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.

9 Comments so far

  1. Craig (unregistered) on September 17th, 2007 @ 7:49 pm

    After losing my business to the storm, getting virtually no insurance payout, going bankrupt while trying to keep the house and now trying to deal with the various and sundry and seemingly arbitrary rules while setting up a new business in a city that says it wants to “encourage” new businesses, the word “fair” no longer exists in my lexicon.

    At least Ray, Kathleen and Dubya keep telling me they love me. It makes getting screwed seem more bearable, don’t you think?


  2. Ann (unregistered) on September 17th, 2007 @ 8:59 pm

    but do they call you angel in the morning?

    ;-)


  3. monte (unregistered) on September 18th, 2007 @ 12:48 am

    I don’t get it, all my life our government has been BLOWING TRILLIONS of dollors to build schools, hospitals, roads and other freebees’ for forign countries over seas with no requirement to pay any of it back.
    So why is it so hard for our government to help the very same people who have had to pay for all that crap all these years?
    Afgahnastan says “jeehad! death to the united states!”, That must be arabic for “thank you for building the new multi-million dollor soccore stadium, it makes a great public execution arena”, and “thank you for the new school house, it makes an excellent taliban training facility”.
    With that said, it is an insult for our government to even THINK of asking people to pay taxes on road home money or to pay any of it back, Its time for our government to start taking care of its own FIRST!


  4. Ray (unregistered) on September 19th, 2007 @ 8:42 am

    This is based on my current understanding of the tax code. The IRS is closing a loophole where they do not want to see both a casualty deduction and unexpended income. I don’t see why the tax code should permit a person to take two deductions on the same asset for the same event. Just like we are not supposed to be doubled taxes, I believe we should not receive double deductions for Katrina. I believe the only appropriate solution is to permit one of the two deductions. However, if you choose to amend your taxes for 2005, you should be permitted to amend those taxes without deduction — considering the circumstances, I imagine that the IRS would waive penalties.

    My question is… Has the IRS broken with tradition regarding other natural disasters like hurricanes in Florida, etc?


  5. Chris (unregistered) on September 19th, 2007 @ 1:58 pm

    I don’t know if there is a precedent since there hasn’t been anything like the road home in the past (that I know of).

    Like I said, I understand that people shouldn’t have it both ways… however, that big lump sum payout is going to bump a lot of people up to the next tax bracket, which is going to cost them much more than they would have paid if they didn’t claim a loss in 2005.


  6. Shelly (unregistered) on September 19th, 2007 @ 3:56 pm

    RESIST NOW! STOP PAYING INCOME TAXES! THERE IS NO LEGAL BASIS FOR INCOME TAX! I AM NOT KIDDING!

    http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=56855

    Or you can watch the movie Freedom to Fascism for free on the internet. It was made by Aaron Russo, who made the Rose, and Trading Spaces. You will not believe what you see.

    You can also look into Ron Paul, who is running for President on the Freedom ticket: http://www.ronpaul2008.com
    He will abolish the IRS.


  7. Shelly (unregistered) on September 19th, 2007 @ 3:57 pm

    RESIST NOW! STOP PAYING INCOME TAXES! THERE IS NO LEGAL BASIS FOR INCOME TAX! I AM NOT KIDDING!

    http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=56855

    Or you can watch the movie Freedom to Fascism for free on the internet. It was made by Aaron Russo, who made the Rose, and Trading Spaces. You will not believe what you see.

    You can also look into Ron Paul, who is running for President on the Freedom ticket: http://www.ronpaul2008.com
    He will abolish the IRS.


  8. Shelly (unregistered) on September 19th, 2007 @ 4:00 pm

    RESIST NOW! STOP PAYING INCOME TAXES! THERE IS NO LEGAL BASIS FOR INCOME TAX! I AM NOT KIDDING!

    http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=56855

    Or you can watch the movie Freedom to Fascism for free on the internet. It was made by Aaron Russo, who made the Rose, and Trading Spaces. You will not believe what you see.

    You can also look into Ron Paul, who is running for President on the Freedom ticket: http://www.ronpaul2008.com
    He will abolish the IRS.


  9. nola geek (unregistered) on September 22nd, 2007 @ 9:40 am

    Dude, your math / logic is wrong.

    You’re not penalized $10,000. You’d have to pay taxes on 2007 earnings anyway.

    Don’t me let me guess, you’re not a CPA?



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