lat may have jumped the shark...site just isn't what it used to be.

What happens to you if your employer withheld taxes for you in the wrong state?

I've established myself as an LLC. It's done wonders for my tax bill. Wesley Snipes told me about it.

The phrase "jumped the shark" may have jumped the shark.

ok since this is a lawyer site- can anyone recommend any deductions or strategies that will ease the pain for the 33% bracket? i work in biglaw, am in the middle of AMT and am getting killed.

ok since this is a lawyer site- can anyone recommend any deductions or strategies that will ease the pain for the 33% bracket? i work in biglaw, am in the middle of AMT and am getting killed.

@1:03--You get soundly beaten about the head and neck. Or, you file a claim for refund in the state where the withholding occurred and may owe taxes if withholding should have occurred in a different state. Go to www.taxsites.com, look under the state and local tab for each state, and read their rules online. Now, was that so hard?

1:19, you need to become a homeowner.

Once I bought my apartment, with an interest-only mortgage (but one that I can afford), I started getting huge tax refunds.

Obama's "doughnut hole" SS plan (which will lift the cap on income over $200,000) will add another 12.5% tax bite (on income over $200K). That, combined with Obama's expected increase in the maximum Fed tax rate to 39.5%, will increase the marginal tax rate in high rate income taxing states (like CA) to over 62% (taking into account the mandatory 3% Medicare payments).

You high earning or future high earning law students or BigLaw associates should plott your income expectations over the 8 years that Obama might be in office and educate yourselves on how much of that income will go to Uncle Sugar in an Obama administration.

Infatuation with a charismatic change candidate is one thing, but voting against your self interest is quite another.

Obama's "doughnut hole" SS plan (which will lift the cap on income over $200,000) will add another 12.5% tax bite (on income over $200K). That, combined with Obama's expected increase in the maximum Fed tax rate to 39.5%, will increase the marginal tax rate in high rate income taxing states (like CA) to over 62% (taking into account the mandatory 3% Medicare payments).

You high earning or future high earning law students or BigLaw associates should plott your income expectations over the 8 years that Obama might be in office and educate yourselves on how much of that income will go to Uncle Sugar in an Obama administration.

Infatuation with a charismatic change candidate is one thing, but voting against your self interest is quite another.

If 1:19 is "in the middle of AMT," I guess that means that he is paying AMT? If so, there's not much to do. Even though AMT needs to be re-indexed, the rest of us without tons of kids and other deductions thank you for paying more than you would otherwise have to.

maybe it's in our self interest not to have blood running in the streets after income disparities widen even further and no one can afford medical care

Anyone know where I can adopt some dependents on the cheap? This AMT business is killing me.

1:19, you need to become a dog owner.

Once I bought my poodle and started deducting all of its costs (food, vet visits, massages), which are totally deductible as a business expense because my dog guards my person while I'm home and my property while I'm away (thus allowing me to work), I started getting huge tax refunds.

How about the Supreme Court tax decisions today? Justice Thomas (unfortunately just a concurrence) saying that he doubts the authority of States to tax a multi-state business.

The problem is the federal government might step in and tax multi-state businesses more than the states would.

Let me tie in the previous thread on bonuses (bonii?). My firm offers six weeks pay as a stipend in lieu of some fixed amount like say, 10,000. Are they taxed the same way? As bonuses or as salary? I have plans for that money and I'd love to know just how much I'll get to keep.

If you have an investment property, can you deduct the mortgage interest as a 2nd residence, or are you limited to using it to offset rental income?

1:19 - did you hear this from michael vick?

Under the Obama plan, how much tax would Jose Padilla have to pay on the damages he is seeking from John Yoo, fugitive war criminal?

Um, 1:41 a bonus, exactly like your salary, is taxable income. Same stuff - you're getting paid for services. Unless you consider yourself a capital asset in the hands or your employer.

1:44 - pick up the Code, or hire an tax preparer. You'll need more facts than you give in the post.

1:41, call HR and make sure you're claiming 10 allowances on your W-4 to minimize withholding on your one-time payment. That will help. I'm pretty sure it's all taxed the same, but you don't want to be over-withheld your 3L summer.

ooh this makes me want to play scrabulous rather than studying for finals!

Guys 1. buy a house take out a primary loan of up to a million in interest only.. and deduct. If you still get taxed too much, step 2. buy a second home in a different state and do the same. note that in combination with this you will have to increase your witholding to somewhere around 20. If you are still paying too much tax, rent both of those places out, and go be an expat the best place is Asia or Australia.

4. everyone should hire an accountant
5. why am I counting?
6. why would anyone pay AMT when you just take the penalty on your state return?
7. I can't believe Im still wasting time on this post...

1:44- Yes. Simple question with simple answer.

I suggest second homes go into an LLC, and depending on the state, you may want to consider making it a DE

1:21 - You didn't "buy" an apartment if you have an interest only mortgage. Good luck accumulating wealth.

AHAHAHAHAHAHAAHAHAHA

NYC is terrible

How is it that these so-called "elite" law school grads who work at V10 firms don't know anything about basic tax law? Not quite so elite these days.....

Yeah, the IRS really needs to step up its audit of clueless idiot lawyers. People, having more dependents doesn't help you on the AMT (unless it bumps you from single to head of household).

Actually, scratch that head of household parenthetical.

for all responding to OP on 1:19. sure buying a place makes some sense but how big of a mortgage makes sense if the reason to buy is for a deduction. I guess I'm wondering based on the following hypothetical situation:

say 5,000 a month- interest only or at least mostly interest
that's a 60K deduction per year
this basically means you get to keep 66% of the 60K you put our in interest? or is this wrong? I don't think it changes the bracket or necessarily gets one out of AMT?

and yes, litigators are clueless about this stuff, but we LOVE the tax people for all their helpful comments :)

Taxes are socialist. I have a negative net worth, yet I am taxed like a rich guy and defined by democrats as "rich." They refer to tax cuts for "working Americans" like I do something other than work all day.

I think taxes are too low. Last year, I worked in academia and with the ensuing rebates, I'm getting back more than I paid in. People should probably have to pay at least something in income tax.

Hope and change, 1:24. Hope and change!

- BHO

Flat Tax is fair. Aren't we all equal in the eyes of the law?

HofstraMagna @ 3:13: Feel free to give me your rebate. I too can't dislodge from AMT trap and will actually OWE this year, even taking into account my rebate. AMT sucks - it's gone beyond original purpose and Congress knows it, but something's got to pay for Bush's spectacular war.

HofstraMagna @ 3:13: Feel free to give me your rebate. I too can't dislodge from AMT trap and will actually OWE this year, even taking into account my rebate. AMT sucks - it's gone beyond original purpose and Congress knows it, but something's got to pay for Bush's spectacular war.

I don't get the scrabble symbolism

1:39(2) --

Thomas doubts the authority of the Court to decide multistate tax cases to the extent those decisions rely on the dormant commerce clause. His concurrance is actually an argument for no limits to state taxation of multistate businesses, not the contrary as you assert.

"I write separately to express my serious doubt that the Constitution permits us to adjudicate cases in this area."

Moral: Read the decision first, then make wild claims about it.

2:29 is completely clueless about economics. Paying down your tax deductible 5.5% mortgage is one of the worst ways possible to accumulate real wealth. Accumulation of real wealth requires leverage. And whether the loan is interest only or not has nothing to do with whether you own the property. That is determined by whether you have a stake in upside and downside risk.

2:10, how can one avoid federal AMT by taking penalty on state return? My tax prepared didn't mention that one.

Of course, the cost of the war is about 1% of GDP and 3% of the Federal budget. What we are all paying for is entitlements. Basically, half of our taxes go towards supporting other people and their children in a cycle of poverty and dependence and funding a nive 20-year vacation for people over 62 who are perfectly capable of working.

Ok, so let me get this straight. All the people who purchased homes for 800k, which are now worth 500k after the housing bubble burst, are the real genuises, because they saved on their taxes?

Come on, people, get real! Home ownership is expensive -- in some areas, the real estate taxes and the cost of upkeep will almost be as high as reasonable rental rates. Factor in the depreciation that is still occurring in some markets, and buying a home will be the fastest way to loose all your hard-earned money. I'm not saying don't buy a home -- just that buying a home *solely* for tax reasons is wrong. There are a lot of other considerations that need to take place before one can decide whether or not it's a good investment.

And don't just take my word for it -- that's what my high-priced accountant says too. (Now, my friends who went to the budget big box accounting firm ended up buying a ritzy condo at the peak of the housing bubble. Good job, guys.)

Yeah, screw old people! Do away with Social Security and make them work! Why should they get to retire when we aren't going to be able to?

I say we go to the FairTax! It is the most fair tax system out there, and it will do away with the IRS. Plus, if you do away with Social Security the tax rate could be lower.

I was actually counting on all of you BigLaw high earners to pay big-time into the SS system to support me in my golden years.

this is 2:10 - 3:32... You should hire an accountant... I know that there is a way to take a state penalty, but am not aware of the ins and outs.. the point is that the AMT goes away when you take a certain state penalty on your non-earned income. Im not a tax lawyer though so can't help you on the specifics.

As to the morons who are talking about short term housing drops... yeah they have lost a bit in the short term... but they should be taking the money they saved in taxes and use that to double down... plus clearly you, 3:52, come from a TTT city that has major housing issues... NY attnys have non of those issues.

"Factor in the depreciation that is still occurring in some markets, and buying a home will be the fastest way to loose all your hard-earned money."

And therein lies the confusion (and problem for some). Like stocks, drop in home market values matters only to those who need to sell. Buying a home should be a long-term investment so for those speculators who got screwed by current downturn and can't flip for quick and easy profit, serves them abso****ing right.

The idea for the state penalty is based on the fact that state taxes are not deductible under the AMT. So if you owe lots of state taxes, it will bump you into AMT.

The trick is to underpay on the state taxes, get lower deductions, and not get dragged into AMT territory. Underpay the amount that would have been useless under the AMT anyway. Afterwards, next year, you have to pay the state taxes (with penalty). If your income situation is much different next year, you can fully deduct that extra state tax and not get dragged into the AMT that year, so you avoid AMT both years and use your state income tax deduction fully.

Obviously this only works in very unique financial circumstances.

The tax brackets need to be modified, esp at the very high end. Why should someone earning $200k be in the same bracket as someone earning $200 million? $200k in NYC or SF isn't exactly rich.
Don't give me the usual republican line that if we added higher tax brackets for super high earners that they'd be encouraged to work less. Once someone earns that much money keeps working, it clearly isn't about the money to them. So tax them hard if they'll be doing it anyway. Better them than me.
PS, republicans, trickle down clearly hasn't worked. Look around. So don't trot that one out either.

4:56
I don't get why you're yelling at republicans when it is democrats who create all the entitlements which cause you and me to pay the higher taxes. Both democrats want you to pay more in taxes and democrats NEVER distinguish between those earning 200k and 200M. They're both "rich" and apparently not different at all.

We don't need brackets at all. We need use taxes. I dont want to pay for anything I dont use. Split the costs of the military, courts, and other essentials per capita and send me a bill. The same bill you send to people who cant pay it. If they can't pay, they should be hired into a work program for the public good, a la the TVA, until thier debts are paid off.

We don't need brackets at all. We need use taxes. I dont want to pay for anything I dont use. Split the costs of the military, courts, and other essentials per capita and send me a bill. The same bill you send to people who cant pay it. If they can't pay, they should be hired into a work program for the public good, a la the TVA, until their debts are paid off.

The reason there is no specal distinction between 200k and 200 million is that there aren't enough people making 200 million to make a difference. Yes maybe it would be fair to hit them hard on taxes, but it wouldn't generate that much revenue. That's why Democrats have to reach down into the upper-middle class to shoulder the bulk of the tax burden. Middle and lower classes, of course, pay little or no taxes.

Not to mention that $200 million person could easily move, renounce US citizenship, and pay zero taxes.

It wouldn't be that easy for big earners to move to another country. Presumably their sources of income are in the US. Even if they move and renounce citizenship, if the income is somehow earned in the US, we tax it. I don't know the rules for determining where income is earned, but we could change those rules to suit our needs if we needed to.
If some pissant country tries to become a tax haven and induces companies to move headquarters so top execs can avoid our taxes, we can make it very unpleasant for those countries and companies. So much of our tax money goes to our military, it would be nice to use it in a way that benefits most people. Bomb the tax haven country and let a bomb accidentally hit the shiny new headquarters of the tax cheat. (I'm joking. An economy as large as ours doesn't need to resort to military force to coerce much smaller nations. We can use severe economic sanctions.)
There aren't enough people earning 200 millions, but what about 5 or 10 or 15, etc? I think we could find enough revenue to justify revising the brackets and adding new top brackets. You are probably right that it wouldn't be enough to solve our budget problems and give huge tax relief to everyone else, but I think it would be enough new revenue to justify doing it. You seem to be arguing that if an action would only cure cancer, but not cure cancer, aids, parkinsons and bird flu all at once, then we should't do it. You are right that soaking the rich on taxes won't single handedly, say, solve the medical care problem. But I think it would still be worth doing. It certainly wouldn't hurt.

Sigh, so much ignorance. For earned income, the source is where the service is performed. If IBM hires Jamaican Jamal to work in Jamaica, Jamal doesn't pay US taxes (and IBM deducts that salary payment, even better). There is no way foreign non-US-citizen employees of US companies will ever pay US taxes.
For unearned income, it's even easier. Buy some foreign stocks and bonds, or foreign real estate. Voila, no US taxes ever.

All of this presupposes that the $200m guy is not a US citizen or renounces US citizenship (which is hard and suitable only for high earners). Raise taxes too much and you'll soon find all your high earners working abroad.

Plenty of countries have low taxes. Try Ireland, Hong Kong, UK (for noncitizens), Bermuda, Estonia, etc etc. Half of Europe doesn't tax capital gains. Your bombing suggestion is naive and hilarious.

The key to maximizing revenue is to tax things that won' go down because of the tax. That would be inelastic demand for gasoline and cigarettes, and wages of lower US earners who can't move (bottom 50% pays <1% in taxes). Get the bottom 50% to pay $100 each and you just raised yourself $10 billion.

"There is no way foreign non-US-citizen employees of US companies will ever pay US taxes."

Well, I don't know. Depends whether or not there is a tax treaty between US and a foreign country.

On the niceties: home (check), dependent (check), married filing jointly (check), abundance of deductions (check), bludgeoning student loan debt (check, check). AMT keepin' it real? Damn skippy.

It's not like from a purely benefits/detriments analysis it makes more sense to work less, earn less, get more favorable tax treatment (probably live longer too). In sum, wtf?

On the niceties: home (check), dependent (check), married filing jointly (check), abundance of deductions (check), bludgeoning student loan debt (check, check). AMT keepin' it real? Damn skippy.

It's not like from a purely benefits/detriments analysis it makes more sense to work less, earn less, get more favorable tax treatment (probably live longer too). In sum, wtf?