Posts Tagged ‘taxes’

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First Steps in Preparing A Tax Return

Friday, September 18th, 2009

Hi party people. Since I am in tax instructor mode, a lot of my upcoming entries will be to educate you as to what goes on when you file your income taxes. Taxes are a very important part of everybody’s life and it is something that should be taught more in school. In any case, here we go:
The first step in preparing an income tax return is to determine if the taxpayer needs to file one in the first place. Special filing requirements apply to taxpayers who may be claimed as dependents on other taxpayers’ returns. In order to determine if a taxpayer is required to file an income tax return, you need to know three things:
 
• Marital status
• Age
• Gross income
 
Marital Status
 
Marital status (married or unmarried) is determined on the last day of the tax year. The marital status of a person who died during the year, as well as that of the surviving spouse, is determined as of the date of death.
 You need to know the marital status and whether the taxpayer is age 65 or older because these facts help you determine how much gross income the taxpayer may have before being required to file. Once marital status is determined, you need to know whether a married couple will file a joint return or separate returns because this choice also affects filing requirements with respect to income.
A taxpayer is considered married if, at the end of the tax year, he is in a common-law marriage that is recognized in the state where the couple is residing or was at the time recognized by the state where the common-law marriage began. California has not recognized a common law marriage since 1900 so you can figure that they aren’t the norm here. If you were common law in another state and move to California, it will be recognized.  While specific requirements vary by state, a common-law marriage generally must meet four legal standards:
• The parties must have the legal capacity to marry.
• The parties must have the current intent to marry. That is, they must intend to be husband and wife and must communicate that intent to one another.
 • The couple must live together as husband and wife.
• The parties must publicly present themselves as husband and wife.
 
It is a common misconception that a couple must live together for a set number of years to have a common-law marriage. In reality, there is no time limit if the four conditions listed above are met. While some states allow common-law marriages, there is no such thing as a common-law divorce. If the partners decide to go their separate ways, they must petition the state court for a decree of divorce just like any other married couple.

Bottom line is that if you are unsure if a relationship is a common-law marriage, the couple should get the advice of an attorney familiar with marriage law.
 
Same-sex marriages are not recognized under federal law, which currently defines a marriage as “a legal union between one man and one woman as husband and wife.” For federal tax purposes, individuals in same-sex unions must use a filing status available to unmarried taxpayers. However, individual states may enact legislation regarding the legal status of same-sex unions within those states.

Age

For general tax purposes, a person is considered to have attained any given age on the first moment of the last day of that year of his life; that is to say, the day before his birthday. A taxpayer is considered to have attained the age of 65 on the day before his or her 65th  birthday.  Some special rules apply to children with regard to age. For several specific tax purposes, children are considered to have attained a certain age on their birthday.  More on that in another entry.

Gross Income
 
Gross Income Gross income is the total worldwide income subject to tax. There are two aspects to determining gross income:
 
• Who owns the income
• What income should be reported on a tax return

Ownership of income, in the case of a married couple, is determined by state law. The laws regarding the ownership of income and property in most states are based on British common law. These states are called separate property states. In separate property states, income received belongs to the spouse who earned it or who owns the property that produced the income.
Nine states are community property states. With the exception of Wisconsin, the laws of community property states are based on Spanish civil law. Generally, in community property states, income received for services performed is considered to belong half to the husband and half to the wife, regardless of which of them earned it.

The laws regarding the ownership of income from property vary among these states. Generally, ownership of income needs to be determined only if the couple files separate returns.  For federal income tax purposes, there are five filing statuses:
1. Single
2. Married filing jointly
3. Married filing separately
4. Head of Household
5. Qualifying widow(er) Additionally, the standard deduction is increased by state and local real estate tax paid up to $500 ($1,000 if married filing jointly). Also, the standard deduction is increased by a disaster loss in a federally declared disaster area. Your net disaster loss is your personal casualty losses in a federally declared disaster area minus any personal gain. Elderly taxpayers use the extra amount for age when computing their gross income filing requirements, but the extra amount allowed for blindness does apply (double check this yourself if you need to apply it).
General Rule:
For most taxpayers, a tax return is required when gross income equals or exceeds the sum of the taxpayer’s standard deduction and the personal exemption amount.
 
 
Exception:
The standard deduction is an amount of income not subject to tax, which varies based on filing status. The regular standard deductions for 2008 are:
• $5,450 — Single or married filing separately
• $10,900 — Married filing jointly or qualifying widow(er)
 • $8,000 — Head of household
Taxpayers who are age 65 or older or who are blind are entitled to increased standard deductions. The additional deduction is $1,350 for each condition for singles and heads of households, and $1,050 for all married taxpayers and qualifying widowers.

A taxpayer may claim the additional standard deduction for blindness if he is legally blind at the close of the tax year.

A taxpayer who is partially but legally blind, or whose sight is unlikely to ever improve beyond that condition, must obtain a statement certified by his eye doctor or registered optometrist. The statement must be retained by the taxpayer with his records; it need not be attached to the return or sent to the IRS.

Specific requirements must be met in order to qualify for each filing status. We will discuss it in other entries or you may find more info on my site or at www.irs.gov.

And that may be enough for now, don’t you think?

I will try and tackle more tax issues as I get more time. I am swamped these days (but ALWAYS looking for more work) and if you have any questions – please keep them coming and I will try to get back to you as soon as I can.

Kim Isaac Greenblatt

First Steps In Preparing a Tax Return

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Tax Info for Sep 08 2009

Tuesday, September 8th, 2009

Just a reminder that quarterly estimated taxes are coming due so please don’t forget to mail your payments (if you look like you are going to owe) in. Also, in case you missed in July, some interesting information here:
Decreased Estimated Tax Payments for Qualified Individuals With Small Businesses

For 2009, qualified individuals with small businesses may be eligible to make smaller estimated tax payments. If you qualify, your required annual payment for 2009 is the smaller of 90% of the tax shown on your 2008 tax return or 90% of the tax shown on your 2009 tax return. You must check box F in Part II on Form 2210 or box C on Form 2210-F to certify that you qualify.

You are a qualified individual if:

More than 50% of your gross income was from a business that had an average of fewer than 500 employees in 2008, and Your adjusted gross income in 2008 was less than $500,000 ($250,000 if you are filing married filing separately for 2009).

The above obviously doesn’t apply to everybody but just a reminder for you to check it out if it does affect you.

What are estimated taxes for those of you just joining my blog (welcome, by the way)?

Estimated Taxes

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

Who Must Pay Estimated Tax

If you had a tax liability for 2008, you may have to pay estimated tax for 2009.

General Rule
You must pay estimated tax for 2009 if both of the following apply.

You expect to owe at least $1,000 in tax for 2009 after subtracting your withholding and credits.
You expect your withholding and credits to be less than the smaller of;
90% of the tax to be shown on your 2009 tax return, or
100% of the tax shown on your 2008 tax return. Your 2008 tax return must cover all 12 months.
Sole proprietors, partners, and S corporation shareholders – You generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For additional information, refer to Publication 505, Tax Withholding and Estimated Tax.

Corporations – You generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return. Use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information, refer to Publication 542, Corporations.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to take more tax out of your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

Estimated tax not required
You do not have to pay estimated tax for 2009 if you meet all three of the following conditions.

You have no tax liability for 2008
You were a US citizen or resident for the whole year
Your 2008 tax year covered a 12 month period
You had no tax liability for 2008 if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your 2009 estimated tax, it may be helpful to use your income, deductions, and credits for 2008 as a starting point. Use your 2008 federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated taxes for the next quarter. You want to estimate your income as close as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter. Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

If there are any more questions, drop me a line or check with the IRS.

Good luck, gang and talk with you again soon!

Sep 08 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.  Did I also mention that I have authored over a dozen books that are still in print?  I invite you to please check them out.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.  Thanks for your support.

Kim Isaac Greenblatt

Tax Info for Sep 08 2009

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How To File Taxes If Laid Off

Wednesday, August 19th, 2009

What should you do or plan to do if you are out of work and have to file taxes?

The first order of business is to see if you hit the threshold for having to file.  If you were laid off in 2009, the chances are that you made some money and you may want to try to file to see if you can get back some of the taxes that you paid in the form of a refund.

Did you get a lump sum severance package?  If so, were enough taxes taken out of it?  If not, you should think about putting aside some of the money now or better yet pay your quarterly taxes with it so you don’t have a tax liability and possible penalty later on.  If you are hungry and trying to just keep a roof over your head I understand that you have other more immediate priorities but I wanted to just gently remind you in case things get better for you and you end up back on your feet sooner than you think.

The Fed and the respective State governments will work with you if you owe current taxes and they will try to make things easier if you owe back taxes if you approach them rather than having to wait for them to come to you.  Remember that the govt at all levels, Fed and States, need cash.  We are in a Depression and they need to make up for lost income as much as you and I do.  Everybody is trying to become profitable again.

Even if April 2010 is still some time away, it is important to start planning now while there is still time and the ability to mitigate any tax damage that might happen between now and then.

If you had money taken out for taxes for the Fed but not enough because of the Make Work Pay Program (remember that back in Feb 09?) where the Fed had employers take out less in withholding you will want to double check with the tax tables (available at the IRS website or check with me via post or email or your tax person) to estimate what kind of tax situation you might be facing.

For your review from the IRS, here are some tables to ball park your tax liability.  Please double check with your tax pro and the IRS in case of any questions and verify that the numbers we are using and you are checking with are right.
2009 federal tax tables are divided into four sections based on your filing status: single, married filing jointly, married filling separately, head of household.

Filing status: SINGLE
Use this schedule to figure out your tax if you are filing as single.

10% on income between $0 and $8,350
15% on the income between $8,350 and $33,950; plus $835.50
25% on the income between $33,950 and $82,250; plus $4,675.00
28% on the income between $82,250 and $171,550; plus $16,750.00
33% on the income between $171,550 and $372,950; plus $41,754.00
35% on the income over $372,950; plus $109,216.00
(Tax Rate Schedule X)

Filing status: MARRIED FILING JOINTLY
Use this schedule to figure out your tax if you are filing as married filing jointly.

10% on the income between $0 and $16,700
15% on the income between $16,700 and $67,900; plus $1,670.00
25% on the income between $67,900 and $137,050; plus $9,350.00
28% on the income between $137,050 and $208,850; plus $26,637.50
33% on the income between $208,850 and $372,950; plus $46,741.50
35% on the income over $372,950; plus $100,894.50
(Tax Rate Schedule Y-1)

Filing status: MARRIED FILING SEPARATELY
Use this schedule to figure out your tax if you are filing as married filing separately.

10% on the income between $0 and $8,350
15% on the income between $8,350 and $33,950; plus $835.00
25% on the income between $33,950 and $68,525; plus $4,675.00
28% on the income between $68,525 and $104,425; plus $13,318.75
33% on the income between $104,425 and $186,475; plus $23,370.75
35% on the income over $186,475; plus $50,447.25
(Tax Rate Schedule Y-2)

Filing status: HEAD OF HOUSEHOLD
Use this schedule to figure out your tax if you are filing as head of household.

10% on the income between $0 and $11,950
15% on the income between $11,950 and $45,500; plus $1,195.00
25% on the income between $45,500 and $117,450; plus $6,227.50
28% on the income between $117,450 and $190,200; plus $24,215.00
33% on the income between $190,200 and $372,950; plus $44,585.00
35% on the income over $372,950; plus $104,892.50
(Tax Rate Schedule Z)

Again, the tables are ballpark.  You should have a tax pro work with you or take some time to go through the details yourself if you are tax work inclined.  There are other situations where if you are making a lot of interest income that you still may required to file and other situations where even though you didn’t hit the dollar levels, you still may have to or want to file.

There is a lot of stuff working its way through Congress and tax changes will no doubt be finalized between Oct and Feb of this and next year respectively.  The State changes you will need to wait for as well since a lot of States do follow the Fed changes.  Where I can I will post what comes up for the Fed and for California since I have a direct interest in it.  I do multi-state returns so if you have a question or issue please e-mail or post me and I will do what I can to help you.

Hope you will be doing better in the months to come.  Please make sure that you have a roof over your and your loved ones heads, food on the table and clothes on your backs.

Aug 19 2009

 

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.  Thanks for your support.

Kim Isaac Greenblatt

How To File Taxes If Laid Off

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Posted in Business | 3 Comments »

First Important Tax Item Is Filing Status

Tuesday, August 18th, 2009

Question from a reader: “What is the most important thing in getting ready to file income taxes, Kim?”

My answer is that there are several things but the first and number one important thing is to make sure that you get the filing status correct.  The filing status as set by the Federal government and by the State governments as well if they tax you at the state, county or city level generally is the driver of what credits, deductions and benefits you can take.  At the Federal level, I have talked about this before and it doesn’t hurt to revisit the different statuses.

The IRS (google them, you will find them, trust me),  has more detail than you probably are interested in on the subject but let me try and bring the key points home here:

There are five filing statuses:

Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child.

If more than one filing status applies to you, choose the one that will give you the lowest tax.

Marital Status
In general, your filing status depends on whether you are considered unmarried or married. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife.

Unmarried persons.   You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree.

  State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

Divorced persons.    If you are divorced under a final decree by the last day of the year, you are considered unmarried for the whole year.

Divorce and remarriage.   If you obtain a divorce in one year for the sole purpose of filing tax returns as unmarried individuals, and at the time of divorce you intended to and did remarry each other in the next tax year, you and your spouse must file as married individuals.

Annulled marriages.   If you obtain a court decree of annulment, which holds that no valid marriage ever existed, you are considered unmarried even if you filed joint returns for earlier years. You must file amended returns (Form 1040X) claiming single or head of household status for all tax years affected by the annulment that are not closed by the statute of limitations for filing a tax return. The statute of limitations generally does not expire until 3 years after your original return was filed.

Head of household or qualifying widow(er) with dependent child.   If you are considered unmarried, you may be able to file as a head of household or as a qualifying widow(er) with a dependent child. See Head of Household and Qualifying Widow(er) With Dependent Child to see if you qualify.

Married persons.   If you are considered married for the whole year, you and your spouse can file a joint return, or you can file separate returns.

Considered married.   You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.
You are married and living together as husband and wife.

You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.

You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.

You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.
Spouse died during the year.   If your spouse died during the year, you are considered married for the whole year for filing status purposes.

  If you did not remarry before the end of the tax year, you can file a joint return for yourself and your deceased spouse. For the next 2 years, you may be entitled to the special benefits described later under Qualifying Widow(er) With Dependent Child.

  If you remarried before the end of the tax year, you can file a joint return with your new spouse. Your deceased spouse’s filing status is married filing separately for that year.

Married persons living apart.   If you live apart from your spouse and meet certain tests, you may be considered unmarried. If this applies to you, you can file as head of household even though you are not divorced or legally separated. If you qualify to file as head of household instead of as married filing separately, your standard deduction will be higher. Also, your tax may be lower, and you may be able to claim the earned income credit. See Head of Household, later.

Single
Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status. To determine your marital status on the last day of the year, see Marital Status, earlier.

Widow(er).   Your filing status may be single if you were widowed before January 1, 2007, and did not remarry before the end of 2007. However, you might be able to use another filing status that will give you a lower tax. See Head of Household and Qualifying Widow(er) With Dependent Child, later, to see if you qualify.

How to file.   You can file Form 1040EZ (if you have no dependents, are under 65 and not blind, and meet other requirements), Form 1040A, or Form 1040. If you file Form 1040A or Form 1040, show your filing status as single by checking the box on line 1. Use the Single column of the Tax Table, or Section A of the Tax Computation Worksheet, to figure your tax.

Married Filing Jointly
You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

***

For more information, you can check with the IRS and you may be interested in checking out my book, “Bad Tax Idea, Good Tax Idea” for some tips that accountants and tax professionals might not give you.  You can find that book on Amazon (you can google to find that too).  All information posted here is for you to review and for more serious study and tax prepatation, kindly due your own research or consult your tax pro!

Good luck with your thoughts on Filing Statuses for Taxes!

Aug 18 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.  Thanks for your support.

Kim Isaac Greenblatt

First Important Tax Item Is Filing Status

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Posted in Business | 1 Comment »

More On Calif Taxes

Thursday, August 13th, 2009

Here is some more info about California taxes coming up in the last quarter and into next year.  Individuals who file quarterly estimated income taxes, like the self-employed or the lucky ones who can generate a ton of money or income from stock options and dividends have to speed up their California tax payments.

Starting 2010 -specifically Jan 1 2010 – California will require you to pay 70 percent of your estimated taxes during the first six months of the calendar year up from 60 percent.  The reason is obvious because the state is trying to increase the money collected during the final two quaters of their fiscal year.  California’s fiscal year runs from July 1 to June 30. 

That means that if you are making estimated quarterly payments you will need to pay 30 percent in the first quarter, 40 percent in the second quarter, nothing in the third quarter and 30 percent in the fourth quarter.  The older way was 30/30 and then 20/20 for the tax quarters.

That means that you need to prepay your taxes a little earlier in order to make sure that you aren’t going to get dinged with any penalties later on.  When you are doing business, be sure that you collect your taxes from your customers (most biz people I know are on this because they certainly don’t want to be on the hook) and remember to file it on time.

Don’t expect this change to end anytime soon because the state is doing what it can to make more revenue.  Remember that they cannot print money like the Federal government can and they are limited to raising cash by taxation or floating bonds or loans.

As I get the information and things get finalized with California and Federal tax law changes I will forward the information on to you guys.  You know that I love ya.

What else is new…

Make sure that you have all your licenses and permits up to date when it comes to tax time.  Expect local and state agencies to be cracking down especially now that the amnesty programs for getting caught up on license fees are gone.

Remember that it is quarterly tax time and your payment if you owe is going to be coming around the corner. 

I can’t think of much of anything else.  I am still plowing away on my book on gaming and it is coming along.  Thanks again for all of your support and please keep the questions coming.  Yeah, I know I am not a search engine but as you are discovering, for specific questions, there isn’t anything that can beat the human touch.  We haven’t gotten to the point where machines and computers can answer things intuitively.  The reason that some results come back better than others is because you as a seeker may have been fortunate enough to get an exact match to your question because some other person asked the same question in the exact way you did.  Or maybe you are asking a common question.

I have gotten posts about how the nature of the market is for contract work and I can say that contract work is slow just as everything else is depending on where you live.  I think if you are lucky enough to be somewhere where there is funding and that business is still booming you can find something.

Stay healthy and watch your money.

 August 13 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.  Thanks for your support.

Kim Isaac Greenblatt

More On Calif Taxes

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California Millionaire Tax

Tuesday, August 11th, 2009

Question from a reader:”Is it true that California taxes millionaires more than any other state in the Union?”

My answer is that it definitely is one of the highest tax rates in the nation to be sure.   Whether the people who have a million dollars do business in California or not, remember that California taxes people similar to the Fed on all worldwide income, that is, unless you are paying taxes to another localized tax authority – like another state.

The high end of the California state income tax schedule is 10.55 percent if memory serves me right.  That may seem like a lot of money and frankly, it is.  We, as Joe Sixpacks, are still going to be taxed at 9.55% if we earn more than $47,055 and year and less than a million bucks.  The .25 percent increase on individual income tax went live back in April here in California.

This increase should go away by expiration at the tail end of 2010.  There are a bunch more California tax changes coming up and I will get to them in a few days once I double check what suggestions would make sense for some people and what doesn’t work for others.  Good question though and I hope you fall into the class for millionaires.

Question from a reader:”Any thoughts on your on-going view of the stock market?”

My answer is that things haven’t changed that much in my mind.  I was wrong on the rally hitting when it did and honestly, I don’t get it because I still think that employment numbers are not being reported correctly and that we are recovering, on paper at any rate, at a much faster rate than reality warrants.  With people being laid off, I don’t see how people will go ahead and be able to afford to buy things to help the economy.

I think with all the business earnings over and with just the Fed reporting whether they will be reporting a rate hike – I bet they won’t and I think that is already factored into the happy stock market-I think things should float or cool off than for a few weeks.  The cliche and history is that the economic news and markets drop in Fall, specifically with September, and we may get some dips and adjustments in the Fall.  Remember I am not a professional but I do admit it when I call something incorrectly unlike a lot of people who collect money for their “advice”.

So my best advice for the stock market for you is to keep watching and doing your own due diligence.  I still think that there is a meltdown that is just waiting to happen in the wings.  It may happen three years from now, instead of waiting 7 to 8 like we did last time but I don’t see anything changing until people get working and start making money.

If the Fed starts raising interest rates next year in the current climate I think that will put the kabosh on any kind of recovery and just hammer more nails into the coffin. 

Cash is still king these days and you can get some great deals if you are willing to negotiate and pay with cash.  In some areas, like real estate, it seems that property values are low in some places and stable in others.  This is more to the nature of banks not lowering the sales prices of their homes that they are carrying on their books and in the cases where they have been bailed out, they will just sit on the properties and collect any fee income from title work, etc.  Nice work if you can get it.

Internationally I think that most nations are in the same pickle jar we are stewing it.  A big concern of mine is that we don’t let totalitarian thoughts and crackpots start rising to power with extreme views on politics or religion.  Remember that is how people get into trouble.

In terms of international investments I don’t think that China is the panacea for everybody to throw money into but it does bear reviewing.  I was following the information and investing problems with the Australian iron company that was doing business with China and there are a lot of issues that have to be dealt with in terms of communication and corruption.

Be safe and sane people.

August 11 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.  Thanks for your support.

Kim Isaac Greenblatt

California Millionaire Tax

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BFF Girly Girl and Credits

Friday, August 7th, 2009

Question from a reader:”What are nonrefundable and refundable tax credits?  Can you be a little less drier than the IRS in your explanation for me?  I don’t remember if you answered this already but I wouldn’t mind you to refresh my memory since I am trying to see what kind of shape I will be in for taxes this year.  Thanks, Kim.” 

Ahh, with summer time comes the sweet sound of smart people planning on their tax liability, whether they are getting a refund and any consequences before things get nuttier later in the year, or worse, too late once we get into the next tax year.  Ironically, I have been involved in a class with credits and appropriate of nothing in particular, I received an email question that fits right in.  Thank you, reader for being in the zone on this one.  Okay, back to your question.

 Think of tax credits coming in two flavors.  One that can wipe out your tax liability and then stops working.  We can call that flavor “stopberry”.  The second one can not only wipe out your tax liability but can also give you cash back.  We can call that flavor “goberry”.

 Keeping that analogy in mind, we can now discuss the fact that tax credits are grouped into two categories: nonrefundable and refundable.

 A nonrefundable credit is limited to the amount of tax owed by the tax payer. It may not be more than your tax liability. Any portion of a nonrefundable credit that exceeds the tax liability is not returned to you as part of a refund. The nonrefundable credits are on Form 1040, page 2, Credits.  So let us show an example to demonstrate this now if that is okay with you guys (I know, it is summer and you would rather be at the beach or playing video games but bear with me).

 Example: Our best friend forever, Girly Girl, has a tax liability of $700. She also has a nonrefundable  tax credit of $1,000. Because a nonrefundable credit may not be more than the amount of tax owed, Girly’s nonrefundable credit is limited to $700.Girly Girl does not receive the remaining $300 of the nonrefundable credit. This amount is “lost.”  It isn’t really lost though since you never were going to get it back because it wasn’t refundable.  It may be stopberry but at least it is a flavor that helps us.

 As you probably realize now from our conversation here, a refundable credit is not limited by the amount of tax owed by the client. Any amount of a refundable credit that exceeds the tax liability may be refunded to the client. The refundable credits are on Form 1040, page 2, Payments.

 Example: Our good friend, Girly Girl  has a tax liability of $700. She also has a refundable credit of $1,000. The refundable credit first reduces Girly’s tax liability to zero.Our BFF Girly is then eligible to receive the remaining $300 as a refund.  Obviously, this goberry is better tasting than a stopberry.

 The nonrefundable credits that are currently out there for you are the child tax credit, the child and dependent care credit, the adoption credit,the Hope scholarship credit, the lifetime learning credit, and the residential energy credits.

 The refundable credits are the additional child tax credit, the earned income tax credit, and the first-time home buyers credit. Taxpayers who qualify for the first-time home buyers credit and purchase a home after December 31, 2008, and before December 1, 2009, may claim the credit on their 2008 or 2009 tax returns.  Taxpayers may claim enhanced first-time homebuyers credit on 2008 or 2009 returns for purchases this year.

 Good questions and please keep them coming.  Just a reminder also that quarterly tax payments are coming up for you and your business.  Also, if you have filed an extension you are going to have to have your completed tax returns ready soon.  Planning on getting married?  Start talking to a tax planner (I am available so look me up) so you can avoid getting blindsided your first year of marriage.

 Any exciting plans for the weekend?  Let me know since I probably will be trying to work on my book-it is almost finished, doing chores around the house and cleaning.   Is it hot where you live as well?  We’ve been baking out here.

 Stay healthy, get wealthy and watch your money.  May you also look out for your stop and go berries!

 Aug 07 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.

Kim Isaac Greenblatt

BFF Girly Girl and Credits

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Posted in Business | 1 Comment »

Tax Receipts Lowest Since 1932

Wednesday, August 5th, 2009

Yuck.  The Depression we are in is cutting off the cash flow to the government in the form of less taxes.  Taxes, though everybody hates them are the lifeblood of a nation next to floating bond issues.  Of course if you live in a dictatorship there are other means of getting revenue but fortunately we live in the United States.  Our tax receipts are looking to drop 18% this year which would be the largest single year decline since the other Great Depression.  Our Federal deficit will be jumping up to $1.8 trillion dollars.

The information comes from an Associated Press analyst (not my own research on this) but seems right if not too low honestly.  The numbers state that individual income tax receipts are down twenty two percent from a year ago.  Corporate income taxes are down 57%.  That means that Social Security tax receipts could drop for the second time with the first time being in 1940.

Our Social Security System which would be depleted with projections in 2037 might be broke as early as 2013 at this current rate of depleting tax revenue.  It doesn’t help things that there isn’t a lot of grassroots hiring for a lot of jobs.

For a lot of people the promise of Social Security was a safety net and through the years there have been projections that the fund would run dry.  Back when the program first started, the funds were locked up and couldn’t be touched.  It didn’t take many years before Congress started tapping into the money to fund other programs with the promises to replenish it with other money.  Eventually you have to pay back the money whether good intentions were used or not.

President Obama said that he would address Social Security next year after the medical plans were addressed.  Medicare tax receipts are down as well, by the way, but that was predicted and last year was when the govt started paying out more in money than it was taking in for Medicare.

It is very tough to dig oneself or a nation out of a downward spiral and when I see that the stock market is rising I really feel that there is a disconnect with reality here.  People at the bottom of the financial goods chain, the consumers, need money to make things work.  If people aren’t buying goods, a lot of the projections for growth are just that – projections like on a movie screen.  And like a lot of movies, the stories might be fictional or not end very well.

The Cash for Clunkers program looks like it was a success except that it has run out of money and as of this post, the House has approved funding but the Senate hasn’t.  Hopefully that will get resolved one way or another because at this point I personally don’t know if all that extra money for car dealerships will help if people get new cars and then end up defaulting on their payments two months from now because the bottom drops out of their jobs.

Banks are also offering loans again judging by the mailings that I am seeing and hearing from people.  The loans aren’t large ones but something is better than nothing and I can’t blame banks for not wanting to make loans to people who aren’t going to pay back what they owe.

For those of the readers who are jumping back into the stock market I encourage you to do your own due diligence and keep your eyes open.  Things are encouraging on bleak news because people are desperate.  Just because losses aren’t as deep that just means that they aren’t losing cash as fast.  That still is very different than hearing that profits are up.

Keep in mind too that even if profits are up, you need to look at the company balance sheets and see what has happened and make sure that there hasn’t been any accounting fudging of numbers to make things look better than they are.

Please be safe and healthy people and keep your eye on your money.  If you don’t, somebody else might have eyes on it.

Aug 05 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.

Kim Isaac Greenblatt

Tax Receipts Lowest Since 1932

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Nicolas Cage Call Me About Taxes and Comics

Tuesday, August 4th, 2009

I really like Nicolas Cage’s roles and I would like to offer my services to him as his tax guy.  It sounds like Mr. Cage is in dire need of good, honest and clear tax advice so he can hold onto some more of his money and still take care of his role as a taxpayer.

The Internal Revenue Service is stating that Mr. Cage has to come up with $6.2 million to cover 2007 unpaid taxes.  That year Mr. Cage appeared in “Ghost Rider” (I thought it was good) and had a cameo in “Grindhouse” (I thought it was funny).  I thought they did okay at the theaters though maybe not spectacular.

Some of his recent movies, “Knowing,” “Bangkok Dangerous” and “National Treasure: Book of Secrets”  haven’t been so great at the box office. 

From what some reports that are coming in, Nicolas Cage is putting up his homes in California and Louisiana for sale.

In the past he owed $660,000 that he agreed to pay in Sept 2008.

Mr. Cage, if you or your people are reading this – call me or drop me a line.  I also am interested in comic books so we can at least talk about that once you get through getting ticked off over your tax situation. 

August 4 2009

Kim Isaac Greenblatt

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.

Kim Isaac Greenblatt

Nicolas Cage Call Me About Taxes and Comics

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Tax amnesty LA Biz Ended

Monday, August 3rd, 2009

Remember when I mentioned that the city had a tax amnesty program for businesses?  Well it was pretty successful.  The city hoped to make about 10 million in taxes and they made at least 7 (or was it 8 million) which isn’t too shabby.  The deadline for fighting the city’s serious budget shortfall was July 31 2009 and  Mayor Antonio Villaraigosa urged businesses and residents on Wednesday to pay delinquent taxes before the city’s tax amnesty program ended.

Officials in the city (and state)  believe upwards of 80,000 businesses owe the city $280 million in taxes – money either unpaid or underreported by businesses and individuals. Through July 31, 2009,  city scofflaws could have paid back taxes without penalties, which normally range up to 40 percent. Now Mayor  Villaraigosa said he will have auditors will looking to find those firms which have not paid.  Yes, forty percent.  That is a huge penalty and I have been telling my clients for years to pay their business tax so they can avoid getting dinged by penalties which can be very stiff – especially if you aren’t making money in the down economy.

To paraphrase Valley Industry and Commerce Association board member Mel Kohn, who has been involved in the city’s business tax reform effort, the boardmember praised the amnesty program that began May 1 as a way to make sure all business pay their share.

“If businesses pay what they owe, it will be less for all of us,” Kohn said.

Veronica Perez Becker of the Central City Association offered a different take on the program:

“This is like a bailout for businesses, to pay their taxes without penalties,” she said.  I would agree with her because that was a pretty fair and thoughtful way for the city to let people get caught up, collect money and get back on track. I still don’t get how otherwise sane people decide to not pay business taxes especially if they are working in the same city that they live and do business in.  Eh, who knows what lurks in the minds of the small and large business person.

I seriously doubt there will be any more amnesty programs for awhile since state and local governments are facing budget shortfalls and even though there may not be a public statement that there will be no new taxes you can bet that the collection of existing or back taxes will be enforced and strictly.

Just a reminder to that it isn’t that far away for your quarterly taxes and you should be putting aside cash for paying your quarterly taxes for both the Fed and respective state taxing authorities. 

Hey, how is everybody adjusting in California to the higher ugh sales tax?  I still get sticker shock when I see 9 plus percent for taxes added on for purchases and I really want somebody to do something to get business to get going back in California but I can’t blame people for being gunshy from starting up gigs.

Judging from the amount of restaurants I have seen and for some of the very low end (food trucks) and high end (some restaurants in Encino, Long Beach, and other parts of Southern California) people seem to be still eating out in some moderation and in some cases excess.  Got any great recipes?  If so, think about if you have the head for running a catering truck or opening a restaurant.  You might get some decent leases with the Depression and be able to try and make it a go from three months to a year.  Do your own research and be willing to put in killer hours though for the next few years.

Going full circle on this blog entry, please be sure to also take into account your business taxes and be honest on what you can expect to make your first year in making your estimates.  The general cycle for new restaurants is at first a small pop to get to see if they like your food, followed by either a growing, hungry base of customers or it levels off to nearly nothing if they hate your cooking until you tweak your prices or change recipes.

What else is new – ah, expect the stock market to pop a bit more, I was shocked it actually rallied at the end of last week.  I had expected it to go up just a scootch but it seemed to roar a bit on news about the economy.  Personally, I am too much of a realist to hold my breath on things till more people start to get their jobs or hours back.

Talk to you later.

 August 03 2009

Also, please  don’t quite go anywhere yet.  Having some tax issues or tax questions?  Any problems with trying to make it through the financial Depression we are in that is making you depressed?  Please read on.

I am expanding  my practice and taking on new tax clients.  If you are interested in having somebody who is a successful businessman and tax professional with integrity review your returns discretely and see if your tax guy or gal is doing a good or goofy job, please drop me an email or post a comment with your contact information and time.

I have experience in international business, small businesses, partnerships, multi-state tax returns (they can get complicated) and anything else you can probably think of.

I also do business consulting and have ran several businesses (still running a few) myself so you are in good hands.

If you are looking for a day job, part time work, suggestions for saving money or investing, please check out my book, Practical Money Making, that is listed right after his paragraph in this very post. There are some great suggestions and ways to survive the Depression we are in.

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

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.

Have you read my book, “Bad Tax Idea, Good Tax Idea“? Please order it today. The tips inside can save you hundreds if not thousands of dollars! Tax planning should be done year round and not just two weeks into January or later.

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.

Kim Isaac Greenblatt

Tax amnesty LA Biz Ended

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