Friday, October 22, 2010

Why I hate Obama (today)

Here's the stupid aspect of the tax code for today. Yes, I'm wasting 11 minutes when I could be studying to tell you the utter idiocy of the tax code. I have just barely resisted the urge to have a daily stupid tax fact aspect of my blog because really, who cares. It will only spread my anger for the tax code to other people and I don't need to spread the hate.

A few definitions first:
AOC = American Opportunity Credit (and education credit)
MAGI = Modified Adjusted Gross Income
MFJ= Married Filing Jointly (get your mind out of the gutter!)

The following is directly out of my income tax course book. Things in parenthesis are my commentary. The rest is actually in the book, I swear.

Calculating the AOC

The AOC is available up to $2500 per eligible student on the tax return. The amount of the AOC is the sum of:

1. 100% of the first $2000 of qualified education expenses pad for the eligible student
2. 25% of the next $2000 of qualified education expenses pad for the eligible student

The maximum AOC which may be claimed for 2009 is $2500 times the number of eligible students on the tax return. (In case you've got more than one kid in undergrad work at the moment)

Up to 40% of the AOC may be a refundable credit.

(Translation: We thought it would just be too d*** easy to calculate something with either a flat maximum or a flat percentage so we threw in both. Because we certainly don't want to make this easy for anyone, right? Let's make the tax code sooooo complicated that people just stop reading it and then we can put in whatever stupid s*** we feel like, including a raise and nuclear missiles for my buddies. And instead of just choosing refundable or non-refundable with no consideration for logic, let's make it a percentage refundable!!! That will really make people throw up their hands and stop trying to get this credit. Yeah, let's make it even more complicated so we never have to pay out. )

(Then it gets better!)

Income limitation

As mentioned on page 9.3, certain levels of the MAGI reduce or eliminate the AOC. We covered the definition of MAGI on page 9.3. Now let's look at its effect on the AOC.

The AOC is phased out for clients with MAGI between $80,000 and $90,000 ($160,000 and 180,000 for MFJ). THe AOC is not available to clients with MAGI above $90,000 (180,000MFJ)

(So instead of just picking a MAGI and saying "above this number, you can't get this credit", the decided to phase it out. That means there's this complicated formula that only applies to people who have a MAGI within this $10,000 range. )

(It then goes on to explain the forms - yes multiple forms - you must fill out to calculate all that crap. Keep in mind, determining if the student is eligible is easy. Determining if this expense is eligible or not is easy. It's all the crap later!!)

(And this WHOOOOOOOLE thing is only valid for tax season 2009 and 2010. That means only between when the obimination was elected and the mid-term elections. Hopefully all this stuff really WILL go away in 2011, but I bet not. That would be too sweet.)

No comments:

Post a Comment