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(Tax) Knowledge is Power

January 19th, 2013 at 09:34 pm

I am quite sure the average person is quite ignorant about all the taxes they pay.

I know I personally have a very strong edge with all my tax knowledge (income tax, payroll tax, etc.).

BUT, I don't always pay attention to every tax I pay. Some of the smaller stuff is easy to ignore.

SO, while I am tracking our sales tax this year and monitoring that I am also starting to look at all the taxes that we pay.

So, I have more tax observations, and I found a simple way to save some taxes!

**We share cell phone service with my parents, who live in another city. While looking at our cell taxes, I found that our city has some of the highest cell phone taxes in the region. Which is not to say there is much we can do, because my parents live in one of the most expensive cities in the world. Odds are, their tax is even higher.

So I looked it up. Best I can tell, our cell phone tax rate is 7%. I have *no idea* how it is figured, since it comes out to about 3% of our total cell charges. BUT I found that San Jose has a cell phone tax rate of 5%.

Worth a shot, so I changed the mailing address to my folks' address. Totally on the up and up as our usage runs very 50/50. It's a toss up which city the taxes should be billed too. We have apparently been paying more tax than we need to, for several years. {I initially did not want to change it all over to their name, but realized that all I had to do was change the billing address. Easy peasy! Will see if this makes a difference...}.

**I am also seeing another layer of it being impossible to compare apples to apples sometimes when discussing these things online.**

Other utility billing observations:

**Our landline is also subject to the 7% tax, but it cost pennies. In fact, all of our landline taxes (lots of Federal taxes) are negated out because they run about $2 per month, and we get a $2 credit per month for getting online bills. So, I'll consider it a "no tax."

**Our internet is subject to -0- taxes. No fees. No taxes. I found this one surprising. I didn't know "high speed internet" was tax-free.

Clearly it's in how they bill it. I am sure they could lower the "bill" and add some fees. This is one of our higher utility bills. All the fees are obviously included in the rate. But still, I like the no tax part!

**Water/City Charges. $0 Tax.

I appreciate this because their charges are kind of insane and completely out of our control. For reference, the metered water portion of our bill was $3 last month. The rest is a flat fee, and we pay a TON for water in this city. Glad I don't have to pay taxes on top of fees I can't control at all.

**County Sewer Charges

It's a flat fee and I don't have the bill handy. I don't think the taxes really matter - they will charge what they charge and I have no control over it. But I will look it up later.

**Gas and electric is interesting. We use the regional private PG&E for gas and the local city utility for electric. The general impression is that our electric is dirt cheap because of this. Hard to say (I'd have to compare rates), but the city charges us a heck of a lot of FEES. I think our lower electric bill is mostly due to the energy efficiency of our home. As most people even locally guess we pay about 3 times what we do in winter, etc. {My parents seem to think they'd have a much lower bill here than their PG&E Electric, but I am not so sure - excepting a more modern and energy efficient home}.

PG&E GAS: 7.5% utility tax. Basically no charges and fees. We barely use any gas and so the tax is negligible. We literally pay on average $20/month. We have gas heat (furnace, hot water, gas stove, etc.).

City Electric: 7.5% utility tax. Plus this and that fee. They literally add $18/month just plain flat fees, to our bill. Our last bill (December) was $55 for electricity usage and $25 for fees and taxes. Lovely!!

So though I always kind of feel like our electricity conservation isn't as stellar as our gas conservation, I suppose that really isn't quite fair. Electric costs more anyway, and the fees and the taxes add up. This utility tax is calculated based on all the usage AND the fees. So, double ouch.

So today I have far more knowledge than I had yesterday. & I might have even saved a couple of bucks in the process.

8 Responses to “(Tax) Knowledge is Power ”

  1. FrugalTexan75 Says:

    Speaking of tax knowledge ... it's been kind of funny/sad to see how many people are upset about the "tax hike" that Pres. Obama "instituted" ...i.e. the SS tax holiday expiring. I itch to set them straight, but fear that it may become politically charged .. so keep mum. (This is on FB.)

    Good job finding a way to possibly save a little bit via taxes. I was surprised that the Internet wasn't taxed as well. The $29.30 quoted, was just that. No more.

  2. MonkeyMama Says:

    Yes, it drives me nuts what people unwittingly support and vote for with the complexity of the tax code and such. (Though even if it were simple, they'd be easy to dupe. It's not like payroll taxes are really that complicated, but few take the time to understand them).

    & it's one of those things where "facts" are often turned into political debates. I am sure I have been called an extreme liberal or conservative many many times for just making more factual tax statements.

    Like, OBama didn't give you a tax increase. He gave you a tax cut, and it expired. Though I appreciated the simpleness of this tax cut versus the various Bush stimuli (Oh I appreciate VERY much as a tax preparer), I knew all along it was kind of a horrible idea. You send people a check, it might be kind of a mess to administer, but people understand it. You sent them a check one year, you didn't the next year. Messing with people's payroll = bad idea, in comparison. They are happy when they get the tax break, but our attention span seems to be 10 seconds long in this culture.

  3. PauletteGoddard Says:

    What are some good layperson manuals and websites tax ignorami such as myself can go to improve our tax knowledge?

  4. ceejay74 Says:

    What irritated me about the payroll "tax hike" is that all the other things Congress was fighting over were ALSO tax cut expirations, yet many congresspeople fought tooth and nail as if they were tax hikes. Meanwhile no one in Washington bothered to even mention this other tax cut expiration. Made no sense to me.

  5. rob62521 Says:

    Very interesting to learn about these taxes...I will have to check to see if we are taxed on high speed Internet.

  6. MonkeyMama Says:

    @paulette - I have no idea? Seriously, most my tax knowledge comes from work and college, and so I am not aware of any good/useful basic tax sites. I suppose I can keep my eye out.

    I do have a link in my sidebar "Mauled Again" that has some really good tax discussion - is written by a tax law professor. A lot of good "big picture" info about income taxes in particular.

    {Unfortunately, there is a lot of BAD tax info out there, so I am wary to share links loosely without reading thoroughly}.

  7. MonkeyMama Says:

    P.S. If anyone ever has a tax question, just ask me. About *any* tax. To start, maybe I will do a payroll tax primer.

  8. Rachel Says:

    I totally agree with your point: taxes are a tricky business and mostly they cause stress and panic when the tax year is ending... I personally try and keep the deadlines but especially if you are self employed, sometimes there just isn't enough hours in a day.

    I really enjoyed browsing your blog! Personal view to this topic is always nice.

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