esrosedotblog

TAXING SITUATIONS

I paid our real estate taxes this morning. The whole thing. Two periods.

We pay it all at once so that we get the deduction in the year. And also, I suppose, because I don't like to wait to pay for things. Heh heh.

I was disappointed to not find the new assessment based on our purchase in June.

Well, I guess I was expecting too much. They tell us that they are a almost a year behind on updating the assessment records from new property exchanges.

So I had to pay the old amount which, I estimate, is about 35% more than what we will end up paying.

We will get a credit back but we won't get interest on the difference.

On another front, we are in the process of refiling our federal tax returns for three years. It turns out that, according to a new ruling by IRS counsel, since California is a "community property state", the new domestic partner laws effectively make any certified domestic partners' income community property.

If there is a disparity between one partner's income and another's there is a significant advantage here. The higher earner gets reduced in his or her income as the income goes to both partners. Brackets change.

We filed as regular people originally. Now we have refiled as domestic partners in community property.

The problem is that, unlike married couples, there is no mechanism or process at the IRS to handle this. We still file separately.

They have to take both ammended returns, apply the new ruling and make appropriate refunds. They also have to understand that the original tax paid by the one partner was paid for both.

And so on.

Let's put this as kindly as we can. The IRS is not staffed up for this kind of problem solving and the ruling is so new that this is the first example of its application.

We are trailblazers.

Our accountant is good. He is handling the details. We finally have a person to talk to and they have approved (you have to ask) the CPA to be authorized to speak for us.

In the meantime, we have demands for payment of taxes we have already paid and a lot of other nonsense. No answers to our letters of explanation.

It will clear up. Or not.

The worst that can happen is that they will not allow it as it only applies to California couples (as far as we know) and somehow they will retract the ruling.

On the other hand, for most couples, the ruling is beneficial to the federal tax system as it technically requires that all domestic partners file community property and this could actually raise revenue in some cases.

It is surely a bona fide mess for them and we think that, perhaps, the person who made this ruling is now having his own problems with the bureaucracy for doing it in the first place.

But this is all fantasy. They tell us nothing. We tell them everything. They refund or not. It is a closed system.

There is quite a bit of money involved for us. And it is a point of principle. I have always been a no-more-and-no-less-than-owed-guy as far as taxes are concerned.

So I want what is coming to me. No more, no less. We will continue to pursue this until it gets too hot or too arduous. Stay tuned.

Labels: money