The Greediest Generation

Although this is a little over a month old, it’s a good argument in favor of Social Security privatization that I just came across. Doing nothing will just result in the inevitable implosion of the entire system

Just What We Need

The Bush plan is a growth engine that should be supported by anyone who believes in capitalism, fairness and private property, concepts foreign to most members of the JackAss party.

Record Retention

A common question I receive is how long we need to keep copies of our tax returns and the backup records. Copies of the actual tax returns should be kept forever. While most returns can’t be audited by IRS more than three years after they were submitted, there are dozens of reasons why information from them is crucial to locate decades later, including after you have passed away. As I mentioned earlier, one of the most difficult tasks for anyone is taking care of a decedent’s affairs. Not having access to copies of previously filed tax returns, often going back decades, makes the job even tougher.

As far as all of the backup documentation for your tax returns, such as cancelled checks, receipts and bank statements, those don’t need to be retained as long. While there is no universal answer to this, I usually advise keeping everything for at last five years after a tax return has been filed. That takes you past the normal three year statute of limitations for IRS, as well as the longer four years used by some states, such as the PRC. Of course, if you have an unsettled matter, such as an open IRS audit for which the statute has been extended, you should continue to hold onto all substantiating documentation until the matter is completely over with, which can often drag on for a dozen years or so.

When discussing the matter of backup receipts, you need to keep straight which are period expenses, such as phone bills and mortgage interest statements, and which are capital asset purchases. Since most assets don’t trigger any tax consequences until they are sold, you need to hold onto the purchase info until at least five years after you have reported their sale on your tax return. This is important for purchases of stocks and real estate. Unless you are claiming depreciation on it, IRS won’t have any reason to ask for proof of an asset’s cost basis until after you have sold it.

In these times of fast changing technology, besides what you hold onto, it’s important to keep tabs on how your records are maintained. As this article points out, if your crucial documents were created by certain software programs, you may be out of luck in a few years if you no longer have access to that program or one that can read those kinds of files. Similarly, the physical medium used is important. I still have a stash of the old real floppy 5.25″ disks with some clients’ data. None of my current computers has a drive that can read those disks; so I’m hoping I don’t have a need for any of that data. If so, I do have some floppy disk drive that I can salvage from the dozens of old computers in our PC graveyard upstairs. Since many newer computers are being produced without any floppy drives, even the 3.25″ disks may not be readable in the near future. Copying their data to a CD would be a good idea for long term storage. With DVDs close to killing the market for VHS, getting valuable data off of video tape cassettes and onto video CDs is a project we are going to be starting on soon.

KMK

Choosing Their Battles

The only war the DemonRats want to fight is pitting groups of Americans against each other via class envy. Luckily, it doesn’t seem to be as effective as it has in the past. To be more accurate, Dashole’s helmet should have a hammer and sickle emblem.

Remember the Cause

I have always received a lot of flack over discussing political issues in the context of taxes. Most other tax speakers and writers assume that taxes just happen in a vacuum and refrain from making any connection between what goes on in DC and our 1040 forms. That is just insanely naive.

I have always known that taxes and all of the messy laws, rules and regulations are merely symptoms of the real problem, which is the growth of government well beyond its intended scope of responsibility as envisioned by our founding fathers. While most people continue to clammer for new government programs with the assumption that the money for them will just magically appear, I know better. Every single program is paid for from money out of our pockets. It’s really no different than if your next door neighbor came over, stuck a gun in your face, and demanded that you pay for his medicines or his kid’s college tuition. Of course, our rulers have the IRS to do that dirty job for them. The end result is no different.

If only more of our rulers in DC would openly address the issue of the need to scale back the size and cost of government, as Georgia’s Senator Zell Miller does here. Amazingly, he’s a member of the JackAss Party, whose official platform believes that there is no part of our lives that the Federal government shouldn’t control.

KMK

Let’s hope he doesn’t give up the fight for lower taxes and wimp out under pressure from the class warriors, as he has already done with other conservative issues.

Accountants, Lawyers Clash Over Tax Work

This is nothing new. There have always been disagreements as to where the line is between accounting and legal functions. I can remember discussing the issue of when accounting and tax services come close to practicing law in my accounting classes in college in the mid 1970s. Every profession wants to protect its monopoly power over its turf.

KMK

Although there is a big discrepancy in who pays the major share of taxes in this country, the widespread confusion over the horrendous tax code is shared by everyone of all income levels.

Senate Democrats Introduce Payroll Tax Refund Plan

I would actually support this idea in addition to Bush’s cuts, not instead of. For many people, payroll taxes are much higher than their income taxes. In addition, this would be a nice tax cut for employers.

KMK