By: SOO ASHEIM
In today’s world of total technology consumerism, it truly is a wonder how a country so fixated on having the newest and geekiest wiz kid sensation can be in such horrendous debt. Especially when one considers the taxes we pay for the privilege of simply using our tech toys.
When was the last time you happened to look at your cell-phone bill –not just glanced at it, but actually took the time to read what you are being taxed for? Recently I did just that, and I’m still confounded as to what it all means or whether it is just a lot of ‘legal-ese’ and I’m being duped into believing each and every one of these extra taxes, surcharges, and fees are not a measure of double-dipping. For instance, on my cell bill with Verizon, I am paying for a $69.98 “monthly access charge.” I presume that to mean that is what Verizon is charging me to actually use their phone. However, directly below that charge is another $21.86 I dole out each month for a “usage charge.” How is that different from a “monthly access charge?” Then, there’s the “Verizon Wireless Surcharge” for another $5.56. Combine all three charges with the “taxes,” a “government surcharge” and another fee totaling $8.40, and now my “$69 a month cell phone” has become my $105.80 a month albatross!
Exactly who is the person that actually does have the widely-advertised phone for $69 per month? I would love to meet this person and shake their hand! And then find out the secrets to how they have managed to maintain a $69 phone bill per month, because I certainly haven’t figured it out, and no one I’ve ever talked to about this has either!
And it is the very same story with any cable TV service as well. Sure, they all have a hook for the first six months. Get “bundled” with your phone, internet and cable TV for “X” dollars. Then, once they have your signature on the dotted line for the next two years, all bets are off! Up, up and away that bill keeps rising. When inquiring about the taxes, fees and “portability fees” with our cable service company recently, I asked: “Why are we being charged for telecom relay services each month?” “Well, everyone needs to pay that.” Okay, I get that, but why? No offense toward the deaf, but personally, I can hear just fine. Why do I have to pay for telecom relay services when I don’t need them nor have I asked for them? That goes hand in hand with the “TRS Administrative Fee” as well. Granted, both are a piddling 21 cents – but multiply that by 24 and that is at least a decent lunch at Taco John’s. And can anyone explain what a TAP surcharge is for? Whatever that dubious charge is, it is another one of those (6 cents) charges so small that no one questions it or feels it is worth asking about, because in the scope of what most cable TV bills are in a month, six cents isn’t worth arguing about. Or…is it?
I think that’s the key to all the seemingly nebulous “Oh – so what? It’s only …” extra taxes, surcharges, and fees we are all paying. Yet, when I add all of them together, the taxes, surcharges, and fees are thirteen percent of our total monthly bill. I don’t know about most of you, but I know we could certainly find a much better use of $312 a year!
ONLY THE TIP OF THE ICEBERG
In a lifetime of working and paying taxes, North Dakota and Minnesota residents will all, at one time or another, pay state sales tax, personal income tax, federal income tax, and retirement income taxes. For many others, add on gasoline tax (or diesel fuel tax), cigarette tax, property tax and inheritance and/or estate taxes.
It does not matter who you are or what you do, sooner or later, every one of us has to pay the man. What matters is how much, and how to skirt the maximums on whatever the governing agency is dunning us for.
VARIATIONS OF THE LEGAL PONZI GAME
North Dakota charges sales tax on clothing. Minnesota does not. North Dakota’s state sales tax is 5 percent, excluding food and prescription drugs. Lodging taxes are 6 percent in North Dakota.
Minnesota’s sales tax is 6.875 percent, excluding food, clothing, and prescription and non-prescription drugs. Liquor and beer in Minnesota are charged at 9.375 percent, while in North Dakota alcoholic beverages are 7 percent; however, due to North Dakota’s home rule charter clause for both cities and counties, some may levy their sales tax up to an additional 3.0 percent. In Fargo, sales tax is charged at 7 ½ percent. Moorhead is the same as the state’s rate.
Minnesota has a rather draconian tax on motor vehicles; while the sales tax rate is not applied to motor vehicles subject to the state excise tax on motor vehicles, several cities can add their own sales taxes, and many are as high as 9.53 percent. Both states have gasoline taxes, diesel fuel taxes and cigarette taxes. In Minnesota, gas taxes are 28.1 cents per gallon; North Dakota rakes in 23 cents per gallon. And a reason why several border communities such as Fargo and Grand Forks are selling double their numbers in cigarette sales is the huge difference in the tax charged per pack. North Dakota gains 44 cents per pack, while Minnesota is losing $1.58 per pack every time a Minnesota smoker crosses into North Dakota for a pack of smokes. Not to mention the revenue lost to Minnesota when those same smokers hop the border to buy their smokes and also their fuel —instead of buying gas in their own home state.
THE BIG HITS
Personal income taxes vary widely from one state to another, and so it is between Minnesota and North Dakota. Minnesota state income rates range from a low of 5.35 percent to 7.85 percent as its highest rate. North Dakota will take 4.86% on income over $373,650. The best way to be certain is to ask a tax advisor or go online. There are many websites for each state that explain in great detail what a person actually owes, determined upon amounts made, head of household, number of dependents, and so forth.
Property taxes are another area that varies significantly. The differences can be vast not only from state to state, but from locale to locale. Generally speaking, jurisdictions and/ or local governments will calculate a property’s tax rate by multiplying the assessed value of the property by the mill rate and then dividing that product by 1,000.
Most homeowners prefer to have their property taxes rolled into their home loans so an escrow account can be set up to take care of whatever their tax responsibilities for the year will be. That eliminates a nasty surprise at the end of a year when things may not have gone so well and someone was not able to save for the year-end property tax hit.
The numero uno hit for most is what they will owe the Feds at the end of the year. Again, like state taxes, much will depend on what you grossed, how many dependents you can claim, whether you file jointly or separately, or if you are a single person filing for yourself, and the number of earned credits and deductions you have.
Needless to say, none of this is simple nor is any of it much fun. The most important thing to remember is that no matter what you owe or expect in return, the government is expecting to hear from all of us! And unless you are aware of all the ins and outs, the first few times of filing your taxes it might be advantageous to go to an expert who can guide you through the ins and outs and what may seem like simple mathematics —until dear old “UNCLE SAM” informs you that you are being audited. When that happens, if you have all your paperwork in order and show every single crossed “T” and dotted “I” you will be in great shape—maybe.
For many younger college graduates entering the work world, only to find their chosen field of career is frozen or filled, then turning to entrepreneurship, or for Moms who are raising children and working, often the paperwork and time needed to put everything together for a tax return can be daunting. That, too, is a good time to seek out a tax preparer who can at least walk you through the ins and outs and how-to-do-its .
I spoke with Tami Vigen at Liberty Tax and asked “What are some of the types of deductions people often forget or don’t know about?” She mentioned withholding taxes that have already been paid in, general sales tax deductions, or for students, earned credit deductions is another that many miss or are not aware of.
The benefit from having Liberty Tax or any other tax preparer is in today’s world of electronic filing, most offer services for the future in the event someone finds they lost or need another copy –and many will keep them on record for up to five years.
The most important thing to remember in filing your taxes, whether you do it yourself or have an expert, is to keep all receipts throughout the entire year. If there’s one thing the government absolutely loves, it’s a paper trail and they will definitely want yours!