A couple of years ago I came into a little money as part of a settlement over an inheritance issue. Now I’m not talking about, “hey, I’m gonna go buy my own tropical island” sort of money. It’s not even, “hey let’s buy a bigger house” kind of money. It’s not even enough money to buy a very stripped down new car. It was just enough money to pay off my credit card, sock a little in the savings account and go out to a nice dinner. Heck, I couldn’t even pay off my car with it.
When I got the money, I talked to several people who are pretty well versed in money matters, including a financial planner. I was under the impression that the money would be non-taxable. So, I didn’t report it on my taxes. It’s not like it would have put me into another tax bracket. I wouldn’t have even had to pay that year. I probably just would have gotten a smaller refund check. Everything seemed fine.
In April though, I got the rest of the money and this time we talked to a different financial planner. He also thought the money would be non-taxable, but suggested we talk to an actual accountant. Seeing as how this bit of cash was more substantial than the last and could actually pay off most of our mortgage, we also thought an accountant would be a good idea. That’s when we found out not only was this money taxable, but so was the bit we recieved two years ago. You know, the money we hadn’t paid taxes on.
Now, we could have just pretended ignorance about the other money and hoped the IRS never found out. We could have paid on the current money and left it at that, but when I found out about the mistake, I wanted to rectify it. So we had the accountant do all the paperwork and figure up the late fees and penalties. Wanna guess what it came to?
While I won’t give an actual $ value here, it equivocates to 70% of the money we got. Yes, that’s right, 70%. Now, I’m in full support of paying my taxes to help make the world a better place. As a citizen, I believe it is my responsibility to help fund local schools (even though my son doesn’t attend), pay for roads and a I’m even ok with contributing to services for the those in poverty, despite the fact I hopefully will never have to use them. I am at least partially responsible for my fellow human being and am ok with that. What I am not ok with is giving the government 70% of my money.
The thing that really cheeses me off about this is that if I had kept my mouth shut, there’s a good chance I would never have to pay a cent of it. I did the responsible thing. When I realized my error, I wanted to make it right. Now, I realize if the government didn’t have some sort of punishment, people would just not pay their taxes and then when caught would claim “oops” and pay right up. I’m not one of those people. I’m dumb and was careless, I admit it. I even feel like I should have to pay some late fees for it, but 70%? It would have been one thing if I was trying to get away with something and they had to spend the time and resources to track me down. But not only did I come quietly, I turned myself in. I didn’t hurt anyone.
I feel like there should be some sort of break. It’s not like my husband and I are wealthy. I’m a teacher. He’s in sales. I work for one of the lowest paying school districts in the state. He works for a cheap publishing company. When we got the money, I was in my first year teaching at my school and I’d actually taken a pay cut. He was in telesales then and was making diddly/squat. We were getting by just fine, but we weren’t exactly painting the town red with our extravagance.
What makes this situation even suckier is that in addition to the 70% the government took, to cover all the lawyer’s fees and mediations and consultations, the lawyer took 18% of my money before I even got it. As it turns out, I got to keep a whopping 12% of my money. Granted, that was just for the first part of my settlement. I have no idea what is in store for this current money. I’m assuming since I just got it and I haven’t had to file my taxes this year, I can at least escape without the late fees and penalties. I may get by with the government only taking 40% of my money. And while that is still way too much considering what I make and how we live, it’s better. Plus, I don’t have any more lawyers fees. Of course, I now have accountant fees. So far I’ve acrued about four hours of work from him and let me tell you, even the junior accountants there aren’t cheap.
How in the world does anyone get ahead? All I wanted was to pay my mortgage off so I could start saving a little more for my son’s college education and so that I could take a few weeks off when we get ready to have our second baby. At this rate my son better get some major scholarships and a part time job at McDonald’s.
Yeah, I’m being a bit mellow dramatic, but I feel very violated by our government right now. I’m all for paying my share, but this is my share and a couple of my neighbor’s shares as well.
beetqueen 
I completely understand what you’re going through. Rodney came into a nice wad of cash about a year ago and we had to give up 50% of it to taxes…money that he was entitled to and cashed out of his employee stock when he switched jobs. That money bumped us into a higher tax bracket as well, so we’re also not getting Bush’s so called “economic stimulus” money. Love the government…