I remember during the early 2000s clients crying about how much they had lost on their 401(k) plans. “It was worth $900,000, but now it is down to $500,000!”. My question was always, “How much did you contribute to the plan?” If they had put in $360,000 over the years and the company had matched 10% they were ahead $104,000! The $900,000 high was a result of the artificial over-inflation of the market during the dot-com boom.
These clients also wanted to know if they could deduct their loss. First – what loss? Second – as Kelly points out it was a “paper loss” and not a “realized loss”. And third - it happened within a pension plan so it is not reportable on the 1040.
Kelly ends the post with the absolute best of advice. When it comes to capital gains and losses if you have a tax question, “ask your tax professional - not your broker, not your banker, not your financial advisor (trust me on this).” Do trust her!
* While we are on the subject of the financial FU - Kristine McKinley of THE TAX WISE MONEY COACH discusses the topic of “Keeping Your Money Safe”.
* CCH has published a Special Tax Briefing on “Tax Policies of the Presidential Candidates”.
* Trish McIntire of OUR TAXING TIMES has discovered two “New Websites” of interest.
* Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG led me to an item by someone who agrees with me about a true “minimum tax” in his post “51% Spend the Money of 49%”. According to Glenn Reynolds at INSTIPUNDANT.COM (highlight is mine) -
“Personally, I'd like to see everyone pay at least some income tax, and I'd like to see the amount of tax paid, by everyone, go up or down every year in tandem with federal spending. That would encourage fiscal discipline directly. It would also make it harder for politicians to promise everybody a free lunch, but hey -- why shouldn't they sacrifice something, too?”
* Joe also provides a lesson for all those who use their car for business – don’t leave your business receipts in your car overnight (or at least don't use that as an excuse to the IRS for having no records) – in his post “Salesperson in Training Learns About Deducting Travel Expenses”.
* Drug addict Rush Limbaugh is perhaps one of the last people I would quote on anything – but I must admit that his show did provide a humorous (and probably not far from the truth) parody on Chuck Rangel’s tax problems, as identified by TAX GURU Kerry Kerstetter in his post “Rangel Audio Parody”.
* Speaking of Chuck – the Tax Foundation’s TAX POLICY BLOG provides a good summary of “Congressman Rangel's Tax Woes”. Remember, this is the guy who heads the House committee that writes tax law!
This item was new to me – “Rangel, through his lawyer, requested permission from the Federal Election Commission to transfer $64,500 from his campaign funds to commission a painting of himself to be hung in the Ways & Means Committee room, which he would donate to the House of Representatives.”
* Michael Rozbruch of the TAX RESOLUTION UNIVERSITY blog takes us back to basics with “5 Simple Tax Tips for Individuals and Small Businesses”.
* Peter Pappas of THE TAX LAWYER’S BLOG uses an urban tax myth to tell us one of the reasons why Americans complain about high income taxes in “Taxpayer Pays IRS Bill With Toilet Seats”. His last paragraph is an excellent analogy.
* Bruce presents the first in his series of guest posts by fellow tax bloggers on the topic of Mistakes Made When Choosing a Tax Preparer over at TAX GUY with an entry by Gina L. Gwozdz of TAX TIPS BLOG. My 2 cents worth on the issue will appear on Monday.
* This entry appeared some time ago – I was saving it to use in a WHAT’S THE BUZZ-type posting to the no longer “in print” THE FLACH REPORT –
“How to Turn a Photography Hobby into a Business”, a guest post at FREE MONEY FINANCE by Stephanie Simpson, provides some good advice and information. In the introduction the blog’s host/author states “I've suggested several times that one way to earn extra money is to turn your hobby into an extra income” I have been saying this for years – and have added that if you do it right you can deduct most, if not all, of your hobby’s expenses.
* In addition to my weekly WHAT’S THE BUZZ two other tax bloggers provide a weekly overview of good stuff related to taxes and personal finance that they have found on the internet. These guys often find some real gems that I have missed. TAX GUY Bruce McFarland posts “Passing the Week . . . .” on Sundays and Peter Pappas of THE TAX LAWYER’S BLOG does a weekly “Dr. Tax-O-Sphere, Or How I Learned to Stop Worrying and Love the Tax Code” on Mondays. At times we must look like a mutual admiration society, as we all include each other in our weekly reviews.