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Business Impact-Tax Law Changes For 2009 Part 3 I Think

Monday, January 5th, 2009

Here is the third and final business impact post on the 2009 tax law changes.  The laws look to be in for the most part and what I covered in my previous two posts here and here should hold true.  For more detailed information, you may want to check out the IRS website.  For my thoughts on what is notable or what to concern yourself for your filing for this year, please read on.

 

irsbldg1

 

In some respects, in keeping with the new Administration that is coming in, there will be relief for people who don’t have a lot of money, were nailed in a natural disaster, clobbered by losing a home and other situations that made 2008 a rough time for everybody.  If you owe taxes because of loan forgiveness, credit card debt forgiveness that is taxable, you didn’t live in your primary residence a long enough time to get an allowance, etc, ask your tax professional to help you try to dig up any other legal credits or see what relief packages might apply to your specific situation.

If you end up owing taxes when all is said and done, take the time to work out a payment plan with the IRS and/or your respective state agencies.  They are willing to work with you and despite what pundits say, they are human beings and a lot of them are going through the same problems that you or I might have experienced.

The level for due diligence has been raised for the tax professional.  That means that items that might have been allowed to go through as an expense or under certain circumstances may be questioned and your tax professional may recommend that you don’t take the expense, etc because under the new laws, the IRS doesn’t want to see anything that has less than a fifty-fifty shot of being accepted as a legitimate business expense, etc.  If you have the documentation, the substantiation from IRS rulings and know your tax law, go for it. 

Education credits have been extended, make sure you research and check with your tax person if you are taking them correctly.  If you are doing your own taxes, make sure that you research your situation and understand completely what you are filing out in the software before you submit anything.  In fact, I would at this point wait till all software updates are finalized before filing.  That may mean a few weeks for the Fed software and maybe longer for State software, depending on what other incentive rebates may be thrown into the mix once our President Elect gets sworn in.

I am also taking new clients if you would like me to do your taxes for you.  If you are interested, drop me an email or post something in the comment section of the blog with your name, phone number and email.

Interested in any of my books, citizen?  I have one out on taxes entitled, “Bad Tax Idea, Good Tax Idea.”  You may want to make a stop over  here. Please click through to purchase my books and some other interesting items that actually ARE on sale. If you like poker, Heroes (the TV series), comic books, Watchmen, etc, there may be some fast links to get you to what you are looking for.

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

 

Kim Isaac Greenblatt

The latest installment on the tax law changes for 2009 in the Business Impact-Tax Law Changes For 2009 Part 3 post.

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Holmes, Can I Deduct My Mobile Home Interest At Tax Time?

Sunday, January 4th, 2009

Question from a reader:”Holmes, can I deduct my mobile home interest at tax time?”

 

0104mobile-home 

 

My answer is first, do people still call each other “Holmes” or “Homie” or “Homeboy/girl” where you come from?   If so, can I borrow that time machine and go back about ten years to the time you just teleported in from?  I am just kidding but I love being called Holmes!  Maybe you are calling me “Holmes” because I am a great detective, like Sherlock Holmes in researching tax information and making brilliant tax deductions?  Okay, okay, maybe not.  Second, to answer your question, sure, if the mobile home interest is for a mobile home and that is considered as your second home or vacation home or if it is a mobile home that has been installed on a lot (in which case it is considered your primary residence if you are living there, right?).  By the way the motor home in the picture above looks like it could use some home improvements while the wind isn’t blowing to knock the shingles off.

 

According to our friends at the Internal Revenue Service, in publication 936,   for you to take a home mortgage interest deduction, your debt must be secured by a qualified home.  This means your main home (where you sleep and ordinarily live-you only can have one main home at a time) or your second home (as in a vacation home or any place that you choose to pick and treat as your second home).  A home includes a house, condominium, cooperative (where you are sharing something in the land or building), mobile home, house trailer, boat or a similar property that has sleeping, cooking and toilet facilities.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment or other deductible purposes.  Otherwise, it isn’t treated as personal interest.  It is not deductible in that case.

Remember that most mobile homes are bought on a payment plan.  The high-end mobile homes, though sales may be down because of the economy, look like super yachts on wheels.  Some of the interior bedrooms, bathrooms and kitchens are done up fairly spectacularly.  Others, maybe not so much.  The interest payments on these mammoths on wheels is tax deductible in the cases that were outlined above.

 

0104houseboat

 

The same holds true for that boat that you have.  As long as it isn’t a rowboat but is big enough to have sleeping quarters, a galley (that is a kitchen), and toilet facilities and you treat it as your primary residence or second home you are good to go.  There are a lot of people who, depending on where they are in their life, their income stream and their family size, decide to live the life on the sea, lake or river and buy houseboats.

So, Holmes, you didn’t tell me in the e-mail what knid of mobile home did you buy?  If it is a self-sufficient, self-contained house on wheels, you are in like Flynn.  All the best to you, Holmes, and thanks for the question and for being a good sport about this post.

Interested in any of my books, Holmes or Holmestta?  I have one out on taxes entitled, “Bad Tax Idea, Good Tax Idea.”  You may want to make a stop over  here. Please click through to purchase my books and some other interesting items that actually ARE on sale. If you like poker, Heroes (the TV series), comic books, Watchmen, etc, there may be some fast links to get you to what you are looking for.

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

 

Kim Isaac Greenblatt

Holmes, Can I Deduct My Mobile Home Interest At Tax Time?

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State Warrants and Other IOU Questions

Saturday, January 3rd, 2009

Question from a reader:”I read that California has issued IOUS in the past.   They are talking about doing that again.  Are they going to?  Should I leave the state?  Are we broke?”

refund-check

 

 

My answers to the statements and the questions are:  At this point, they are trying to decide what to do, you don’t have to leave the state unless you want to and yes, the state is broke though it isn’t like you will the entire city of Sacramento standing by the 405 Freeway on or off ramps begging for spare change-at least not yet anyways.

 

sparechange

 

California has issued warrants in the past.  Warrants look like checks except they have the word “warrant” printed on them.  The first image above is of Federal refund checks and State refund checks (and warrants) are not that different.  If memory serves correctly, I remember receiving a warrant back the past and at the time, I think that most banks went ahead and cashed them and treated them as if they were checks.  After all, if the State of California says they will make good on a check they will, even if it is later than sooner.  In that case, they came to a resolution relatively quickly.    That was back in July 1992.

This time around it is any one’s guess as to what the state will do.  They have 60 days as of Dec 31 from what I gather.  At the end of the time, the State of California runs out of money and is officially broke.  The commercial banks in the state haven’t made a decision yet as to what they would do if they receive warrants either.

So the bad news is that you might get an IOU.  The good news is that currently, if they don’t pony up the cash for the IOU the state has to pay you interest and as of now, the interest might go up to 5%.  According to Jacob Roper, a spokesman for the California state controller’s office, they haven’t determined what the rate of interest might be if that is the case.

Are other states faring any better or worse?  Sure.   Does it mean that you have to high tail it out of California?  Not unless you already were planning on moving in which case any warrants that would be mailed to you would follow you to your mailing address in your new state.

If you owe money in taxes, you are still required to pay it and the newspapers, Internet and blog sphere have been full of comments screaming the blues that it isn’t fair.  I have to ask them, whether or not the State of California pays you any refunds now or later has no bearing on whether we pay taxes or not.  The State of California follows that Federal government in that we are taxed on all worldwide income earned while living in California, with the usual exceptions and rules about paying taxes to other states, etc, etc. 

People forget that when they don’t have money to pay taxes they work out payment plans and agreements with government agencies themselves.  Once in a blue moon I don’t have any issues with the self-same agencies turning around and working out payment plans with us. 

Besides, the whole mess is due to mismanagement of money and running out of it.  If the subject bugs you, please write your State representatives and get on our Governor’s case.  Make sure you suggest they find other avenues of revenue generating like bonds, etc.  We don’t need cutting of services in health, education and special needs like they always seem to go after first.

This is a good time to go after our representatives since it is a new time for a new Federal administration and city elections are starting to come around again as well.  Make sure that you tell your candidates and representatives that their jobs “warrant” that they look after your money, any refunds and programs or else they won’t get the job!

Remember that normal life rules of engagement apply.  Try not to count on any refund money at this point if you can as part of your budget, even if you have planned for it already.  If you can’t change your plans, be patient because as I stated earlier, the decision hasn’t been made as to what to do.  For the record, State employees are being forced to take days off as well to cut down on costs to try to save money as well.

Interested in any of my books?  You may want to make a stop over  here. Please click through to purchase my books and some other interesting items that actually ARE on sale. If you like poker, Heroes (the TV series), comic books, Watchmen, etc, there may be some fast links to get you to what you are looking for.

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

  

Kim Isaac Greenblatt

 

State Warrants and Other IOU Questions

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Ten Timely Tax Tips for Any New Year

Friday, January 2nd, 2009

So here we all are, ready to hit the New Year running and maybe we should get some of our finances in order.  To help you get yourself straightened out or to remind you of things you may have forgotten, here are ten timely tax tips for any New Year:

 

oldtax-form

 

1.  Get your receipts ready now from the previous year.  If you have already been keeping a running tally of your expenses in spreadsheets, Word documents, cell phone notes, pdfs, super!  You are ahead of the game and you definitely are on the ball.  If you haven’t, gather all your receipts and start placing them in categories so you will be able to total them easier.  It will also make things easier for you when you do your own taxes or if for your tax professional.

2.  Don’t be a martyr or a know-it-all at tax time.  If you are having problems doing the do-it-yourself software packages that are out there (and some are easier to use than others), get a tax professional to help you.  All you have to do is see if they can import what you have already loaded into the software (and in most cases they should be able to) and you both are good to go.

3.   Don’t be afraid of doing your own taxes.  If you are good with numbers, can read and are patient, anybody can do their own taxes.  As stated in item two, the “gotcha” is if it is very complicated and when you start researching items on the irs.gov website the tax law starts to sound like a foreign language.  A dead foreign language at that..  For simple returns, everybody should be able to do or at the very least understand their own taxes.

4.    Be honest.  Friends may tell you a lot of things and sometimes it is bad advice.  Take the high road and declare all your income, it is the law.  You are taxed on all income made world wide and if you learn tax law you can see the exceptions and items where you get credit for paying taxes to foreign nations etc.  

5.   Wait till you get all your bank information, stock information, etc.  Especially hold off till you get all your W-2s.  It is easy to amend a tax return (I do that all the time for clients) but it is even easier to be a little more patient, wait for all your documentation and file your return the correct way the first time.

6.   Don’t forget to pay quarterly taxes if you get one-shot payments for sales of movie scripts, books, etc.  If you hit the lottery, make sure that you have money paid so that won’t ding you at the end of the year.  A very rough rule of thumb is to put aside a third of any income for payment to Federal and any state taxing authorities.  If you owe penalties on something, expect penalties and interest to jack your payments to over one third of your income in some situations.  You will need to look at this on a case by case basis.

7.  Don’t complicate your life.  I had a client who was so busy recently trying to find expenses that the person came to the conclusion, “This is stupid.  I am looking at paying $10,000 for expenses that will save me $300 in taxes.”  I agree.  Sometimes it is just easier to relax and pay what you owe based on your income and how you earned it.

 

8.    Double and triple check all tax returns before electronically filing or mailing them in.   People get excited and they transpose numbers, they put items in the wrong categories or enter them incorrectly.  Tax software is garbage in, garbage out (GIGO) and if you don’t check you won’t know.  Take the time and check your information as to what you key in or what you say to your tax pro and if that is a match with what you were talking about.

 

9.   Listen to friends but unless they are exactly like you, watch their tax suggestions.  What works for one person or family may not work for the next couple down the block.  Each tax situation is unique and different from person to person.

 

10.    Set up you tax interview or preparation time with your tax professional early, even if the meeting is for later in the season.  It gives the tax pro time to prepare for your arrival and if they are doing their job, they will have done more legwork for you before you set foot in his or her office.

Anybody have any more suggestions?  Please post them below in comments.   Remember that I don’t post comments for articles or posts that are over 2 weeks old.   

 

Interested in any of my books?  You may want to make a stop over  here. Please click through to purchase my books and some other interesting items that actually ARE on sale. If you like poker, Heroes (the TV series), comic books, Watchmen, etc, there may be some fast links to get you to what you are looking for.

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

  

Kim Isaac Greenblatt

 

Ten Timely Tax Tips for Any New Year

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Can I Take Dead People As Tax Deductions?

Wednesday, December 31st, 2008

  A goofy question from a reader to wrap up 2008 in is as follows: “Can I take dead people as tax deductions?”

 

 baddeduction1

 

My answer, smart guy, is that in some situations, yes, you can claim dead people as tax deductions.  By the way, if, like in the photo you are considered “undead”, for tax purposes you are considered alive and your question is moot. 

If you or your spouse died in 2008, you actually would be filing as Married Filing Jointly one last time for your Federal (and probably respective state) tax returns.  Then, if there were children in the relationship, the surviving spouse could take the Qualified Widow or Widower tax status for the next two years (barring any super changes in tax law from Congress).

The purpose of this is to allow continuity and some relief to the surviving spouse and their family.

Now, if you had wanted to start getting social security numbers from dead people you would be in for a nasty surprise because contrary to what you might think (or maybe you already thought this), the IRS does track dead people.  If a social security number is “retired” or already used in filing, it will kick out the next return that comes in trying to use it.  Electronically it will state that the social security number has already been used.  I don’t remember if there is a deceased code specifically but there very well may be.  As a financial fashion tip, one of the first things that the IRS looks at also is the social security number and they have a very good system for cross-checking if something has already been filed or not as I stated previously.  Trying to file tax returns with zombies (or vampires since the dead are coming back to life) isn’t a great idea and it may result in the IRS or local state authorities chasing you down like villagers with pitchforks and torches.

 villagerspo

Speaking of tax fraud….

People have tried forever trying to claim dead relatives, goldfish, cats, their neighbor’s cats, their neighbor’s dead relatives and of course, for Earned Income Tax Credit fraud, your neighbor’s kids.  The IRS is cracking down hard - and I mean h-a-r-d hard on abuses in EITC and in fraud in general.  My suggestion is to plan on starting the new year right by not trying any shenanigans that you won’t get away with anyways.    Use all that creative criminal energy to start up a manufacturing business and let me help you manage it.  If you can think up methods to try and defraud people you should be able to come up with some awesome business ideas and implementations as well.

Just a reminder if you have any tax questions or want me to do your taxes for you - drop me an email or post in my comments section a phone number and/or email address.

Have  Happy New Year.  Be safe, sane, and my usual blessing of be healthy, wealthy, wise and happy for the upcoming New Year!

Interested in any of my books?  You may want to make a stop over  here. Please click through to purchase my books and some other interesting items that actually ARE on sale. If you like poker, Heroes (the TV series), comic books, Watchmen, etc, there may be some fast links to get you to what you are looking for.

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

  

Kim Isaac Greenblatt

Can I take dead people as tax deductions?

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Uncle Sam Christmas Eve Reminders

Wednesday, December 24th, 2008

I spoke with Santa, Hanukkah Charlie, Kwanzaa Dan and they all agreed that you might want to hear from Uncle Sam one more time before you start your yuletide celebrations.  Uncle, can you take it from here for us?  Also, can you explain why you are pointing at us?

uncsam

Thanks, Kim.  I am sorry for pointing at you, I just do it instictively.  I really don’t like to point.  I just wanted to take a couple minutes and remind your readers and the folks on your “Internet” some things that might help them at tax time since that is around the corner:
I know times are rough and I know that some of you are buying homes for the first time.  There is something now called the First-Time Homebuyers Tax Credit.  First-time homebuyers should begin planning now to take advantage of a new tax credit available for a limited time. The credit applies to primary home purchases between April 9, 2008, and June 30, 2009.  I know Kim yakked about it in an earlier blog.  I am just going to touch on it briefly again. 

Normally, this tax credit must be paid back in equal payments over 15 years. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. First-time homebuyers are those who have not owned a home in the three years prior to a purchase.

Here is something for all of you homeowners out there:

You are familiar with the Real Estate Tax Deduction, aren’t you?  There is an additional standard deduction for those who don’t itemize their deductions, but pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers. This deduction is available for the 2008 and 2009 tax years and increases your standard deduction.

Got any kids in college?  Perhaps this may be of use:

Tuition and Fees Deduction — You may be able to deduct qualified tuition and required enrollment fees up to $4,000 that you pay for yourself, your spouse or a dependent. You do not have to itemize to take this deduction. However, a taxpayer cannot take both the tuition and fees deduction and education credits (Hope & Lifetime Learning Credits) for the same student in the same year. Income limits and other special rules apply to each of these provisions. To determine whether your expenses are qualified, refer to IRS Publication 970, Tax Benefits for Education. The 2008 edition is available soon online. This publication also describes other education-related tax benefits.

Are you a teacher?  Check this out:

Educators’ Out of Pocket Expense Deduction — The educator expense deduction allows teachers and other educators to deduct the cost of books, supplies, equipment and software used in the classroom. Eligible educators include those who work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school. Worth up to $250, the educator expense deduction is available whether or not the educator itemizes deductions on Schedule A.

Remember that recovery stimulus rebate that I sent you earlier in the year?  What?  You don’t?  You may want to double check your checkbooks and look for the letter I sent you as well.  If you didn’t get the rebate (or did) this section may help:

Recovery Rebate Credit — If you did not qualify or did not receive the maximum amount for the 2008 economic stimulus payment you may be entitled to a recovery rebate credit when you file your 2008 tax return. Review the tax return filing instructions including the recovery rebate credit worksheet. You need to know the amount of the payment you received in 2008, which can be found on your Economic Stimulus Payment Notice (Notice 1378). Two online tools on IRS.gov will be available soon — the Recovery Rebate Credit Calculator will help taxpayers figure the amount they should claim on their 2008 tax return, and How Much Was My 2008 Stimulus Payment? helps you determine what your stimulus payment was.

Regarding any cash charitable contributions, please remember that since tax year 2007, to deduct any charitable donation of money, you must have a bank record, credit card statement or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. In determining what may be deducted as a charitable contribution, see IRS Publication 526 for 2008 to be released in the near future.

As long as you don’t abuse this credit, Earned Income Tax Credit (EITC), you might be eligible for this.
This particular credit is offered by the federal government to working families and individuals. You may qualify for the earned income tax credit, or EITC, if you worked, but did not earn a lot of money. EITC is a refundable tax credit meaning you could qualify for a tax refund even if you did not have federal income tax withheld. If you qualify, the amount of your EITC will depend on whether you have children, the number of children you have, and the amount of your wages and income. For more information, go to www.irs.gov/eitc or see IRS Publication 596 for 2008.

If you have any other tax questions, please ask my good friend, Kim.  Happy Holidays everybody!

Uncle Sam

 

 If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book listed below.  Part of all the proceeds from the sales of that book  go  to Rett Syndrome research.  One girl is born with Rett Syndrome worldwide every fifteen minutes.   My daughter Arianna has Rett Syndrome and we are working to do all we can to make her life easier and find a cure in her lifetime.  Boys born with the Rett gene generally die at birth.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

 

 

Kim Isaac Greenblatt

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Posted in Business | 1 Comment »

Top Ten Hookups You Should Marry To Survive the Recession

Thursday, December 18th, 2008

Dude, like you should SO get married to some of the hookups in your circle of friends, I mean, like, dude, come on!

 skankus1

 

1.   Skankus - Dude, you know Skankus!  She is the one in your circle of friends who is always hooking up with everybody else and you know if you just LOOK at her she will get pregnant.  Man, she is a money machine.  Put her working parts to good use.  Take care of business and marry her because each kid she generates is a deduction at tax time.  Good stuff, unless you enter AMT territory.

 nerdus

 

2.  Nerdus - You want to marry this guy, you know, the one you always were “just friends” with while you slept with all your friends?  You want to marry him because he will be the one who starts up some social web site that will make millions and you can always divorce him since he was a starter husband later on.  Make bank, girl friend!

 

 yournextwife

 

3.   Goofus - You want to marry this guy or gal because they can make you laugh.  Not only intentionally but their whole miserable existence is a comedy.  You can always talk them into going on Jerry Springer and make some cash.  Get a trip out of town with them, too.  Please don’t forget to remind them to make their AA meetings!

 

 fruitsy

 

4.    Fruitsy McVeggies - This gal or guy is HEAVY into the non-meat lifestyle and can save your health and a bundle of money.  The downside is that they will drive you nuts with trying to keep everything meat free.  If you can live with the sermonizing, these people will make you live forever or at least until you get sick of eating veggies your whole life.  By the way, I love meat, fruit and veggies.

 

jocko

 

5.   Jocko - This guy (or gal) hits the gym and hits it hard.  Like Fruitsy, they will keep you alive forever with great health and workouts.  And if you don’t work out  enough, they will kill you.

 

oinks

 

6.   Oinks - You gotta love Oinks.  He is just big boned and if in the coming years money gets devalued and you need to start living off the land, Oinks has a lot of meat on his bones to make it through any hard times without eating if he has to.

 

allergymcsnee

 

7.   Allergy St. Sneeze - Not just one but eight allergies make this person a cornucopia of fun.  Nothing spells good times then trying to keep track of what is bugging them.  Plus side is they are thin from all the allergy meds they are taking.  Make sure you get lots of tissue as wedding presents.

 

carnuts

 

8.     Carnuts - This guy or gal loves his Chevy, Toyota, Alfa, Harley (in which case they are Cyclenuts) and they will love it more than you.  On the bright side, wait, there isn’t really a bright side to this one unless you love the same vehicle of choice that they do.

 

yelly

 

9.   Screamy Yellsovich - What marriage would be complete without a person like Screamy who constantly is yelling because everybody knows if you talk LOUD enough you have to be right.  Expect marriages to Screamy to last up to 7 years and end bitterly.  Plus you will be deaf.  Hey, you wanted a starter marriage, not me.

and last but not least

 

highmaint

 

10.    Moneyme Now - This person will only be with you if you are spending money on them.  Expect to be broke within a year and remind them that no, they really don’t deserve to have the best of everything because frankly, people like them aren’t worth it. Not even in thousands of years!

Dude, wait, come back here.  We haven’t even discussed what kind of awesome parents you would make!

On a  more serious and practical note - please check out my book on making money during the recession and taking care of financial problems.  Part of all proceeds from sales go to research a cure for Rett Syndrome.  Rett Syndrome affects a girl born every fifteen minutes and boys born with the Rett gene die at birth.  Peace and happy holidays!

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

 

Kim Isaac Greenblatt

Top  Ten Hookups You Should Marry To Survive The Recession

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ISOs and the Stock Market and Taxes

Monday, December 15th, 2008

Question from a reader: “In one of your recent articles, you  mention that under the new tax law, ‘unpaid taxes, penalties and interest prior to 1/1/08 will be abated’. What exactly does this mean?  It seems like the IRS is  scrambling all of a sudden to get deals with them alone on an agreement and they discourage people from hiring a tax consultant or specialist.”

My answer is: The quote that is from my article should be:  “The portion of unpaid tax, penalties, and interest that was outstanding before 1/1/2008 that is attributable to an ISO exercise is abated. That may or may not affect you (I am banking that for most people it is a non-issue).”

The section of proposed tax law changes that are going into affect deals with people who receive  Incentive Stock Options (ISOs)  to buy company stock at a certain price.  Generally it is within a certain time frame as well. There has been a lot of abuse and confusion with timing of taxes with ISOs and the particular change (or clarification in tax law) is specific for people who worked for companies where as part of their compensation package, years of service, or performance received options to buy shares of their company stock at whatever price it was at the time of the determination with a discount.  That price is usually good for a few years in some cases and if the stock climbs, you can make out like a bandit by buying shares inexpensively.  It can also mean free stock as a payment for service and then there is just a timing issue as to when to redeem the stock.

 

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The stock market news and information section shows when large insiders (the Chairman of the Board, president, treasurer, etc) exercise options.  A lot of times they are just getting money to buy a new yacht or car - well, that was the way it use to be pre-bailout regulations time.  They are under closer scrutiny these days.

ISOs are different than unqualifed stock options and there are different tax situations.  Nonqualified options (don’t you love terms like “qualified” and “non-qualified”?)  have two disadvantages compared to incentive stock options. One is that you have to report taxable income at the time you exercise the option to buy stock, and the other is that the income is treated as compensation, which is taxed at higher rates than long-term capital gains.

For ISOs there’s no income to report at the time you exercise the option (unless you sell the stock at the same time you buy it-there are issues that need to be tracked for tax purposes at that time) and  if you hold the stock long enough to satisfy a special holding period, your gain from the stock will be treated as long-term capital gain.

Hope that helps answer the question or at least get you started in the right direction.

Is the IRS also discouraging people from getting tax professional help?  No.  I think the IRS wants the money that the government is due  and in a lot of situations, just like in regular business dealings you have some people who are more people friendly than others.  It is always a good idea to get a tax professional if you can afford one to help you with any tax problems because they might be able to help lower any tax liability that you have and possibly get you a refund. You can always request that you have another agent to work with if you are uncomfortable with the one that you are working with or speak with his or her supervisor.

If you are in a situation where you owe the IRS or state taxing authorities money, make sure that you respect time deadlines for contact and payments so you won’t have penalties or interest.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

 

 Kim Isaac Greenblatt

 

ISOs and the stock market and taxes (oh my).

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More on who gets audited

Friday, December 12th, 2008

As promised to my business and tax readers, here are some more statistics on who gets audits.  The information is courtesy of the IRS:

2007 turned out to have the highest IRS examination rate increase since 1998.  That statistically sounds big and once we see the numbers we will see that it is relatively big.

Seventy-eight percent (that is 78%) of IRS examinations affected individuals with incomes less than $100,000 in 2007.  That means that the IRS goes after everybody and not just the rich. Statistically that makes sense since proportionally to the general public there are less people making more than 100K than less.

Over 1.3 million audits were made on taxpayers earning less than $50,000 annually.  Again, that is an eye opening figure if nothing else to quash the myth that the IRS doesn’t go after smaller potatoes.

WHAT DOES THE IRS DO OR WHAT KIND OF AUDITS AND STUFF COULD YOU BE LOOKING AT?

• Correspondence Audits: Letter from IRS or state authority 1,073,224 in 2007
• Field Examination: In-person review of your tax return 311,339 in 2007
• Change in Tax Liability: Result of examination by the IRS changing what you owe
• Levies: Garnishments (holds) against your wages and/or bank accounts 3,757,190 in 2007
• Liens: Garnishments (holds) against your real property i.e home, land, car etc. – 683,659 in 2007
• Collections: IRS collected $23.5 billion from examinations and $31.8 billion from Levies and Liens in 2007
• Indictments: IRS files criminal charges
• 90% Conviction Rate of People indicted in 2007
• 22 months was the average sentence handed down for the convictions

 

All that means is that you need to watch your filing dates, respond to IRS and state letters in a timely manner and keep great records.  One of the biggest reasons that the IRS collects so much from letters is that a lot of people just don’t bother to respond within the time limit that the IRS asks you to (which is generally 60 days).  I can’t tell you how many times people come to me with a letter that was actually not a problem but because they didn’t respond in a timely manner got nailed with what the IRS decided.

Eesh.

Also please make sure you send in all the forms you need to if you are doing a return by mail especially amended returns.  One of the leading causes for rejections or audit letters is incomplete filing.  A common one is where you are suppose to attach a list of your myriad stock trade transactions and you forget to send them into the IRS.

Also as a heads-up, expect the IRS to do more audits on EITC and Schedule Cs.  They are working hard on cracking down on fraud in both those areas.

 

Pick up a copy of my book, “Bad Tax Idea, Good Tax Idea” if you want some more insight into what you should and shouldn’t be doing in preparation for having your taxes done.  It is a small book and a light read with some key points that will save you thousands of dollars in taxes over the long haul.

Don’t be bashful about getting a copy of my book, Practical Money Making, for ideas for making extra cash during the depression we are in either.  Good luck and may the holidays be happy for you!

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

 

Kim Isaac Greenblatt

 

As promised, some statistics on who gets an IRS audit.

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Infrastruture Plans Look To Become A Reality

Monday, December 8th, 2008

President-elect Obama said in his weekly radio address that he will be investing time and money in our infrastructure.  The president-elect’s economic package will have five main components: making public buildings more energy efficient; investing in infrastructure on the order of the 1950s-era interstate highway system; upgrading school buildings; expanding broadband Internet access; and, making the health care industry more technologically advanced.

“We need action – and action now,” Obama said.  “We won’t do it the old Washington way,” Obama said. “We won’t just throw money at the problem. We’ll measure progress by the reforms we make and the results we achieve – by the jobs we create, by the energy we save, by whether America is more competitive in the world.”

 

 

 

Readers of my blog know that I have been yammering for infrastructure planning for awhile now.  Congrats and here is hoping that it starts to make a difference in the lives of people in our country.  The results won’t be seen overnight but as long as the money is spent in America, with American companies and people who are living here are going to be able to work the jobs, we should be okay.

The dollar number for the proposed economic stimulus package is looking as of now to be between $400 billion to $700 billion dollars.  Hopefully, that money will get down to where it is needed, in our pockets and purses so we can save and spend with it.

Remember that our President-elect also stated that the economy will get worse before it gets better.  The question  will be there, for how long will it be worse?  Make sure you have savings and a decent job to weather the rough financial storm that we are trying to navigate through.

 

Also, here is a question from a reader: “How much money has the IRS collected from examinations and Levies and Liens?  In other words, there isn’t much incentive for them to stop auditing us, is there?”

My answer, and I probably will go more into audit stuff in another blog, is you are right.  Remember, the IRS is out to get people who aren’t paying what they should and there isn’t a reason they should stop audits, is there?  If you knew you could just put down any amount of money and know that there weren’t any consequences you would do it right?  Think really HARD before you answer that since we all know how human nature works.

To answer your question, I believe the IRS collected $23.5 billion dollars from examinations and $31.8 billion from Levies and Liens in 2007.   I will try and get to more IRS statistics for you in the near future. They tend to be very sobering, if nothing else.   Don’t be scared, just make sure you keep great records and if you aren’t doing your own tax research hire a good tax professional.

I am taking new clients, by the way.

 Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

Kim Isaac Greenblatt

Comments on President-elect Obama’s infrastructure plan and answering an audit money question.

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