2022 Taxes

Hopefully I am now done with my 2022 state and federal income taxes.  I received a refund check from New Jersey last Wednesday, May 17, and deposited it Friday.  As usual I did my taxes using the TurboTax Deluxe program.   Intuit (publisher of the TurboTax programs) tries to upsell more expensive versions of the program but I have always found the Deluxe version to be sufficient.  I filed the returns a few days early on April 12.  I submitted the federal return electronically shortly after midnight and mailed the NJ return on the way to work.  TurboTax tells you to expect to wait 24-48 hours to receive conformation that your return was accepted but in recent years I have gotten a federal confirmation in just a few minutes.  38 minutes this year.  I always mail my New Jersey return because TurboTax charges a fee to file it electronically.

I owed a considerable amount on the federal return.  This was largely because I had some US savings bonds come due (reach final maturity after 30 years) last year.  Tax on savings bond interest is deferred until the bonds are redeemed which is nice but means a big bill when they finally come due.  And the income is considered ordinary and doesn't receive the favorable tax treatment capital gains and dividends do.  Of course I knew the bonds were going to come due and had increased my estimated tax payments but not as it turned out by enough.  I still got a New Jersey refund because savings bond interest (like all interest paid by the federal government) is exempt from state taxes.

I didn't have any major issues with the program.  The handling of state income refunds is no longer a problem as Trump's changes to the tax laws mean I now take the standard deduction and don't deduct state income tax.  Although I live in a blue state the essential elimination of the deduction for state income tax hasn't hurt me because I had been paying the alternative minimum tax which didn't allow this deduction. 

2021 Taxes

 A rather belated report on my 2021 taxes.  As usual I was a little lazy about getting them done but ended up submitting the federal forms electronically early Monday morning April 11.  As I recall I mailed the New Jersey state forms on Tuesday.  My federal refund was deposited in my bank account April 27 which seems like a fairly normal delay.  Unlike last year it was for the expected amount.  A little annoyingly I owed New Jersey money, for some reason I had increased my federal estimated tax payments but not New Jersey's.  However my underpayment wasn't enough to trigger a penalty.  I continue to use TurboTax and had no notable issues with the software this time.

California Tax Board Rant

Next up in the rant department is the California Franchise Tax Board which is in charge of collecting California's income tax.  Bottom line, if you have a problem with your California taxes call the taxpayer rights advocate number.  Apparently it exists because the regular process is often an ordeal.

While I live in New Jersey my employer has a location in California where I have worked several summers most recently in 2019.  This requires me to file a non-resident income tax form with California and pay the appropriate tax on my California wages.  I use TurboTax to do my income taxes.  However TurboTax only includes one state income tax return.  Additional states can be purchased but being cheap when doing my 2019 taxes I filled out the California non-residence forms myself.  Unfortunately I made a small error.

My California return included form 540NR and schedule CA.  540NR is the main form, the purpose of schedule CA is to reduce your allowed deduction based on the ratio of your California income to your total income.  After completing schedule CA you were suppose to copy two numbers back to form 540NR, your California income and your California taxable income after your allowed deduction.  Unfortunately I only copied the second number back which is the only number used going forward (and the only number schedule CA tells you to transfer back).  As a result I left line 32 of form 540NR blank but everything else including the tax owed was correct.

A few months later California sent me a refund check for my entire tax paid in 2019 and a notice that they had changed my return.  Apparently some computer program had seen the blank line 32 and ignoring everything else in the return had deduced I had no California income and therefore owed no California tax.  This was remarkably foolish as any human reviewing the return would have seen easily that it was line 32 that was wrong not everything else on the return.  And I think it would be a good idea for to have a human review computer changes rather than automatically send out a check for the entire tax paid.  I expect it is pretty rare for people to work in California, have substantial taxes withheld from their wages, submit a return with an additional payment but nevertheless actually owe no California taxes.

I didn't cash the refund check because I knew it was sent in error and starting calling the California tax help number.  This involved long periods (a hour or more) on hold.  California supposedly had a call back system but unlike Amtrak's it didn't work properly, my phone would ring once and then go to voice mail.  Eventually I got through to someone but they were not very helpful.  For some reason although what had happened should have been obvious they required I submit a written explanation.  I did this but made another error in that I didn't include an entire corrected return.

After hearing nothing for months I called again and when I eventually reached a representative they disclaimed all knowledge of my letter of explanation, apparently because I hadn't precisely followed their amended return process it had just been thrown away.  So I sent another written explanation this time including a formal amended return.       

After another long delay California sent me a letter changing my tax owed back to the amount I had originally calculated adding interest and fees and demanding payment.  After trying and failing to reach someone at the regular help number I eventually tried the taxpayer rights advocate number.   This quickly reached a representative who put a hold on my account and told me that I could resolve the situation by returning the refund check (which fortunately I still had).  I did this.

After a long vacation I tried calling back the person I had talked to.  This took several attempts (apparently they don't check their voice mail) but eventually I got through.  California had received the returned check and this had in fact resolved the situation. I requested (and eventually received) a statement showing a zero balance. 

The whole experience was infuriating.  Liberals claim to be the good government party but they often show little interest in the (no doubt boring) job of making government work well.  Democrats claim that Republicans have kept the federal IRS underfunded and perhaps that is true.  But there is no such excuse for California, the Democrats have had complete control for a long time.  Nevertheless the California Franchise Tax Board appears to be totally incompetent.  Apparently good service just isn't a liberal priority.  This is shortsighted as it creates antigovernment feelings which reduces the popularity of the overall liberal agenda. 

2020 Taxes

 Although the deadline was extended to May 17 I managed to get my 2020 income taxes done on the usual schedule.  I submitted my federal return electronically late on April 13 and mailed my New Jersey return the next day.  I mailed the New Jersey return because I am too cheap and stubborn to pay the fee (about $20) to submit it electronically.  I used TurboTax Deluxe again as I have every year since 2010 (for tax year 2009).  I have complained about the program in prior years but I didn't have any big issues this year.  One minor problem was some directions which weren't correct for seniors (the tax laws are a little different when you pass age 65) but this wasn't too hard to figure out and I certainly have no desire to return to doing my returns by hand.

My federal refund didn't show up in my bank account until May 5 which seems a bit longer than normal.  For some reason it was for $5.95 more than computed on the return I submitted.  To date I have not received any explanation (perhaps they don't bother sending a letter for such a small amount).  It is possible I copied some number from a 1099 form incorrectly and this was automatically corrected but I don't really know.  This is bugging me a little but probably not enough to pursue the issue.  I haven't heard anything from New Jersey which has sometimes been quicker.  However it's probably not the right time to be expecting record speed.

2018 Income Taxes

I mailed in my 2018 US and NJ income tax returns last Friday, a whole 3 days before the Monday deadline. They had been more or less done for several weeks but because I owed money this year I didn't feel any great urgency to complete the process.  However on the preceding Tuesday my phone and internet went out with Verizon giving a repair estimate of the following Tuesday.  The lack of internet left me with time on my hands which I used to get the returns done a little early.  It also meant I couldn't submit them electronically and had to mail them but I am inclined to do that anyway when I owe money because I am a little nervous about allowing them to pull money from my bank account.

I owed money primarily because I had a large involuntary capital gain (from CVS buying Aetna) last year and I hadn't increased my estimated taxes by quite enough to cover the additional capital gains tax.  The lower federal withholding rates also contributed but the new law did provide me a tax cut.  I ran my 2018 income though the 2017 program and discovered my federal tax was about 6.5% less because of the new law.  Similarly running my 2017 income through the 2018 program showed my 2017 federal tax would have been about 9% less if the new law had taken effect a year earlier.  In both cases the general pattern was the same, my ordinary income tax and the net investment income (or Obama care) tax went up because of the new limit on deducting state and local taxes but I still saved money because I no longer had to pay the Alternative Minimum Tax (AMT).  The AMT doesn't allow deductions for state and local taxes so I hadn't been benefiting from those deductions for some time.

I didn't have any particular issues with Turbo Tax Deluxe which I used again this year perhaps because I am getting use to its annoying features.  It still tries sell you upgrades but they aren't really needed.  

CVS Buys Aetna

A couple of weeks ago on Wednesday, November 28, 2018 (almost a year after the deal was announced on December 3, 2017), CVS completed its purchase of health insurer Aetna.  This was of particular interest to me because I owned some Aetna shares.  I had bought them in late 2012 when I had some money to invest.  I had Aetna health insurance through my employer and (contrary to the claim by some that everybody hates their health insurer) was satisfied with their performance.  The stock seemed very cheap (in terms of price versus earnings per share) so I bought some.  This worked out quite well as I paid less then $50 per share and the sales consideration (a mix of cash and CVS stock) had value in excess of $210 per share.  So I have a capital gain in excess of $160 per share.  Unfortunately the gain is fully taxable (at capital gains rates) even though part of the purchase price was paid in CVS stock.  Fortunately I adjusted my estimated tax payments throughout 2018 to account for this.  This wasn't actually required (to avoid a penalty) since you aren't required to predict the future and pay estimated tax for income you haven't received yet but convincing the IRS of this requires filling out a complicated form in which you report your income by quarter (approximately) instead of lumping all 2018 income together.  So it seemed simpler to pay in advance although this would have meant getting a large refund if the deal hadn't gone through in 2018.

I held my Aetna shares in a brokerage account.  On Thursday (one day later) the position seemed to be in limbo but by Friday (2 days later) I had the CVS shares and money in my account.  This beats locating and and mailing in paper stock certificates which I have had to do in the past.  CVS initially said (in a statement that appears to have been removed) that the fair market value (for tax purposes) of the CVS shares I received was $79.50 per share (the CVS closing price on Tuesday).  However my broker thinks it is $80.715 (the average of the CVS high and low for Wednesday) which seems more consistent with IRS regulations.  I suppose I will go with whatever the 1099 (which I haven't received yet) says. My broker valued the fractional CVS share (for which I received cash) at $80.2644 per share.  This is close to but slightly less than the CVS closing price on Wednesday of $80.27 (perhaps there was a commission paid when the fractional shares were sold).

In order for the merger to go through CVS had to get various approvals including from the US Department of Justice (USDOJ). The USDOJ approved the deal with certain conditions which CVS agreed to.  Usually such agreements are formalized in a legal settlement which a federal judge has to approve.  Such approval is usually routine and it is normal for companies to complete a merger (as CVS and Aetna did) before the judge has signed off. However in this case the judge, Richard Leon, has been expressing doubts about the wisdom of allowing the merger.  But it is my (layman's) understanding that while the judge may not like the agreement that the USDOJ arrived at, he can't actually block the deal if the USDOJ is willing to allow it since the USDOJ can just drop their lawsuit if the judge doesn't approve the proposed settlement.  Since the main condition was that CVS sell part of Aetna's business the USDOJ has little need for a formal settlement agreement once this sale goes through (as I believe it now has). We will see if this is correct.            

State Tax Changes

Last November 1, New Jersey raised its state gas tax by 23 cents a gallon.  This was a pretty big increase, the old rate was 14.5 cents per gallon so the tax more than doubled but I didn't really object. The old rate was anomalously low and the roads have to be paid for somehow.  And the effect on me was insignificant.  I estimate I buy about 300 gallons of gas a year in New Jersey so the increase will cost me about $70 a year or a bit more than a penny a mile.

As part of the deal to raise the the gas tax the New Jersey sales tax was cut from 7% to 6.875% starting January 1, 2017 and to 6.625% starting January 1, 2018.  This affects me even less.  I estimate I spend about $10,000 a year subject to this tax.  So I will eventually save about $37.50 a year in sales tax or just over half of what the gas tax increase will cost me.

As noted above the first stage of the sales tax decrease was supposed to take effect on January 1, however I was a bit surprised to see the my local upscale supermarket still charging the old rate on Tuesday January 3.  However this was fixed by Wednesday and they apologetically refunded my nickle when I complained.

Sales tax rules tend to be complex and constantly changing so they impose a considerable compliance burden on businesses.  This is especially true for companies like Amazon who have to keep up with all the changes nationwide instead of just those affecting their particular location.  In my view any effort to make more out of state merchants collect sales tax needs to be coupled with simplification to reduce the compliance burden.

Tax Loss Sale

Monday was Columbus Day.  This is a federal holiday which my employer observed but the stock market was open.  I took the opportunity to sell my position in ConocoPhillips (COP), a large American oil producer.  This was another of my ill-fated bets on peak oil so I realized a loss.  This will save me some money on my 2016 taxes. When I made a similar tax sale last year I estimated I would recover 25% of my loss.  This turned out to be low, according to TurboTax my actual recovery was about 32%.  I am unsure why the savings were in excess of the nominal statutory rates, perhaps my marginal rate is actually higher because I am subject to some phase outs of exemptions or credits. In any case this makes tax loss selling an even better idea.  I still find it painful however and had been putting it off.

I didn't reinvest the sale proceeds.  I had considered buying some more VDE (Vanguard's energy sector ETF) waiting 35 days (to avoid the wash sale rule) and then selling my current position in VDE (which also has an unrealized loss) and repurchasing the COP so as to maintain my current exposure to the energy sector (more or less) while realizing both losses. However I decided to just take the money out of the market for the moment.  My short term timing was okay as the COP is currently down some since I sold.

2015 taxes

My taxes got off to a bad start this year when the DVD drive in my computer died while reading the TurboTax disc.  Fortunately external DVD drives (which plug into a USB port) aren't very expensive.  I ordered one from Amazon and it was able to read the disc.  So I guess I can't blame this on TurboTax. 

Last year Intuit annoyed a lot of people by removing longstanding features from the Deluxe version of TurboTax (in order to force people to buy a more expensive version).  The ensuing outcry eventually caused Intuit to reverse course and the deleted features (or at least most of them) were restored for 2015.  One positive difference is Intuit now appears to provide unlimited state returns as part of the base program (previously if you needed to file more than one state return you had to purchase upgrades for each additional state).  This saved me some money as I spent the summer working at my employer's California location.

In addition to again encountering some problems with TurboTax that I have complained about in previous years I found a new issue.  When entering items from Box 14 on your W2 TurboTax says something like don't worry if you can't find the item in their drop down menu of common deductions.  But you should worry because if TurboTax doesn't recognize the abbreviation it won't treat it as a deductible state tax potentially costing you money.  In my case I had a deduction labeled "UI/HC/WD" which it turns out is the same as "UI/WF/SWF" which is deductible.  The program actually knows this but only lists "UI/WF/SWF" in the main menu.  If I recall correctly you have to consult a help page to get a list of alternative names which includes "UI/HC/WD" which I had not done until this year.  I don't think this actually cost me money in previous years because I am subject to the alternative minimum tax which doesn't allow the deduction.  However anyone who just pays the regular tax is potentially overpaying if they overlook this which TurboTax makes it easy to do.

I also found I had been making another error in my New Jersey returns.  States generally do not tax interest on directly held federal bonds.  So you can exclude this interest from income on your state return.  But if you own a mutual fund that in turn owns federal bonds state tax treatment varies.  In New York this interest is taxable unless it is a substantial fraction of the mutual fund dividends (over half by some test if I recall correctly) but in New Jersey it appears you can prorate and exclude the portion of dividends attributable to interest on federal bonds from your income even when it is only a small fraction of the dividends.  Having lived in New York for many years I was used to the New York rule (which my mutual funds never came close to satisfying).  When I moved to New Jersey I assumed the rule was the same.  This oversight cost me a small amount of money in previous years but not enough to make filing amended returns worth the hassle.

I filed my federal return electronically April 10 and mailed the state returns April 12.  My refunds were reasonably timely.  I received (by direct deposit to my bank account) my federal refund on April 20 and my New Jersey refund on June 3.   I was not due a refund from California.

Over the years I have had various issues with TurboTax but there don't appear to be any obviously superior alternatives so I will probably stick with the devil I know.

Added 7/19/2016:  Actually I received my New Jersey refund May 3 not June 3.

2014 Taxes

I got my income taxes done a little early this year.  I submitted the federal return electronically late on April 6 and mailed the state returns the next day.  My federal refund has already arrived, it showed up in my bank account April 15.  I was pleased of course but on reflection it could have been faster.  It should be immediately clear to the IRS that the return is legitimate (because it matches the 1099s and W2s reported to the IRS and is similar to my return for 2013 including having the same address and bank information) so in principle my refund could have arrived in just a couple of days.  However given the actual IRS system (which among other things appears to only issue refunds once a week) this was close to best case.  And I guess cutting this time down shouldn't really be a top priority for the IRS.

The IRS is much quicker than New York and New Jersey.  New York estimates 6 weeks and New Jersey 12 weeks which is consistent with my experience (except for New York in 2013 when I didn't get my refund until the end of August).  We will see how it goes this year.

Incidentally I intended to drop off my state returns at the post office on my way to work but drove right by and was a couple of miles past before remembering and turning around.  Not a big deal but it did leave me with a bit more understanding of how a parent could forget to drop a infant off at day care (as sometimes happens with tragic results).

Added May 1:  Both of my state refunds arrived quicker than usual this year.  My New Jersey refund check arrived in Wednesday's (4/29) mail and my New York refund check arrived in today's mail.  I can only speculate as to why things were faster than usual this year.  I have now filed several New Jersey returns maybe that reduces fraud concerns.  Also perhaps the fact that both refunds were on the small side.  Maybe filing a week early helped.  And I suppose it is theoretically possible the states have become more efficient.

TurboTax vrs H&R Block

It is tax season again and as in prior years I have been using TurboTax (published by Intuit) to do my taxes. A friend was visiting with a similar H&R Block tax program so I decided to compare the two programs. This proved somewhat painful as although the H&R Block program is able to import TurboTax data from 2013 easily as best as I can tell there is no way to import the TurboTax data from 2014. So I had to enter all my 2014 data again. When I had done so the H&R Block program produced similar but not identical results. Some differences were due to the way the programs round to whole dollars. For example TurboTax sums up all my dividends received and then rounds while H&R Block rounds each entry before summing. This sort of thing makes a difference of a dollar or two here and there.

The biggest difference was in their handling of a state tax refund. These are taxable if they are for a year in which you had previously deducted state income taxes and received a tax benefit for doing so. I normally deduct my state income taxes and receive a benefit on my ordinary income tax for doing so. However since I am also subject to the alternative minimum tax (AMT) which does not allow deductions for state income taxes my tax benefit disappears once the AMT is added in. So my state income tax refunds are not taxable. It seems to me that given your prior year's return a tax program should be able to figure this out for you. But neither program handles does. As I have complained before TurboTax makes it quite complicated to exclude such tax refunds from income. H&R Block is better in that it is simpler to tell it that the refund is not taxable but you still have know that it isn't. Fortunately I know this from doing my tax returns by hand but many people won't and will end up paying extra taxes. Recently the Obamacare tax on investment income has added a new complication. Because this tax is on net investment income you are allowed to allocate and deduct a portion of your state income taxes paid from your gross investment income. But this means if you later receive a state tax refund you deducted too much and are required to adjust your investment income in the current year appropriately to compensate. TurboTax (given your prior year's return) helpfully figures all this out for you and automatically computes the appropriate value. H&R Block just gives you an opportunity to enter an adjustment but provides no useful help in determining when such an adjustment is needed or how to compute it. Given that the Obamacare tax started last year so that this is the first year that this adjustment may be needed I expect most H&R Block users will have no idea about what to do and will just assume this doesn't apply to them (which is what I did). Even if a user did realize an adjustment is needed they would have to compute it by hand which is the sort of thing people buy tax software to avoid. So TurboTax definitely wins here. In fairness to H&R Block both companies have a range of programs of varying cost and capacities and possibly a more expensive version of the H&R Block program would have handled this.

Overall this H&R Block program seemed similar but a bit inferior to TurboTax. So given my familiarity with TurboTax I see no compelling reason to switch.

The Only Other Investment Guide You'll Ever Need

Having recently reread "Money Angles" by Andrew Tobias I decided to see what other books of his were in my local library. His book "The Only Investment Guide You'll Ever Need" was supposed to be there but apparently has been lost or stolen. But I checked out and reread the 1987 sequel "The Only Other Investment Guide You'll Ever Need". Although it is similar in some respects to "Money Angles" I didn't like it as much. One problem is the book comes across as more badly dated because it offers more of the kind of specific advice that depends on the details of things like current tax laws and many such details have changed. For example the book mentions at one point (p. 225) a tax on mutual fund advisory fees (which were to be included in income). But this tax on "phantom income" proved so unpopular it was repealed before it ever actually took effect.  Also I have read enough personal finance books that another version of fairly standard advice is not very interesting to me. 

I didn't hate the book, it does have some of the same sort of amusing stories I liked in "Money Angles".  And some of the advice is still good.  But if you are looking for a guide to personal finance I think you would do better with a more recent less dated book.    

Account Numbers

Last night I logged on to my bank's website to pay my water bill.  For some reason I happened to notice that the account number on my bill didn't match the information on my bank's website (which I had entered several years ago when I added the water company as a payee after moving into my new townhouse).  Upon investigation I found the water company (New Jersey American Water) had changed my account number last November at the same time they changed the format of their bills.  An inconspicuous statement to that effect (advising that account numbers on bank bill payment systems should be updated) was included on the bill but I hadn't noticed.  The payments had been going through anyway but presumably would have started failing at some point.  So it seems that if you use bank bill payment systems you should check every so often that the payee information is up to date.

I also was a bit startled to see that my 2014 New Jersey tax refund had been electronically deposited earlier in the week.  I had filed a paper return and had been anticipating a paper check.  However upon checking I found TurboTax had included my bank account information on my return.  I don't remember telling it to do that but I was originally intending to file the New Jersey return electronically (like my federal return) but was then prevented from doing so for some reason I don't remember.  So I guess TurboTax didn't remove the bank account information when I switched to paper filing.  I suppose no harm was done and I did get the New Jersey refund a month earlier than last year.  Still very slow though, the federal refund took about a week. 

Property Tax

Thomas Piketty in an interview for a British think tank suggests property taxes should be assessed based on your equity in a property (value less debt) not on value:

But it is perfectly possible at the national level to transform our traditional forms of property taxation, which are typically proportional and which do not take into account financial assets and financial liabilities, because they were set up in the nineteenth century when most property was real estate property, so they do not take into account financial wealth and liabilities. This can be turned into a progressive tax on net wealth, which basically would be a way to reduce property tax –council tax in the UK – for the vast majority of the population. Typically, if you have a house that is worth £500,000, but you have a mortgage of £490,000, you are not rich – you have a net wealth of £10,000, so you should pay less than someone who has no mortgage or who paid off his or her mortgage many years ago. 

This makes little sense for US property taxes on owner occupied housing as I will explain.  Piketty is correct that someone with a mortgage on their house is less well off than someone who owns their house free and clear.  However this is already taken into account in the US tax code through the mortgage interest deduction in the federal income tax code.  Although this deduction is often cited as a loophole it has always made sense to me.  But I don't think it makes sense to provide a second reduction in your taxes for having a mortgage.  In fairness to Piketty many countries don't have a mortgage interest deduction in their income tax code in which case his equity argument above has more force.  But in those cases a simpler fix is to add a mortgage interest deduction.

I had previously though the real loophole regarding taxes and owner occupied housing was that the imputed rent on an owner occupied house is not included in income.  But while thinking about this it occurred to me that property tax is roughly equivalent to an income tax on imputed rent.  (This idea is not original to me but I had not encountered it before.)  So besides the practical problems in trying to assess and tax imputed rent as income there is a theoretical case for excluding it as well.  Of course if property taxes are a surrogate for income tax on imputed rental income they should ignore mortgage debt as this doesn't affect the imputed rental income you are receiving by living in your house.

A complication in thinking about tax breaks on owner occupied housing is that any benefits tend to be reflected in selling prices and hence make less difference to new buyers than might be expected.

2013 Taxes

This year I got my taxes done a whole day early.  Hopefully things will go better than last year.  My state refunds took months to arrive and then it turned I had made a mistake on my New York return and had to file an amended New Jersey return. 

This year I have already made one mistake.  I realized shortly after submitting my federal return electronically that it was missing a form.  Fortunately this didn't affect the amount of the refund I am due so I just stuck the missing form in the mail to the IRS but it was still aggravating.  I consider this mistake partly TurboTax's fault as it gives you an option to skip things you aren't ready to do yet but then doesn't always remind you in the review phase that you may not be finished.  So you should be careful about starting your return before you have everything you need.

I had some of the same issues with TurboTax as in previous years and noticed another problem.  In the review phase it summarized my effective federal tax rate for 2013 and previous years but computed it incorrectly for 3 out of 4 years.  For 2010 and 2011 it failed to add in the AMT and for 2013 it failed to add in the Obamacare investment income surtax.

I gripe about TurboTax a lot but it really doesn't make much sense to try to do your taxes manually if they are at all complicated.  The Obamacare surtax has just added another layer of pointless complexity.          

Patent Issued

My last day of work at IBM was just over 5 years ago.  So I was bit surprised to see in my mail today a check from the IBM payroll department.  It turned out that on January 28, 2014 the US patent office had issued patent 8,639,737 for an invention I made while employed by IBM which entitled to me to a small award from IBM's patent incentive program.  The application was filed March 8, 2008 and was derived from an earlier application filed May 27, 2005.  Which all seems like a very long time ago at this point. 

While it was nice in a way to get this reminder of a past life it is also going to complicate my taxes for 2014.  This is New York state income so I will have to file a New York state return and I will likely end up over withheld with respect to social security.

Shipping Options

TurboTax (the tax program I have used for the last few years) was on sale at Amazon this week so I decided I might as well order a copy although I won't be ready to do my taxes for a while yet (still waiting for a lot of the tax documents I will need).  So naturally I chose the free but slow shipping option over the faster but more expensive choices that Amazon also offered.  Curiously when I was placing the order (late Monday night) this free option showed an expected delivery date of next week but when I received a confirmation of shipping the next day the expected delivery date was Thursday (when it duly arrived via the USPS).  Which leaves me wondering if Amazon is deliberately giving pessimistic arrival times for the free shipping option on the checkout screen to discourage use.  And if so about the legality of this. 


The program installed without any trouble which was a bit of a relief since if I recall correctly I had considerable difficulty getting it to install correctly last year (perhaps connected with a malware problem I had early last year).

Tax update

As noted earlier I filed an amended New Jersey state income tax return last month claiming an additional refund.  The check arrived Friday.  So it only took New Jersey about a month to process the amended return as opposed to over 3 months for the original return.  Hopefully I am now done with my 2012 taxes.

New York refund arrives

My New York State income tax refund finally arrived on Wednesday.  It wasn't as much as I was expecting because it turned out I had made an error (using the wrong tax computation worksheet) in figuring my tax.  This was a bit annoying although I can get some (but not all) of the difference back from New Jersey by filing an amended return which I did.  Hopefully New Jersey will process this a bit faster than my original return.  I was also annoyed to learn that although New York theoretically pays interest on refunds delayed more than 45 days this only applies if the interest is at least $1 so I was out of luck there too.

While looking over the New York tax computation worksheets I noticed something bizarre.  Suppose a married couple is taking the standard deduction of $15,000 so that their taxable income (line 38) is $15,000 less than their AGI (line 33).  Then if I have figured correctly, if their AGI is exactly $2,000,000 their tax will be $135,972.5 while if their AGI is just $50,000 more (that is $2,050,000) then their tax will be $179,487 or $43,574.50 more.  This is a marginal rate of over 87%.  Taking federal taxes into account some people in this situation seem to be facing a marginal rate of well over 100% for this income range.  This makes no economic sense, it is just evidence that the New York legislature can't be bothered to write sensible tax laws.  

State Income Tax Refunds Delayed

I have been used to receiving any state or federal income tax refunds owed to me towards the end of May.  But this year my state income tax refunds (I was not due a federal refund) were much delayed.  My New Jersey state income tax refund finally arrived yesterday, more than 3 months after I filed.  The federal government pays interest on income tax refunds after 45 days but New Jersey gives itself a rather generous 6 months .

And my New York state income tax refund still hasn't arrived.  Apparently New York changed contractors and this has led to delays.  At least New York also pays interest after 45 days (on excess withholding).