IRS / Road Home Bullshit
So the T-P just published this article today saying people will probably have to pay income taxes on their road home payouts– if they claimed a casualty loss in their 2005 taxes.
So let me get this straight; someone claims $60,000 in casualty loss on their 2005 taxes. this negates their $30,000 yearly income for 2005 and 2006, so they pay no taxes for those years, saving them roughly $8,000. In 2007, road home gives them $60,000 to cover the loss. Now they owe income taxes on the $60,000 plus their income. $60,000 + $30,000 = $90,000. Income tax on $90,000 is roughly $18,000.
Now, I understand that a roadhome payment from the government does pretty much negate your casualty losses. And maybe it’s not fair for someone to escape paying income tax for two years and then get a huge payment from the government. However, in this scenario, not only are they paying back the $8,000 they avoided paying in 2005-2006, but they’re penalized an extra $10,000. How the fuck is that fair? Not to mention the fact that they probably already spent their road home payout thinking it was tax free. This just doesn’t make sense.