It’s tax season again; have you seen the commercials on television? Use this tax preparer, get that software, be worry free and leave it all to the professionals!
OK, I admit, since my wife’s degree is in accounting and since she does small business finances for a living, I leave it to her.
I provide the documentation, which I keep with scrupulous attention throughout the year. But she is the one who works through a software program that she trusts, and just about this time each year, we spend a week with furrowed brows, checking and rechecking, filling out the forms, searching for mistakes over and over.
Well, she has the furrowed brow, my job is to be supportive … as in, “I’m sure if you have redone this calculation 17 times and the answer is the same each time, it must be right!” Or, it could be that she has miscalculated 17 times but actually I never say anything like that because after decades of marriage and joint tax returns I can happily report that she has never missed a calculation.
Finally, she gives everything one last worried going over before filing with the state and federal governments.
By now, even if you are on Social Security and drawing a pension from other sources, you should have received your bank statements and all other forms relating to any income you earned last year. These all have to be compiled, tabulated and written down on a form either on a hard copy or electronically depending on your level of computer skills.
Then, when all the boxes are filled in and calculations written down and cross referenced, we can see whether we have loaned money to the government over the last year and will get some of it back, or if we have not given the government enough. Then it’s time to get out the old checkbook.
I wonder how many people remember that until WWII payroll income taxes were paid quarterly by the individual workers and were not taken out of our paychecks before we even got to see the money, much less use it. The immediate need of funding of the war was the excuse the government used to start payroll withholding and once it started the government never looked back.
Most people now just see payroll withholding as something they have always lived with and few question it. But there was a time when workers received their full pay at the end of each pay period, and they were held responsible for paying the taxes on time. Nostalgic or what?
It’s interesting isn’t it, that we have to pay taxes on Social Security at all? I can see that we would have to pay sales taxes if we use our Social Security income to buy things that are taxable; that at least is fair and we have some control over what we spend.
But Social Security income was supposed to have been drawn from the money we paid into the system during our working years and was intended to supplement our retirement incomes. Taxing it was a big No, No when it first was passed by Congress on August 14, 1935.
The SSA created a social insurance program providing a monthly benefit to individuals age 65 and older and no longer working. The monthly benefit was based on payroll tax contributions and paid to workers when they retired.
I think it is worth noting that the first Social Security recipient was a person who paid a total of $22.54 into the system and received $22,000 in benefits over her lifetime! I guess that pretty much set the precedent for future payouts.
Anyway, originally, although the contributions to Social Security were not intended to be tax deductible from annual income taxes, the payments themselves when distributed to retirees, were not supposed to be taxed. But that changed along the way and now we pay taxes on our government retirement the same as if we are still working!
Doesn’t that go a long way toward making us feel that we are still making a contribution instead of taking from the working people? Or not?
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