Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Warning to High-Tax Refugees…

Posted by taxguru on March 8, 2019

Just as the antebellum plantation owners didn’t just roll over and allow their slaves to escape without attempting to bring them back, the rulers of the high tax states do often go after their escaping taxpayers for tax money, as in this recent article about New York.

Tax collectors chase rich New Yorkers moving to low-tax states  (CNBC)

As residents flee New York’s high taxes, state uses intrusive audits to get cash from defectors (FoxNews)

 

NYTaxTorture(3-6-19)

None of these tactics  by New York should be news to listeners of the Rush Limbaugh show.  Rush constantly complains about being audited every year by the New York tax authorities, even though he relocated to Florida in 1996.  He is forced to document by several different means where he was working every single day of the year in order to prove that he didn’t earn any money inside the State of New York. 

Just as with the IRS and Federal tax issues, the burden of proof in State tax disputes lies with the taxpayer.  All it takes is for the IRS or State tax agency to accuse you of owing taxes and you are presumed to be guilty.  The tax agencies do not have to provide any substantiation for their claims.  The accused taxpayers have to come up with the evidence to prove that they don’t owe the money.

This isn’t a new issue in the tax world.  I have been dealing with the matter of the proper tax homes of clients for decades, especially in California, where clients have relocated their tax homes to tax free states, such as Nevada, Washington and Texas. I can also remember discussing the subject in many of my live tax seminars back in the 80s and 90s, with the example of George H. W. Bush.  While he and Barbara spent most of their non-DC time at their estate in Kennebunkport in Maine, they had established Texas as their official tax home so that none of their income was subject to income tax by Maine.  Their Texas residence was a hotel room.  

Avoiding taxes in high-tax states, especially Calif, used to be even harder to do for retired people.  Calif used to take the position that pensions were earned while working inside that state and even if the person retired to another state or country, Calif was entitled to its taxes on all of the pension benefits.  I can recall fighting with FTB over several of those kinds of cases.  Luckily, a law was passed a number of years ago preventing Calif and other tax-greedy states from taxing the retirement benefits of former residents.

As I have always made very clear, I am a huge proponent of people arranging their affairs, including where they live, to minimize the amount of their wealth that is confiscated by the various levels of government.  Relocating to a state with lower or zero taxes is still a very savvy tax savings strategy, especially with the new ridiculous $10,000 annual limit on the Schedule A deduction for State And Local Taxes (SALT) that should be the breaking point for more people to want to escape the clutches of the high tax jurisdictions.

Anyone who is planning to make such a move should definitely work with a professional tax advisor who can help them do it properly in such as way as to be able to defend against their former States’ tax agencies. 

NYRefugees(3-27-19)

Posted in StateTaxes | Comments Off on Warning to High-Tax Refugees…

Do liberals voluntarily pay in more taxes?

Posted by taxguru on March 7, 2019

With their staunch opposition to any tax cut legislation, the Dims are perfect targets for this timely parody piece from one of my favorite humor sites, The Babylon Bee.

IRS Still Waiting For Liberals To Voluntarily Mail Their Refund Checks Back

Posted in parody | Comments Off on Do liberals voluntarily pay in more taxes?

Everyone has their breaking point…

Posted by taxguru on February 5, 2019

I never tire of these stories about people who have finally been hit with their final straw and decided to put an end to their fiscal rape by insatiable tax hungry State Rulers and physically relocate to less expensive locales.

High-Tax State Exodus

More people leaving New Jersey than arriving, moving company says

Texas, Florida see big population gains, while New York, Illinois see big losses, Census Bureau data show

Out-of-State Buyers Flock to Miami

With so much of their tax base fleeing their clutches, the State Rulers will continue to follow the path of squeezing even more out of those who remain within their jurisdiction.  The short-sighted Rulers have never been able to grasp the moral of Aesop’s “Goose That Laid the Golden Eggs” fable.

Just wait until people in those high tax states see their 2018 1040s during the upcoming Tax Season, with the amount of non-deductible state and local personal taxes because of the new ridiculously unfair $10,000 limit. That should trigger even more Tax Refugees.   

[Update 2/5/19] – New York’s Governor is feeling the pinch from the tax revenue lost due to taxpayers bailing from his State.

Cuomo Announces $2.3 Billion Revenue Shortfall: ‘God Forbid If the Rich Leave’

Posted in StateTaxes | Comments Off on Everyone has their breaking point…

As accurate as any other opinion survey…

Posted by taxguru on January 29, 2019

Poll Finds Most People OK With Raising Taxes On Other People

We Can No Longer Tolerate An Economic System Where The Rich Get Richer And The Poor Also Get Richer

While these may be from the Babylon Bee satire website; who can dispute the fact that they are very accurate representations of the mindset of the DemonRat Party?

Posted in BabylonBee, polls, TaxHikes | Comments Off on As accurate as any other opinion survey…

We’re in for a very bumpy Tax Season

Posted by taxguru on January 16, 2019

All last year, as we learned how messy and complicated the hastily drafted TCJA was, along with the absurdly redesigned 1040 forms, I warned that the 2019 filing season for 2018 tax returns would be a big mess.  Now, with the government shutdown, it is going to get even crazier for everyone, filers and preparers.

Since we are in uncharted waters here, uncertainty and confusion are the words of the Season.  I will try to post whatever useful info I come across on how to cope with this unusual situation.

Here are some resources I have seen:

The IRS official contingency plan for operating during the shutdown – 132 page PDF   

IRS’s Official Press Release on this situation.

Forbes Magazine’s much more concise summary of the IRS plan.

 

Tax Court is also delayed

The shutdown isn’t just affecting the IRS.  Its Tax Court has also been closed down, with trial sessions being canceled all over the country.  This is going to result in even longer delays in getting to trial than has already been the case for years. 

 

[Update 1/24/19]  From Politico:

IRS faces chaotic tax season amid shutdown

[Update 1/25/19] From Washington Post:

At least 14,000 unpaid IRS workers did not show up for work as broad shutdown disruption hits tax agency, according to House aides

[Update 1/26/19] From Washington Post:

IRS will need at least a year to recover from government shutdown, watchdog tells Congress

Posted in shutdown, TaxSeason | Comments Off on We’re in for a very bumpy Tax Season

What won’t the PRC Rulers tax?

Posted by taxguru on January 13, 2019

As anyone knows, an effective parody has to have a strong foundation in real world true facts.  

An excellent comment on the situation in California is this recent piece from the extremely creative satire website, The Babylon Bee.

California Legislature Unveils Plan To Raise Taxes On Wildfires Until They Move Out Of State

As with all of their parody articles, this one is very concise and pithy, as Bill O’Reilly used to say.  Check out the full thing, but this paragraph does an excellent job of describing the very real and very dangerous mindset of the bozos in power in Sacramento.

"Just as we’ve done with various businesses and private individuals, we will levy ever-increasing taxes on the fires," he said proudly. "Once they realize they’re being taxed to death, they’ll move on to greener pastures like Texas or Arizona." Brown said the taxes will be earmarked for public funding and pensions, but quickly added the state will likely "blow through the cash" on crazy pet projects faster than they could bring it in.

[Update 12/13/18]: Proving once again that the PRC Rulers are themselves parodies of actual leaders, they have one-upped the Babylon Bee by proposing to tax cell phone texts.

California mulls tax on text messaging

So, the question is still a very valid one.  Is there anything that the crazies on the left won’t tax in order to steal more money for themselves?  If George Harrison were still around, he would have to add so many things to his TaxMan song that it would be twice as long.

 

[Update 12/20/18]: The Babylon Bee has another great parody that could very well come true, given the environmental wackos’ insane blaming of humans breathing out carbon dioxide for the imminent destruction of the planet.

California Considering Tax On Breathing

This article includes another prediction that has actually already come true as part of the Federal TCJA, with its deduction limit of $10,000 for State and Local Taxes (SALT) on the 2018 Schedule A.

…California had unveiled a tax on taxes, charging residents a luxury tax for the privilege of being taxed.

[Update 1/13/19]:  This is not a parody, but one more indicator of California’s continuing slide into total socialism

Gavin Newsom’s budget calls for new tax on drinking water

Posted in Calif, parody, taxes | Comments Off on What won’t the PRC Rulers tax?

IRS Increases Standard Mileage Rate For 2019

Posted by taxguru on December 17, 2018

IRS has released its official standard mileage deductions for 2019, and the business rate has been increased by 3.5 cents over the 2018 rate.  This is the largest year to year jump in a very long time. 

While these amounts aren’t going to be used on actual tax returns for more than a year, many businesses use the official IRS rate for billing customers and for reimbursing employees; so this advance notice is useful right now. 

The IRS Announcement: IRS issues standard mileage rates for 2019

Beginning on Jan. 1, 2019, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
  • 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
  • 14 cents per mile driven in service of charitable organizations.

Posted in IRS, Vehicles | Comments Off on IRS Increases Standard Mileage Rate For 2019

2019 IRS Inflation Adjustments

Posted by taxguru on November 20, 2018

Even with all of the changes from the TCJA, there are still some items that are adjusted periodically for increases in the cost of living.  IRS has done the calculations for 2019 and released the following press release.

IRS provides tax inflation adjustments for tax year 2019 

The folks at TheTaxBook have summarized the 2019 changes, with comparisons to the 2018 and 2017 amounts.  I posted a copy of it on my Google Drive for easy downloading.

Posted in inflation, IRS | Comments Off on 2019 IRS Inflation Adjustments

Phony IRS Scammers Busted

Posted by taxguru on November 2, 2018

With all of the scam phone calls from phony IRS agents, threatening arrest over bogus tax debts unless money is sent to them via gift cards and other crazy methods, it’s great to see that some of them have been caught and will be residing in the Gray Bar Hotel for a while. 

IRS Impersonator Scam Leader Sentenced to 135 Months in Prison After Stealing Millions of Dollars; Co-Conspirators Also Imprisoned

While they are also supposed to pay back the $10.7 million dollars they stole from their 6,282 gullible victims, that’s not very likely to happen.

Posted in scams | Comments Off on Phony IRS Scammers Busted

IRS Cutting It Close For Hurricane Michael Filing Delay

Posted by taxguru on October 12, 2018

With Hurricane Michael barreling down on us, I was wondering when IRS would announce their official special delayed filing due date for 2017 income tax returns, as had been their customary policy during other large destructive weather events.  I was checking their news page every few hours for the past week.

The hurricane was declared a Federal Disaster by Trump, one of IRS’s main criteria for allowing more time for those affected by a humongous natural catastrophe to get their tax returns in.  I knew they would eventually get around to issuing an official news release regarding this event.  However, considering that the extended 2017 1040s are due in the mail in three days from now, by Monday, October 15, today’s news release was just in time for those of us who were affected by Michael. Now, people can focus on the clean-up tasks rather than stressing to meet the Oct 15 filing deadline.

IRS’s news release from today:
IRS extends Oct. 15 and other upcoming deadlines, provides expanded tax relief for victims of Hurricane Michael

The money quote from this news release:

“individuals who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018, will now have until Feb. 28, 2019, to file.”

Posted in Due Dates, hurricane, IRS | Comments Off on IRS Cutting It Close For Hurricane Michael Filing Delay