Ask MetaFilter questions tagged with taxes and debt

need a primer on forward funding

puckish — Wed, 18 Jan 2012 14:51:48 -0800

Can someone give me a quick primer on the MBTA debt crisis? I'm trying to make a case that debt forgiveness is a higher priority than a gas tax, but don't know enough about how that debt is packaged to be really solid on why that's true. My gut sense that it's the interest from the Big Dig, rather than the initial assumption of debt. That said, I'm fuzzy on the details of who holds the $8 billion and counting, and how it's been transferred and moved around. I've read this and this, as well as a number of articles, so I have a rough sketch. I'd be grateful if someone here could help me fill in the details!

also helpful: is there somewhere I can go to get a rundown of the 2000 forward funding legislation?

Paying to learn a tough lesson

rileyray3000 — Fri, 24 Sep 2010 14:24:55 -0800

How do I go about proving an uncollectible debt? About August of last year I got a call from a woman who, up until recently, was my mentor. She said she'd been the victim of identity theft and she was in the process of moving and had no money for the deposit on the new apartment or to pay the movers. Now this is a woman who helped get me into college, who's always been eminently trustworthy and who I respected a lot.

I was, at that point, getting paid in cash for my job. And I was putting 1/4 of each check away to pay the taxes later. I told her I could take the money out of there but it would HAVE to be back by tax time. She said the bank was looking into the way the identity thieves got her money and she thought it would be replaced soon. So I loaned her 3200 dollars

Over the next few months I would call to check on her as a friend and also to get an update. I would offer to call the bank and look into it. I would offer to get experts to look into it. I was always rebuffed. Eventually what I did find out through her is that she had been compromised before. By people in croatia and poland. To the tune of tens of thousands of dollars. And possibly a couple of times. And now the bank thought she was in on it.

Do I think she was? No. She's a woman in her 60's. I think it's unlikely for her to get involved with this sort of thing. Do I think she's lying? Not necessarily. She uses her debit card online and on an old PC that probably has no antivirus software to speak of. She's older and she's proud and she's probably made some major mistakes here.

But one of the big ones was how she handled it with me. She dodged me and told me she'd loaned out thousands to people and never gotten it back. And as tax day drew near her plan was to borrow it from another friend of hers who was rich.

It didn't happen.

I had to borrow money from my boss to cover the money I loaned her and spent a good deal of time paying him off this year. It left me in a hole I just got out of.

She is a friend and, up till now, I could never imagine her doing this. In the interest of that friendship I asked if she could even pay some token monthly amount to pay me back. She agreed and then I didn't hear from her. When I finally did, she said she was now living with friends and I would someday get my money from her. But to stop pestering her about it.

When I brought it up to a friend - because I was just angry and talking - he said I could claim it as an uncollectible debt on my taxes and just be done with the whole thing. I asked my tax guy about it and he said I would need to prove I tried to collect on it. But if I did I could take a deduction for the amount

What's the bare minimum I would need to do in order to do this? I don't want to harass this woman but if it could be done simply with some notarized letters and such then I think I could put the whole thing behind me. Maybe someday I might be able to think about this woman without getting immediately angry.

Help me find info showing both sides where they need to compromise

Reverend John — Fri, 03 Oct 2008 08:12:53 -0800

I seem to remember reading about a study which showed a correlation between higher taxes and lower spending, can you help me find it? I believe the argument went something along the lines that when taxes are higher people tend to pay more attention to government spending, and the greater scrutiny tends to discourage waste and unpopular spending.

A corollary was that lowering taxes actually encourages higher spending and creating deficits and driving up the debt.

I'd really like to find this study to see how well supported it actually was and if it would be useful for helping find a compromise between Republicans who are vehemently anti-tax and Democrats who are less inclined towards fiscal responsibility.

Will bankruptcy absolve you of tax debt?

jotrock — Tue, 16 Oct 2007 16:06:33 -0800

Will filing for bankruptcy absolve you of tax debt? I owe a lot of money in back taxes, in addition to some other extremely large financial burdens that I won't get into now. The debt is from 2003 and 2004. I set up a payment program with the IRS and have kept up with the payments for about a year now. Now I'm on the brink of other financial difficulties and wondering if Chapter 7 will get rid of my tax debts as well. Even a bankruptcy lawyer I spoke with wasn't sure! The laws changed in 2005 and nobody seems to know what's going on now!

Deductible v. non-deductible debt

Anonymous — Thu, 30 Aug 2007 18:55:18 -0800

At what point is it not worth making student-loan debt into mortgage debt? My accountant has advised my wife and I to pay off her sizable student loans by rolling them into our home debt. Because of our income, her student loan interest is not tax deductible, but the home loan interest would be. But she has a very low interest rate on some of this debt. Is there a calculator somewhere that can show me that he is correct (or incorrect)? I sometimes get the feeling he is so philosophically opposed to paying taxes he would simply rather pay more to a bank than less to the government. When I ask him specifically at what point it would not be worth it, he simply assures me we are not in that boat.

What should I know about marrying a guy with debt, poor credit and tax liabilities?

Anonymous — Sat, 28 Jul 2007 09:42:55 -0800

I'm going to marry a guy who has a lot of debt and possible trouble with the IRS. What should I know? He has the "usual" debt - car, credit cards, school loans - but a lot of it. His credit rating is trashed and won't get any better before the marriage. Though I also have some debt, my credit rating is pristine. Am I correct in thinking that his debt coming into the marriage remains his responsibility? Or can those creditors come after me (I have nothing to take right now anyway)? Am I right in thinking that the simple act of marrying this guy does not affect my credit rating, but joint accounts/loans would?

The other issue is that he owned his own business before we met and did not file tax returns for several years (due to laziness/disorganization, not criminal intent or political reasons). It's unclear how much he owes because he hasn't been willing to organize the paperwork and see an attorney. I don't foresee this getting resolved before we marry (although I could make it a condition of marriage). Will I be liable for his tax delinquency?

We live in Illinois but will probably get married in Wisconsin. I know you're not my lawyer and this isn't legal advice.

How do I write off my defunct business as a tax loss?

daHIFI — Mon, 27 Feb 2006 11:57:28 -0800

How do I write off my defunct business partnership on my taxes? I ended a 2 year self employment partnership (incorporated LLC) August of this year, walking away with around $8k in personally liable loans, as well as racking up another $5K after my car was repossessed. I want to know how best to claim this loss on my taxes. My partner and I took a minimal salary from the business that year, doing everything we could to keep our retail computer store afloat. We were not able to pay an accountant near the end and never filed the K1 form at end of year. I'd like to go ahead and fill out my taxes using figures that would go on the K1, as I have the numbers in Quickbooks.

Since my new job has a good salary, I've had quite a bit taken out for takes this year, more than I took home from the store this year. I'd get back $1700 this year without the business loss, but I could get back the full $2600 deducted from my paycheck with the business loss included.

I'm also aware that I can claim the rest of the loss as I pay it back next year as well, right? I expect to have over $12K taken out in taxes in 2006