Say "bye bye" to your boat interest deduction.

[comsnark]

I agree as well.


- - - - - - - -

So . . .how many of you are going to writing your congressperson to protest the elimination of the boat interest deduction?

 

[Woody]

I agree as well.


- - - - - - - -

So . . .how many of you are going to writing your congressperson to protest the elimination of the boat interest deduction?

:smt043:smt043:smt043You are kidding aren't you?:smt043:smt043:smt043 We all are true boaters that still feel the connection to the sea we crawled out of eons ago. We don't need no stinkin' deductions.

 

[rondds]

From the IRS website...



Home Equity Debt

If you took out a loan for reasons other than to buy, build, or substantially improve your home, it may qualify as home equity debt. In addition, debt you incurred to buy, build, or substantially improve your home, to the extent it is more than the home acquisition debt limit (discussed earlier), may qualify as home equity debt.

Home equity debt is a mortgage you took out after October 13, 1987, that:

Does not qualify as home acquisition debt or as grandfathered debt, and

Is secured by your qualified home.

Example.

You bought your home for cash 10 years ago. You did not have a mortgage on your home until last year, when you took out a $20,000 loan, secured by your home, to pay for your daughter's college tuition and your father's medical bills. This loan is home equity debt.

Home equity debt limit. There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:
$100,000 ($50,000 if married filing separately), or

The total of each home's fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.

Example.

You own one home that you bought in 2000. Its FMV now is $110,000, and the current balance on your original mortgage (home acquisition debt) is $95,000. Bank M offers you a home mortgage loan of 125% of the FMV of the home less any outstanding mortgages or other liens. To consolidate some of your other debts, you take out a $42,500 home mortgage loan [(125% × $110,000) − $95,000]; with Bank M.

Your home equity debt is limited to $15,000. This is the smaller of:

$100,000, the maximum limit, or

$15,000, the amount that the FMV of $110,000 exceeds the amount of home acquisition debt of $95,000.

Debt higher than limit. Interest on amounts over the home equity debt limit (such as the interest on $27,500 [$42,500 − $15,000]; in the preceding example) generally is treated as personal interest and is not deductible. But if the proceeds of the loan were used for investment, business, or other deductible purposes, the interest may be deductible. If it is, see the Table 1 Instructions for line 13 for an explanation of how to allocate the excess interest.
Part of home not a qualified home. To figure the limit on your home equity debt, you must divide the FMV of your home between the part that is a qualified home and any part that is not a qualified home. See Divided use of your home under Qualified Home in Part I.
Fair market value (FMV). This is the price at which the home would change hands between you and a buyer, neither having to sell or buy, and both having reasonable knowledge of all relevant facts. Sales of similar homes in your area, on about the same date your last debt was secured by the home, may be helpful in figuring the FMV.

 

[Pseudomind]

I agree as well.


- - - - - - - -

So . . .how many of you are going to writing your congressperson to protest the elimination of the boat interest deduction?

I write pretty regularly and also do contribute a bit to a few sometimes, but I am not aware of a "Boat Interest Deduction?" I am aware of a second home type interest deduction. I will write as I oppose any more taxes, and I am amazed at the number of folks who think that the Bush tax cuts will not affect them.

One only has to do the math and calculate, if you are currently in a 25% bracket, will when they expire you go to a 28% bracket. so if you taxable income is just $50,000.00 a year, while you now owe an additional $1,500.00 in taxes or $125.00 a month. Well pay raises and additional fees and taxes, plus gas and grocery prices have already gone up enough from my pay check and now, BAM I can o pay out another $125.00 or more a month.

I know what I am going to tell my congress people about the non-job they are doing.

I would like for them all to be in session in Washington,, D.C and a giant sink hole opens up and swallows them all in, so then I could say how willingly I would be to contribute to a memorial to them, of a large Porta pot erected. I would be willing to even make the trip to this memorial, so that I and future generation's may stop by and contribute something to these lost souls.:huh:

Ahhh, when you got to go you got to go.

 

[comsnark]

I write pretty regularly and also do contribute a bit to a few sometimes, but I am not aware of a "Boat Interest Deduction?" I am aware of a second home type interest deduction. I will write as I oppose any more taxes, and I am amazed at the number of folks who think that the Bush tax cuts will not affect them.

One only has to do the math and calculate, if you are currently in a 25% bracket, will when they expire you go to a 28% bracket. so if you taxable income is just $50,000.00 a year, while you now owe an additional $1,500.00 in taxes or $125.00 a month. Well pay raises and additional fees and taxes, plus gas and grocery prices have already gone up enough from my pay check and now, BAM I can o pay out another $125.00 or more a month.

"Boat Interest Deduction" = "Second Home Interest Deduction"

I think your math is a bit off. Progressive tax rates affect incremental income. Your entire income is not taxed at 25% currently. If you are single, the income you make ABOVE $29,200 is taxed at 25%. The tax on the first $29,200 is taxed at lower rates (math works out to under 14%)

So if you are single, making $50K, your total federal income tax is about $8715. If the cuts expire, the bill goes up to $9279. This is a difference of $564 a year. Still. . that is $47 per month.

Note: I ain't no accountant. And these numbers don't include FICA, SS, local taxes, state taxes, dog poop taxes or your annual boat registration fees.

As for the rest of the post: Yeah -> I share your sentiments.

 

[Woody]

"Boat Interest Deduction" = "Second Home Interest Deduction"

I think your math is a bit off. Progressive tax rates affect incremental income. Your entire income is not taxed at 25% currently. If you are single, the income you make ABOVE $29,200 is taxed at 25%. The tax on the first $29,200 is taxed at lower rates (math works out to under 14%)

So if you are single, making $50K, your total federal income tax is about $8715. If the cuts expire, the bill goes up to $9279. This is a difference of $564 a year. Still. . that is $47 per month.

Note: I ain't no accountant. And these numbers don't include FICA, SS, local taxes, state taxes, dog poop taxes or your annual boat registration fees.

As for the rest of the post: Yeah -> I share your sentiments.

Com, what tax tables you using?:wow:

 

[Pseudomind]

I do not know, I stated taxable income, e.g after any deductions you owe taxes on $50,000.00 I have looked at some calculations from 2010 tax tables and going from 25% to 28% still comes out at over $100.00 per month closer to $113.00 per month for a single tax payer.

For my money a handful of people pay too much in tax for those who pay nothing.

 

[OldSkool]

All you rich megayacht owners make me sick. You make people build your boats, ship them, prep them, store them, get them ready for seasonal use, frequent food and drink establishments, buy toys you don't need, make people install the toys and wash and wax your yacht. How dare you require all this from our working class then wish a tax break.:smt043:smt043:smt043

 

[comsnark]

Tax tables?

Did I say I was an accountant?

Ok - my math was somewhat wrong. Sorry about that.

But the point holds: not all income is taxed at the same rate. At 50k - every extra dollar you earn will be taxed at 25%; but your total tax is actually a bit lower than 25%.

 

[Four Suns]

Nevermind....

 

[jason78]

With all the talk lately from the left about what everyone's "fair share" is, it got me to wondering- What is the "fair share" of the "other half", as in the roughly half of Americans that pay NO tax at all. Is their "fair share" really $0? Or one farther, is their "fair share" a cash payout from Earned Income Credit and other cash welfare credits?

What if that half-

a) Stopped getting ANY form of cash payouts greater than what they paid in as a "refund"

b) Started paying in something, anything. Maybe $100 a year. $8.30 a month.

If we have over 100 million people (not paying in) that start paying something and stop giving cash to those who are getting it, don't you think that would help? I mean, that half is taking advantage of the many of the benefits the other half is paying for and not paying anything in themselves.

And these earned income credits, etc., have to stop. That is not even welfare, it is plain and simple income redistribution. Paying for someones food, housing, healthcare is one thing but taking cash out of my hand and putting it in someone else's hand who did not work to earn it so they can buy a new TV, car or go on a WalMart junk spending spree is JUST PLAIN WRONG.

 

[Four Suns]

Hey! I like getting my EIC check every year...

 

[jason78]

Hey! I like getting my EIC check every year...

I guess it does help to offset your fuel expenses......:grin:

 

[Woody]

With all the talk lately from the left about what everyone's "fair share" is, it got me to wondering- What is the "fair share" of the "other half", as in the roughly half of Americans that pay NO tax at all. Is their "fair share" really $0? Or one farther, is their "fair share" a cash payout from Earned Income Credit and other cash welfare credits?

What if that half-

a) Stopped getting ANY form of cash payouts greater than what they paid in as a "refund"

b) Started paying in something, anything. Maybe $100 a year. $8.30 a month.

If we have over 100 million people (not paying in) that start paying something and stop giving cash to those who are getting it, don't you think that would help? I mean, that half is taking advantage of the many of the benefits the other half is paying for and not paying anything in themselves.

And these earned income credits, etc., have to stop. That is not even welfare, it is plain and simple income redistribution. Paying for someones food, housing, healthcare is one thing but taking cash out of my hand and putting it in someone else's hand who did not work to earn it so they can buy a new TV, car or go on a WalMart junk spending spree is JUST PLAIN WRONG.

It's another stimulus and we can blame it on the poor folk :lol:
The near 50% of returns that pay no federal tax(which includes some with big bucks) are simply doing what our current tax code allows. They would be fools to do otherwise. CSR seems to be conservative, opinions often are supportive of GB rather than our current president. It’s often expressed here how we should be taxed less. GB gave us some tax cuts(we liked him even more) but you have to understand that those tax cuts increased the number of tax returns that have no federal tax liability(more people for us to call lazy bums I guess). So, something many of us approved of actually generated something we don’t. How do you want to look at things, do you take more away from the lower 50%(if you take a buck you get a buck) or do we let them spend it and it multiplies? Either way they won’t have it. There is a big picture to consider here.

 

[comsnark]

Nevermind....

I got your original point. . . but I respect your withdrawal of that point in the interest of that conversation.

With all the talk lately from the left about what everyone's "fair share" is, it got me to wondering- What is the "fair share" of the "other half", as in the roughly half of Americans that pay NO tax at all. Is their "fair share" really $0? Or one farther, is their "fair share" a cash payout from Earned Income Credit and other cash welfare credits?

What if that half-

a) Stopped getting ANY form of cash payouts greater than what they paid in as a "refund"

b) Started paying in something, anything. Maybe $100 a year. $8.30 a month.

If we have over 100 million people (not paying in) that start paying something and stop giving cash to those who are getting it, don't you think that would help? I mean, that half is taking advantage of the many of the benefits the other half is paying for and not paying anything in themselves.

And these earned income credits, etc., have to stop. That is not even welfare, it is plain and simple income redistribution. Paying for someones food, housing, healthcare is one thing but taking cash out of my hand and putting it in someone else's hand who did not work to earn it so they can buy a new TV, car or go on a WalMart junk spending spree is JUST PLAIN WRONG.

In general.. . .I agree. I think things would be alot better if the handouts went away. These stupid credits for this and that just annoy me to no end.
I am really annoyed by how many able bodied people live on welfare forever.

One minor point: Not paying Federal Income Tax does not mean you don't pay FICA and SS, right? That's over 6% for those that are legitimately working, but making very, very little.

 

[Woody]

There's been some pretty insulting comments made toward the lower 50% of tax returns and those that don't pay any tax. Do you guys understand that the number everyone throws around represents tax returns? There are a lot of full time hard working people in those groups and some of them make a lot of money.

 

[jason78]

One minor point: Not paying Federal Income Tax does not mean you don't pay FICA and SS, right? That's over 6% for those that are legitimately working, but making very, very little.

Agreed however the spirit of my post was regarding Federal Income taxes. In all actuality, as bad it sounds, many of the people you are referring to will draw far more in benefits from those programs than they will ever come close to paying in at low income levels. SS and Medicare is a whole other (but related) discussion.

There's been some pretty insulting comments made toward the lower 50% of tax returns and those that don't pay any tax. Do you guys understand that the number everyone throws around represents tax returns? There are a lot of full time hard working people in those groups and some of them make a lot of money.

I am not sure what you are referring to exactly. Personally, I don't see where I have insulted any class, if you were referring to me. I just think that everyone should be contributing something, anything and especiallly not getting a cash bonus in February just because they are low income. There are definitely plenty of hard working people and people that can only work little, if any for legitimate reasons within these income levels but unfortnately there are also alot of people living on the system and have no problem doing so. I personally know of people doing this very thing (including my wife's ex husband). Also, I just don't see where anyone in the bottom 50% is making "alot of money". If they are making "a lot of money" and not paying any taxes then most likely the money earned is cash and not reported to the IRS therefore they are Tax Cheats. Obviously there are companies that get away with no taxes because of huge tax breaks (ex. General Electric) but that is another discussion all together.

Bottom line is that you will never be able to help most people long term by giving them a handout but you will be able to gain a large (and growing) group of political supporters in doing so. If everyone using the system was doing so for "assistance to better themselves" as it was intended, this would not be an issue but too many people don't seem to mind it as a way of life.

 

[Woody]

Jason you're assuming that all those that pay no tax are in the lower 50%, not so. We're talking two groups here, the lower 50% based on income and the near 50% that pay no taxes.
Tried to add a graphic w/no luck so I typed it up
% of Households paying no Federal Income Tax in 2010
Income group # of filers w/no liability % of Income group
Under $50K 63.2mil 68%
50K-100K 4.3mil 12.5%
100K-500K 485,000 2.1%
500K-1mil 14,000 1.6%
Over 1mil 4,000 1.0%

 

[tdappleman]

I certainly didn't buy my boat just to gain another tax deduction - but it is nice to have the option under the current tax regulations. My loan is very small and I only have it since I wanted to keep some money liquid in this wonderful economy. I live in an area which is filled with '2nd homes' - otherwise known as rental homes. The owners rarely come to the area let alone actually stay in them. They rely on the rental income to hopefully cover their annual expenses and then have the deductions which come along with the property. I know I overnight more in my boat than the majority of rental home owners stay in their '2nd homes' so I certainly don't feel bad deducting $1200 worth of interest every year!

The video Vince posted is spot on! Common sense goes a long way!

FairTax or a flat tax in general is certainly the way to go - It will be interesting if it can actually become a campaign issue for 2012!

 

[rabyers1]

"Jason you're assuming that all those that pay no tax are in the lower 50%, not so. We're talking two groups here, the lower 50% based on income and the near 50% that pay no taxes.
Tried to add a graphic w/no luck so I typed it up
% of Households paying no Federal Income Tax in 2010
Income group # of filers w/no liability % of Income group
Under $50K 63.2mil 68%
50K-100K 4.3mil 12.5%
100K-500K 485,000 2.1%
500K-1mil 14,000 1.6%
Over 1mil 4,000 1.0%"

This graphic speaks for itself. The percentages of households paying no taxes dwindles to very low percentages as you move over the 50K threshold. As many folks who earn over $100K in income already know - once you reach a certain point, you will be caught in the Alternative Minimum Tax trap. When that happens, most of the "tax breaks" go away and you will pay something on the order of 25% or more of your income in federal income taxes- no matter how you file your return. A lot of higher wage earners are already caught in this trap and many more get snagged every year as the AMT does not adjust for inflation. AMT is a big part of the reason why a predominant percentage of the actual income tax dollars that are collected come from the high income brackets.

I am all for fair taxation and even a modest scaling of the tax brackets as income increases - but until the AMT is done away with, there is a great imbalance in the tax code. (which won't likely happen as it leaves a huge hole in the revenues) Please note: This applies to personal income taxes. If you own a small business, that is a whole different bailiwick. Small business owners pay many kinds of taxes, so just looking at their taxes paid on the personal income they take out of their business doesn't tell the whole story.
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