Free Tax USA

And my 2023 taxes are done! Because I’m a simpleton with only a W2 and a 1099-INT (from a savings account), filing taxes is always an under 30 minutes procedure. I’m obviously not a target customer for H&R Block. I can appreciate paying for convenience - in having a guy or gal do your taxes - but 30 minutes out of a weekend is not so detrimental.

What is detrimental is last year’s interest income. Because of historically high interest rates, the return from my savings account in 2023 was very healthy. That means I have to pay capital gains tax on that return, of which I am happy to do so, of course. It’s truly a first world problem if you’re complaining about having to pay a lot in capital gains tax. Though I do feel kind of icky about having to pay taxes on income derived from money I already paid taxes on.

The problem with having high interest income is that I no longer qualify for free filing with TurboTax. Apparently: interest income over $1,500 requires a schedule B form (which if you’re using a tax-filing software you shouldn’t have to care what that entails). Because of this one single extra form, TurboTax automatically asked me to upgrade to the paid Deluxe version. I went from free-filing for both Federal and State, to needing to pay over $110. Absolute vultures.

I’m not paying that in this economy. My friends turned me on to FreeTaxUSA, an online tax-filing service of the same ilk as TurboTax. The main difference here is that FreeTaxUSA doesn’t give its customers the bone. Federal tax filing is always free under (I am assuming) most circumstances, and it’s only $14 to file State taxes (compared to $59 for TurboTax). This is what friends are for: saving you $100.

Somewhat tangentially: I am honestly sick of seeing corporations raising prices because of “inflation” and “war in Ukraine”, then three months down the line say they’ve got a record profitable quarter. I endeavor to do as little business with such businesses as possible.

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Death and taxes.

Death and taxes

No one likes to pay taxes. I most certainly don’t.

A few days ago I was shopping for a new Macbook Pro; right now is a great time to buy because both Apple and its resellers are running back to school specials. The 2019 edition 15-inch Macbook Pro I’m currently typing on is being discounted by $200 dollars everywhere, which is quite significant. Be that as it may, it’s still an over two thousand dollar machine, so to maximize the possible savings, I looked to avoid paying the relatively hefty sales tax on top of it.

B&H is my go-to for this sort of thing: it’s the place to purchase high-dollar electronics and not have to pay tax. I’ve bought nearly 10 grand worth of items from them over the years, which amounts to plenty of savings (or dodging, if you’re the IRS). So it was to my utter surprise when I was all ready to click ‘buy’ on the Macbook Pro at B&H a few days ago and saw that CA tax is now being collected. Apparently some recent Supreme Court decision is forcing the company’s hand.

Which is a shame because now that B&H no longer carries a no sales tax advantage, I almost have no reason to buy from them over the king of online retailing: Amazon. Indeed, Jeff Bezos’ company charges sales tax as well (though I’m old enough to remember a time when Amazon didn’t; truly the good old days), but compared to B&H, it offers faster shipping (free two day shipping with my Prime account), and more importantly I get 5% cash-back using the Chase Amazon card. The combination of least expensive and quickest shipping is too difficult to ignore, even though B&H is a small business I really would like to support.

But, I would say I’ve already paid enough taxes this year: the tax bill on the Porsche GT3 was immense indeed. You’re welcome, San Francisco.

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Together we’ll go far.

Why are used car sales taxed?

It’s occurred to me that California charges sales tax on used car sales, and it makes absolutely no sense. I understand if a dealership is selling the used car, but why must I pay tax even if its from a private party? Surely I don’t have to pay the State anything if I were to purchase a flat-screen television sold by some dude on Craigslist who’ve probably stole it. 

Maybe we are obligated to report and pay sales taxes on those sort of purchases and it's just that nobody does it and it isn't at all enforced. We are however forced to do so for cars because each motor vehicle is required to be properly registered with the localities, ergo the government knows everything. 

Well, that really sucks, because the State is essentially double (or triple) taxing a product. Hasn’t a merchandise done it’s duty to society already (in form of the sales tax) when it was first sold? I think it should be illegal for government to double-dip on this, and yes it’s mainly because I don’t want to pay. My next car will likely be used and priced into the six-figures so the tax bill - especially when registered in San Francisco - is going to be enormous. 

I understand the other side of the coin: by instituting sales tax on used cars, not only does California reap the revenue benefits but it also prevents auto dealerships from titling their inventor (thus converting new cars into used) thereby lowering the out-the-door price for customers. Imagine the adverts of “pay no sales tax” plastered in front of dealer lots next to the giant inflatable figures.

Perhaps I'm in a truly small minority: people that care about taxes during car shopping. I bet the majority of consumers simply look at the sale price and regard taxes and license fees as something insignificantly tacked on afterwards. You can afford to do this in Oregon where there is no sales tax, but for me living in San Francisco the final tax bill when buying a car is nearly 10 percent of purchase price. 

10 percent of $100,000 is $10,000, and that’s all going to the State on a car they’ve already taxed at least once. I consider that to be thievery in the highest contemporary order. 

Follow the light. Climb! 

How to get me to buy more cars

As someone who isn't made of money nor does the living situation allow me to fit more than one car at a time, in order for me to sample around the varying types of automobiles out in the world, I've got to keep swapping them out i.e. sell and replace. Listen, no need to lecture me on depreciation curves because I simply take that as the cost of doing business when it comes to this car enthusiast hobby.

There is however one rub I do have a problem with: sales tax. It's the one expenditure I cannot recover when I sell a car, on top of which I have to pay taxes on the new car as well. Living in a high-tax county like San Francisco exacerbates the pain. Combining the last two cars I bought, I've paid over 7,000 dollars in taxes. While most people lumps taxes into the sale price of the car and treat it as a singular sum (less pain that way, I guess), I consider taxes separate because it doesn't pay for anything innate to the car.

I'm somewhat due car change now that I'm homing in on three years of owning the MX-5. However the thought of having to outlay yet another significant chunk towards taxes in purchasing the next car is giving me more pause that it would five years ago. I guess it's true that we turn Republican as we gradually grow older and attain more assets: we'd like the government to take less of our hard-earned stuff.  

In some States buyers can deduct the price of the trade-in in calculating the new car's tax. Tax-heavy California obviously isn't so bold to have such a program. The State's got tons of incentives for electric vehicles though sadly normal combustion-engined cars don't deserve such special treatment. 

I can't be the only person that wants to switch cars but the prospective tax bill is stopping the fun. Why doesn't automobile dealership associations lobby California for some sort of exemption? I for one would buy cars more often - brand new at that - if the tax burden wasn't so heavy. At the very least we should be able to deduct the sale price of the trade-in like other States. 

Some people no doubt would ask "why don't you lease?" because in doing so I'd only be paying taxes on the portion of the payments over the specific loan period. While true in theory, lease deals are horrendous on anything that isn't a basic German luxury car (BMW 3 Series) or mass-market grocery getter (Toyota Camry). The cars I'm into it makes better financial sense to purchase outright.

Besides, spending time to research the appropriate leasing terms and performing calculations isn't exactly my idea of a good afternoon. I'd rather negotiate the price of the car alone and be done with it. 

Auto manufacturers and dealerships: if you want people like me to buy more new cars, lobby the government to lessen our tax burden. We not of the 0.1% can't afford to form LLCs in the State of Montana. 

Tax day

I've already done mine months ago, of course. Granted the Federal and State governments owes me money so I didn't hesitate for a second as soon as all the W2s were in my mailbox. Even if I did owe money, I probably wouldn't have waited until the last possible day like lots of people tend to do (April 15th isn't practically a holiday without reason). Because I understand that taxes, whether I owe or expect a return, is money I've already made - it isn't something extra, nor is it some sort of penalty. If I could set up my tax forms so that I end up at absolute zero (no return but don't owe any either), I totally would. 

I suspect people that make a big fuss over tax day are those that haven't got their financial house in order.