Try as I might, I haven’t been able to come up with any creative money ideas this week – seems I’m stuck in my tax brain. As April 15 comes closer, my analytical side takes over and my creativity goes undercover. So, I thought I’d join it rather than fight it with some tax musings.
Having been doing taxes for over thirty years, it’s interesting to think back on how things have changed. When I first started doing tax returns, the top tax bracket was 70% on unearned income and 50% on earned income (wages). Now we pay 15% on qualified dividends and maximum 35% on other income.
Back in 1976, maximum employee social security taxes were $895. Now they are $7,956. And, maximum self-employment tax went from $1,209 to $15,090. Huge differences, but top social security benefits received went from $267 a month in 1976 to $2,346 now.
There used to be something called income averaging—people still ask about this one. If you had especially high income in one year, you could average the previous five years to end up paying less tax—it was a beautiful thing.
Not much was officially reported to IRS back then. Banks and brokerages didn’t need to file annual 1099’s to report interest, dividends, or sales of stock. We didn’t get 1098’s to report interest paid on a mortgage—and we could deduct all the interest we paid wanted on any number of home mortgages. We were all on our honor.
My head spins just thinking about all the changes I’ve seen over the years. Were things better back then? I can’t really say, but they sure have changed and that’s one thing we can still count on – tax change.
I hear a tax return calling my name….