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form 8938 report of foreign bank accounts – especially having to report joint accounts because my wife is American and is the second holder on some of our accounts. I am Canadian and feel like this is an unwelcome invasion of my privacy. Also Fincen 114 is no party either
I hate the fact that so much of the dealing with the IRS is with paper. I would welcome online filing only and an IRS online account for communications and responses.
The Carried Interest rule. We all pay income tax rates on our earned income, while the Hedge Fund crowd pays capital gains rates on theirs (and they get the cap gains rate, even though they’re risking their clients money, not their own). Then, despite all of the rhetoric from the politicians, the Carried Interest rule survives every “tax reform” effort, while the Hedge Fund crowd stuffs the pockets of those same politicians. Crony Capitalism at its worst.
There are reasons to tax capital (long term) at a different rate than labor. First of all, LTCG is subject to the effects of inflation, while wages aren’t. Secondly, LTCG encourages long term holding and outlook, which is better than immediate payoff for multiple reasons (employment, capital investment, the environment, etc), in addition to reducing market froth and wide gains and losses in a short period.
The convoluted and opaque parts that must be taken on faith that they are right. For example, in navigating TurboTax Premier I often find a confusing lack of explanations, and using it is supposed to make it easy.
The complexity of the tax code coupled with the underfunding/understaffing of the IRS creates a perfect storm of frustration. With all the added legislation that flowed through the IRS, they are so far behind that my June 2020 amended return with a refund was paid this month. When I called them in Jan. they had not opened the envelope. I deal with the IRS more with businesses I am involved with. I’ve waited on the phone for hours to find I have reached the wrong group. Also the lack of technology is astounding. Can’t email the IRS (part of the Treasury Dept). However, I can email the TTB (part of Treasury Dept).
Foreign stock dividends and foreign stock taxes. I used to have several investments in foreign stocks that often did not have US traded ADR’s. Some companies like LVMH withdrew their US ADRs because of the US tax complexity. It required so much time and trouble to track these investments and their dividends (which were paid in various foreign currencies to my US brokerage account) that I eventually sold them all and bought the Vanguard total international market funds.
Retirement contribution limits. Too many accounts with too many rules.
How about this – 1 account with 1 limit? Just an overall $60k/yr (or whatever) limit to a combo of tax-deferred or after-tax (Roth) contributions. Withdraw starting at age 60 (59.5??) with no penalty. No RMDs. QCD whenever.
The completely unfair double taxation on social security, just because I earn my living as a freelancer rather than as a company’s employee. Ridiculous and needlessly punitive. We’re uber drivers, food delivery folks, web designers – we’re eking out a living here – yet paying DOUBLE social security. I don’t understand how this still continues.
Now that I’m done ranting, I guess that’s not a taxation thing…it’s more of a legislative/program policy – but it hurts every tax season.
Clearly the check writing part!
The perfect answer!
The complicated interactions of different taxes. For example, an extra dollar of income can exceed a limit, and bring a dollar of social security into taxable income. The effective tax rate on that one dollar of income can be twice the marginal rate. It’s hard to keep track of all these.
Is that not the point of it? Isn’t there something like 23,000 pages of US Tax Code and therefore no “right answer”?
RMDs and taxing 401k investment growth as ordinary income.
The major changes to the recent tax code involving charitable contributions and investment expenses. The difficulty in taking charitable deductions, along with the pandemic, has had a devastating effect on charities.
Capital gains taxes tax growth on investments including from inflation, which is often caused by the very government levying the tax. It’s good to be King.
Wash sales are needlessly punitive. If you sell anything at a loss, but your dividends are inadvertently reinvested through a DRIP program within 30 days of the sale, you lose the ability to count that loss against your gains.
Didn’t know that! That’s a stinger!
AMT—the Alternative Minimum Tax. It induces a small migraine every time. The kicker is that, as per the instructions, I’m often told I have to fill it out and then, after jumping through all the hoops, it tells me I don’t have to pay it anyway!
The tax accountant’s dream legislation.