Ahhh. So many tax laws, so little time.
At this time of year, I find myself almost daily shaking my head at the stupidity of our tax laws when it comes to being "fair." What? Fair? Why would Congress ever contemplate such an obvious thing?
If a single person over 65 gets a standard deduction of $7,250, what would you expect a married couple over 65 to get? If you guessed double that amount, you're wrong. The married couple only gets $13,900. A single person under 65 gets $5,800 and a married couple under 65 gets exactly double that, $11,600. So why pick on married couples over 65?
If you have a capital gain, it becomes fully taxable, but if you have a capital loss, the amount you can deduct each year is limited to only $3,000. It's been limited to $3,000 since 1978. What about at least keeping up with inflation? This limitation is punishing older folks who have large savings invested in stocks and bonds, the market of which dropped from its highs in 2008-2010. At that rate, they will never be able to deduct all their losses before they die.
How about retirement plans? I could write four pages (and I would just be warming up) of "rules" involving what can be contributed, deducted, etc. It depends on if you choose an IRA or a SEP-IRA or a ROTH IRA. Perhaps you have a 401k? Maybe you are one of the very lucky few who still has a pension? There is a profession filled with folks who specialize in retirement plans. One misstep as an employer and the federal government will come swooping in and disqualify the plan. The regulations alone are just overwhelming to the average small employer!
The new Obamacare surtax? Right now, most will not be touched by it (until Congress decides it is not collecting enough tax to cover the ever-rising costs, then it will probably lower these thresholds to a point that many more are subject to it.) Currently, if you are single, $200,000 is the magical number. You make more than that, and whamo, you will have to look at this extra tax.
What would you expect a married couple's threshold to be? If you guessed $400,000, I must sadly inform you that you probably will not make a good congressperson. Congress, in its infinite wisdom, believes that two working folks that just happen to be married to each other have to deal with this surcharge (tax) when their combined income is over only $250,000. Congress is encouraging divorce of high income earners. Are you kidding me?
How about those "Bush Tax Cuts"? Enacted in 2001 and enhanced in 2003, they were only meant to temporarily reduce the tax rates to help get over the economic hit from 9/11. Congress keeps temporarily extending these way beyond their intended life. It makes it nearly impossible to make any plans about what the tax impact of a business or personal decision would be when Congress keeps changing the law every year. Pass something and leave it alone. Please!
All of this (and much more) might make a hysterically funny skit on "Saturday Night Live."
• Kelly Bullis is a certified public accountant in Carson City. Contact him at 882-4459, on the web at BullisAndCo.com and also on Facebook.