Saturday, October 4, 2008


* If I may be permitted a moment of self-promotion – I hope you all read my guest post on “Mistakes Made When Choosing a Paid Tax Preparer” over at Bruce’s TAXGUY blog.

I start the week off on the series of posts by fellow bloggers on the topic with my 2 cents worth (should that be adjusted for inflation?). Peter Pappas of THE TAX LAWYER’S BLOG follows on Wednesday with excellent advice in his entry “5 Worst Things You Can Do if You Get an IRS Collection Notice”. The week ends on Friday with “Finding a Tax Preparer” by personal finance blogger LIVING ALMOST LARGE.

I am glad that LAL thinks she is tax-savvy enough to rely on Turbo Tax to correctly do her tax return – but I still believe she is taking a big risk. And if she stays away from CPA firms she will certainly pay much less than $800 for a competent tax professional.

BTW, Bruce has informed me that my article on blogging “Why Blog” from last Winter’s issue of the National Association of Tax Professionals TAXPRO QUARTERLY JOURNAL inspired him to first consider writing a tax blog. I am glad to have been someone’s inspiration!

* TAX PROF Paul Caron provides an interesting take on the recently released listing of real estate taxes by state in “Property Taxes: High in Blue States, Low in Red States”.

The listing has three categories - Median Real Estate Tax, Real Estate Tax as Percentage of Home Value, and Real Estate Tax as Percentage of Income.

It comes as no surprise that New Jersey is first on two of the lists - Median Real Estate Tax and Real Estate Tax as Percentage of Income - with the highest real estate taxes in the nation. NJ is #5 on the list of Real Estate Tax as Percentage of Home Value.

* Russ Fox of TAXABLE TALK does a great job reporting on tax cheats who get caught. In his post “They Should Have Known Better” he tells of several tax cheats who, well, should have known better.

One of the cheaters mentioned in the post is an embezzler who was convicted of tax evasion for failing to pay about $82,000 in income tax on the money he embezzled. Russ points out the fact that “tax must be paid even when the source of your income is stealing”.

He also brings to our attention the “alleged” tax improprieties of race car driver and DANCING WITH THE STARS winner Helio Castroneves in “Racing to ClubFed”.

* The Tax Foundation reports on the tax-related errors made in last Friday’s debate in the post “McCain and Obama Both Play Loose with Facts on Tax Issues in Debate” at its TAX POLICY BLOG.

The post states that (highlight is mine) - “The Tax Foundation will be doing the same fact checking on tax issues after each of the presidential debates, as well as (the) vice-presidential debate {see “Vice-Presidential Debate: Plenty of Errors in Tax Policy Rhetoric” for Biden and Palin’s FUs – rdf}. Unfortunately, this type of analysis is necessary because throughout this presidential campaign, honesty and true straight-talk on tax issues from either side have been mostly nonexistent.”

So be sure to go to the TAX POLICY BLOG after each of the upcoming debates.
While on the subject, here is something from the “I couldn’t have said it better myself” file – this comment from TAX GIRL Kelly, “It would be great if all of the candidates could stop with the phony stats and accusations and focus on the real issues. Is that really too much to ask?
* Unlike the commenter from StangNet I was not surprised that the “Top Federal Income Tax Rate Was Once Over 90 Percent” as the Tax Foundation reports in this post. It was 91% for tax year 1963.

When I started doing tax returns (my first 1040 was the 1971 model) the top tax rate was 70% - but the “maximum tax” on “earned income" (i.e. W-2 wages) was 50%. Yes, we had both a minimum tax and a maximum tax.

* Capital losses are on everyone’s mind these days, considering the current financial “situation”. Last week TAX GIRL Kelly gave us a primer on the tax treatment of “traditional” capital gains and losses. This week Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG tells us how to deduct losses in an IRA in his post “Is There a Tax Benefit for an IRA Wipeout”.

Joe tells us “There is a way to get a tax benefit from some IRAs. Unfortunately, it's hard to get, and it will be useless to many taxpayers”. His bottom line – “There's no such thing as a good loss, but IRA losses may be the worst”.

* Joe also brought to my attention a Government Accountability Office study that says “53% of returns reporting real estate income are wrong, to the extent of $12.4 billion in income

According to Joe's post, “the GAO says that unsubstantiated rental expenses are the biggest single source of errors. Other common errors include deducting expenses that should be capitalized; running personal expenses through the schedule E, and leaving income off. The GAO says that unsubstantiated rental expenses are the biggest single source of errors. Other common errors include deducting expenses that should be capitalized; running personal expenses through the schedule E, and leaving income off.”

As someone who has been in the tax business for over 35 years, and seen all kinds of returns from both individual taxpayers and other tax preparers, I have absolutely no doubt the GAO report is correct.

* This post just made it in time for inclusion in the weekly BUZZ – actually because I knew about it in advance and “held the presses” until it was up. I am talking about TAX GUY Bruce’s “A Saturday Post”.

The post reviews the issue of the Dependency Exemption under the relatively new rules (changed a few years back when Congress wanted to create a “uniform” definition of a child in the Tax Code that ended up being anything but “uniform”) as it applies to an apparently real-life scenario submitted by one of Bruce’s readers. His “bottom line” is an excellent point – “To make a truly informed determination it is necessary to know all the facts and circumstances of the individual situation”.

* Always leave them laughing. My Space, Face Book, Twitter – all this “social network” nonsense is truly Greek to me. I have no desire to join – or to be someone’s online “friend”. Why would I want to put my personal life out there for the world to see and risk identity theft and who knows what else? Anyway, I came across a related parody of “the national anthem” - Frank Sinatra’s MY WAY – on the American Comedy Network site.


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