Most People OverPay Their Taxes

I have always taken issue with the underlying sentiment around the country that everyone is a tax cheater and we need a bigger and stronger IRS to catch them. That has never been my experience with the thousands of people I work with every year. Quite the opposite. What I have always seen is that for various reasons, people pay too much in taxes.

These reasons include:

Ignorance of the tax laws and what legitimate deductions are allowed to them. The tax code is a monstrosity and anyone who tries to tackle it themselves is almost guaranteed to miss big tax saving opportunities.

Fear of IRS. People are so petrified of offending IRS, that they frequently intentionally don’t claim legitimate deductions in order to stay in the “safe zone.” This self styled protection insurance often costs these people several thousand dollars in extra taxes each year.

Laziness and sloppy bookkeeping are also big reasons people miss legal tax deductions. Rather than keep track of their itemized deductions, people just take the easy (lazy) route and claim the standard deduction without even trying to see if their actual Schedule A deductions can beat that. I have always believed that you should keep track of every single expenditure and see which is higher, the actual itemized deductions or the standard one. This can change from year to year. It’s an expensive assumption to conclude that just because the standard deduction was higher last year, it will be this year.

This isn’t just my opinion. According to this report, IRS is estimating that people are paying a billion dollars too much in income taxes each year just because they are using the standard deductions when itemized would be higher. As with any IRS estimation, this is probably far too low.

Most people think that I’m such a stickler for good bookkeeping just because of my typical CPA anal personality. While that may be partly true, it’s really for the best interest of the clients. Far too many just don’t do a good job keeping track of what they receive and spend. Whether someone has a business or not, a good bookkeeping system, such as my favorite, QuickBooks, is essential. Every transaction in every account must be entered.

KMK

Giving To Charity

Here is a good summary of the benefits of donating appreciated property to charity.

This is definitely the kind of thing that should be reviewed with your tax pro before doing it. Many charities have become very aggressive in soliciting stocks, real estate and other appreciated assets under the assumption that the ability to avoid the capital gain taxes will always leave you ahead. However, I have done several analyses where the client comes out ahead cash-wise by selling the asset and donating cash. It is very much a case by case scenario.

KMK

State Of Freedom

You can see the state by state schedule of when the average taxpayers finish their annual slavery duties and are allowed to work for themselves instead of their masters in government.

What is important is to look at the overall tax burden, and not just the income taxes, which too many people fixate on. It’s no surprise that Connecticut has the highest tax burden, and latest Tax Freedom Day. However, Washington State, which has no income tax of its own, is ranked with the second highest tax burden because of its high sales and property taxes. That’s why I tell people who ask which states have the lowest taxes that it’s impossible to give a one size fits all answer. It depends on individual circumstances.

However, based on this chart, Alaska has the lowest overall tax burden. In fact, Alaska residents actually receive money from the government as part of the oil revenues. This should be even more generous if the ANWR oil reserves are ever allowed to be utilized.

KMK

Arkansas Priorities

It says a lot about what our masters in government consider to be important by what things are taxed and what are allowed to be exempt from taxation. Here in Arkansas, there is a brave group of Libertarians striving to do the unthinkable; allow humans to be given the same respect as chickens, cattle and catfish. Human foods are subject to sales tax, while animal feed is not. Who is more important in the eyes of our rulers in Little Rock?

KMK

Dumbing Down the Sheeple

The government controlled education establishment has been hard at work for the past few decades at ensuring a steady supply of brain dead morons who will easily take their marching orders from their superiors in the media and the government. As this story about the financial knowledge of high school seniors shows, their dumbing down agenda is right on schedule. The fact that financial ignoramuses are already rampant throughout all areas of our society should come as no surprise to anyone. Here’s another summary.

I was going to say that these students shouldn’t look for careers in the accounting profession; but realized that some of them just might become CPAs. My understanding is that the CPA exam, which was two and a half days of essays, calculations and multiple choice questions when those of my generation took the test, is also being dumbed down. Adapting to the poorer writing and communication skills of the current crop of college students, the test is being converted to all multiple choice. The Enron – Arthur Andersen debacle will look like nothing in a few years as the new breed of CPAs permeate the financial world.

KMK

Setting the Stage

Any time you see a news story about the inequality of income or wealth, you can be sure they are priming you for another money grab. The cliched “the rich get richer and the poor get poorer” is just an excuse for income and wealth redistribution in the name of fairness.

Before you feel safe that only the very upper crust will be under attack, you should understand that if you have one dollar more than anyone else, you will be in the cross-hairs of these modern day Robin Hoods.

To show you how widespread and organized these communists are, I stumbled upon this site dedicated to that noble goal of “income & wealth equality.”

KMK

Interesting Summary of US Taxes

Neal Boortz had an excellent summary of the history of the income tax system in this country on April 15. If his viewpoint sounds similar to mine, it’s no coincidence. He’s also a Libertarian.

KMK

In Their Own Words

Stephen Moore of the Club For Growth has an excellent analysis of the revealing communist message included in The Myth of Ownership. The fact that the New York Times agrees with the principles in the book shouldn’t shock anyone who understands their status as mouthpiece for the JackAss Party.

KMK

We’re All Slaves

Anyone who thinks I have been exaggerating the situation of our masters in DC treating us as a bunch of slaves should check out this NY Times review of The Myth of Ownership; a book that could have been written by Karl Marx himself. It claims that people have no moral right to claim ownership of the fruits of their own labors and are absolutely wrong to be upset when any of it is confiscated by our rulers in DC for the “common good.” This attitude would be laughable if it weren’t held in such high regard by so many of our superiors in the media and in government.

KMK

Fighting Back

One victim of the Clinton Organized Crime Family’s use of the IRS as personal executioners is fighting back. Larry Klayman, of Judicial Watch, is planning to use his favorite arena, the coutroom, to take on the IRS. He isn’t shy about his feelings for the top brass at IRS, calling Commissioner Rossotti a criminal

Battling IRS in this way is an extremely uphill battle because of its long standing exemption from all of the restrictions that the US Constitution is supposed to place on a too powerful government. However, we can hope that the publicity does some good in forcing our rulers to do something to control the obvious abuses of power on which IRS routinely relies.

KMK