and snail mail).

If you wish to make a tax payment, you will be able to choose to pay with direct withdrawal from a bank account (account and routing numbers required) or pay with a credit card (IRS fees apply). Afterward, they will send a confirmation of your accepted extension e-file by e-mail or text message. I got mine within a few hours.

Option #2: Free File Fillable Forms

This one’s a little harder to find, but here are some step-by-step instructions. Go to the Free File Fillable Forms site (go alliteration!) and click on “Start Free File Fillable Forms”. Click “Sign-in” on the top left, and create a new account with your e-mail and password information. After you’re signed in, click on “Continue” and pick your form. Go with the full form 1040. On the top right, you should see an icon with the label “File an Extension”.

This will bring up Form 4868. Click around the form to fill the boxes out. You’ll need to estimate your total tax liability, but since this is just an online version of the form so there is no guidance included. As above, you can request your estimated tax payment to be withdrawn electronically by supplying your bank’s routing and account numbers. For identification purposes, you’ll need your adjusted gross income (AGI) from your 2009 tax return.

Please note that filing an extension only extends the time to file your return and does not extend the time to pay any tax due. To avoid late payment penalties and interest you must estimate what tax will be due and pay that when you file the extension. I would overestimate my tax liability a bit to avoid penalties, and get a slight refund when I eventually file my full return.

Got state income taxes as well? Here is a helpful page on state-specific tax extensions.

Infographic: U.S. 2012 Budget Proposal

Here’s another infographic from the New York Times illustrating the proposed budget for 2012. Rectangles are sized according to the proposed spending. Color shows severity of cut or increase from 2010 (green increase, red decrease).

If you like such visualizations, check out Death and Taxes 2011.

Tax Software Giveaway: H&R Block At Home

H&R Block contacted me to help give away six copies of their H&R Block At Home tax preparation software (formerly TaxCut). Specifically, you will get a free code for H&R Block At Home Premium edition ($49.95 retail value), the level above Deluxe, which has added guidance for the self-employed (Schedule C) and those with rental income (Schedule E). Federal E-file is included. State filing is $34.95 extra.

First, please consider my other H&R Block At Home findings:

  • Amazon.com has H&R Block At Home Deluxe Federal + Federal E-File + State for $24.99. State E-file looks to be another $19.95 extra. (If you are willing to download directly onto your computer, it’s only $21.99. Here are the direct download links for Windows or Mac.) Premium is $44.77.
  • If you are okay with mail-in rebates, you can get H&R Block Deluxe bundled with some anti-virus software for $20 + $2 shipping, and get a $20 prepaid VISA card via rebate at TigerDirect. I couldn’t get the rebate form to download.
  • Until February 15th, you can visit a physical H&R Block location and get your return done for free, but only if you qualify for a 1040-EZ. (No itemized deductions, no dependents, no capital gains.) Otherwise, you’ll have to pay significantly more than the DIY software. Considering the 1040-EZ is only like a page long, if you qualify your taxes should pretty easy to do yourself anyway.
  • You can save 25% off all the online versions here.

If you’d like to be entered for the giveaway, just leave a comment with a valid e-mail below by 11:59pm Pacific on Tuesday, February 15th. Name not necessary. I’ll randomly pick 6 winners and contact you via e-mail.

Chances of Getting Audited? IRS Audit Rates 2010

With doing our taxes properly on our minds, what are the chances we’ll get caught if we don’t? Well, there are several ways that the IRS can detect if your return is suspicious, especially if your inputs don’t match up with their W-2 and 1099 records.

Here are the number of IRS audits and the respective probabilities for individuals and businesses during 2010. Large corporations and wealthy individuals have the highest chance of getting audited, which makes sense since they offer the largest potential payoff. If you are an individual making under $200k a year, then your overall chances are 1 in 100. However, I’m sure if your tax return is clean and you didn’t claim to donate $10,000 in used clothing, your actual odds are even better.

Source: IRS, Businessweek

Anyone out there get audited last year?