Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for March, 2002

Posted by taxguru on March 31, 2002

Misery Loves Company

Every time gas prices rise in the USA, some wise guy has to say how well off we are in comparison to the poor slobs in Europe who pay over $4.00 a gallon for their petrol. Same thing in response to any complaints about our income tax rates. Things could be worse. You could be paying 70% to 90% in some of the Socialist European countries.

The same argument is being used to defend the Postal Service’s upcoming hike in rates. According to this piece in the Christian Science Monitor, we should all just shut up and be happy the rates aren’t as high as in some other countries. The fact that the quality of service has become worse with each rate increase isn’t relevant.

KMK

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Posted by taxguru on March 31, 2002

Right Choice

It seems that once again, my decision to avoid watching the Academy Awards show was the smart move. I’m glad to see that I’m not the only person who considers the show’s designated host, Caryn Johnson, to be the most repulsive person in show business. Here’s an entertaining recap of the show.

KMK

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Posted by taxguru on March 30, 2002

Exposing MLM

I have long been very vocal in my criticisms of multi level marketing schemes and how they are often no better than pyramid scams. My low regard for them is nothing compared to this guy in Sacramento, who obviously has far too much time on his hands. He has a very lengthy expose of the HerbaLife MLM program that is just as applicable to any of the others, including the most pervasive one.

KMK

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Posted by taxguru on March 30, 2002

Another One Bites The Dust

Slowly but surely, the IRS has been taking out the promoters of illegal tax protest schemes. Here is a story of a Florida promoter who is being shut down by the Feds for advising his followers that they are not required to file tax returns or pay any income taxes because the 16th Amendment wasn’t properly ratified. As I have explained on several occasions, this is a bogus argument that does nothing but make matters worse when used with IRS.

The followers of this promoter were paying him thousands of dollars for this idiotic advice. Now, they are out that money, plus all of the back taxes, penalties & interest that IRS will demand. Prison time is also a very real possibility for the promoter and his followers.

This is so typical of too many people who put tons of money & energy into trying to scam the system, when they would most likely end up in far better shape if they directed those resources into more productive endeavors. Maybe I have a twisted perspective on life; but whenever I watch a caper movie, where the planning takes years and millions of dollars, I can’t help thinking that the masterminds could be even more successful if they channeled that into legitimate things. Of course, it wouldn’t be as entertaining a movie. There aren’t as many car chases and shoot-outs in starting a business or making a legal investment. As I have said repeatedly, there are so many very inexpensive legitimate methods of reducing one’s taxes that I can’t have any sympathy for those who are stupid enough to follow the lead of charlatan tax protestors.

KMK

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Posted by taxguru on March 26, 2002

IRS PR Campaign

There are several stories out today based on IRS press releases about their cracking down on people who use offshore credit cards. The presumption is that anyone who has an offshore account is by definition a tax cheater. As we all know, in tax matters, there is no presumption of innocent. Everyone is assumed to be guilty unless they can prove otherwise.

Some additional insight into this is needed. This is mainly an IRS effort to scare off anyone who may be considering opening an offshore account. What always amazes me is how IRS and their doting fans in the media can fabricate numbers out of thin air and then trumpet those figures as facts. They claim two million offshore credit card accounts, when in actuality they have no idea. This is just as bogus as the much hyped tax gap of uncollected taxes. That number is completed made up because by definition, unreported income is unmeasurable. There is no way IRS can ever know how many people have offshore accounts because if they set them up properly, they can’t know this. There may only be a few thousand people doing this; but that wouldn’t attract as much attention as two million; nor would it justify an increase in IRS’s budget to visit the offshore locations.

KMK

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Posted by taxguru on March 25, 2002

Taxes Do Motivate Behavior

One of the underlying premises held by our liberal rulers and their cohorts in the media is that they can raise taxes all they want and people will just bend over and pay them. Those of us in the real world know that to be completely untrue. Even very small tax law changes will motivate people to make drastic changes in all aspects of their lives. In another earth-shattering discovery of the obvious, the Seattle P-I has this story of the fact that people migrate to areas with lower taxes. Next, they’ll finally reveal that professional wrestling isn’t real.

KMK

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Posted by taxguru on March 25, 2002

Pick The Right State To Die In

I have written extensively about how people choose their tax homes based on the state tax laws, often selecting states that have no tax on the income they earn while alive. Now, we need to consider where one will die because there could be large estate (aka inheritance or death) tax consequences. As has been well publicized, the Federal estate tax is being phased out, with a one year tax free opportunity to die in 2010.

Since most states piggy-back their estate tax laws on the Federal rules, many of them are scared at the thought of losing this easy money and are passing their own stand-alone estate taxes as described here in the Washington Post.

KMK

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Posted by taxguru on March 24, 2002

Let Them Put Their Money Where Their Mouth Is

It’s bad enough when big-mouthed empty-headed American celebrities try to tell the rest of us how to spend our money. It’s doubly insulting when foreigners try to make us feel guilty for not paying taxes in the 90% range of their beloved Socialist European countries, as U-2’s Bono is currently doing. That’s why I like this idea for a new 100% tax just on income earned in the USA by liberal foreign rock stars.

KMK

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Posted by taxguru on March 22, 2002

Coordinating QuickBooks With Tax Returns

As I have been saying for decades, the key to the most effective tax returns is good bookkeeping. This is the weakest link in the chain of events. As I have long advised, the best tools for bookkeeping have been Quicken and QuickBooks. Over the past few years, as Intuit has modified the programs, I have become less fond of Quicken and more appreciative of the capabilities of QuickBooks, which I will explain in more detail when I have more time.

As with any tool, QuickBooks is only as effective as the operator. One of the biggest mistakes I have been seeing far too often is using the wrong number of QuickBooks company files. It happens in both directions; either too few or too many. I have been spending huge amounts of my very limited time unraveling Quicken & QuickBooks data where people have combined too many accounts. As I have written for years in my Quicken Tips, each company file should coincide with a tax return; 1040, 1120, 1065, etc. For tax returns that include multiple business schedules, such as 1040s, the best way to keep their activity straight is to include all of them in one Company file and set up a Class for each business schedule (C, E, F, etc.). At tax time, it makes things so much cleaner. The worst thing to do is combine corporate (1120) activity in the same company file as for personal (1040).

Naming the QuickBooks data files should be done with this in mind as well. The best way I have found is to name it for the underlying tax return, such as Smith1040 and Smith1120. Having been on computers for over 30 years, I understand the benefits of short concise file names with no spaces.

I will be posting other tips for the most effective use of QuickBooks.

KMK

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Posted by taxguru on March 21, 2002

Secret Plans

Neal Boortz has been kind enough to post the JackAss Party’s secret plans for implementing their agenda for America, many of which involve changes to the tax laws. It may sound like a parody, but it’s eerily accurate.

KMK

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