1953 Small Progress on Taxes

Thursday, August 14, 2008

One of the uses of journaling is to force linear thinking on a scattered mind. Sometimes it even works.

I think I figured out something on the taxes. The tax owed is $5,000. The Angel says I have to send only (only?) $3,000 instead of the $5,000 the amended form shows because the IRS assumes they cut a check to me for $2,000 on the original return, which I would have to pay back. But I didn't get a check for $2,000, so I don't have to pay it back.

That's not what the amendment says, but I think that's what the interpretation is.

That's one question answered, but the total tax impact of the additional $15,000 income is still too high. It's still $6,000 over the original total tax due.

A second issue I have to address with Piper is that the total income is much higher than I expected. I sold some stock last spring, which was then reinvested in mutual funds and bonds. Selling the stock produced taxable capital gains, which would be taxed at the long-term rate. I am aware of the amount of gains from those sales. But the total income is MUCH higher than those gains would explain. Therefore, um, has Piper been "thrashing" my investments, producing a high amount of short term gains? Which are taxed at a significantly higher rate? And might that explain my way-too-high bracket? That high percent could be half short-term capitol gains tax.

The last few investment company statements seemed to indicate some thrashing. That doesn't mean bad. I know that we've been doing some balancing based on stock opportunities, and I know he moved a significant investment because a particular fund manager resigned. Several bonds reached maturity, too, but I don't think they generate capital gains.

I guess I'd better find out what's going on. It can't be too bad, because in this lousy market I've been gaining, not losing, but I'd gain more if I lost less to taxes.
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