Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for February 25th, 2003

Posted by taxguru on February 25, 2003

Enemies Of Tax Cuts

As Bush continues his efforts to reduce the tax burden and remove the double taxation of corporate income, the opponents of capitalism are not stopping their class warfare. Some typical leftist rants I came across:

New York Slimes, upset that evil rich people who pay more taxes will receive a larger dollar benefit from the tax cut than people who pay less. There is just no reasoning with idiots like this.

A self proclaimed lover of Communist philosophy, claiming that it’s good to tax both corporations and their evil rich shareholders on the same income because their tax burden is still too low. Not surprisingly, this Marxist will soon be starting a career teaching law at Rutgers.

KMK

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Posted by taxguru on February 25, 2003

Don’t Miss Credit Card Charges

I have long maintained, based on real life knowledge, that the conventional wisdom that everyone cheats on their taxes is 180 degrees off from how things really are. The truth is that most people overpay their taxes, mostly because of lousy bookkeeping. That is why we have been very forceful in requiring our clients to set their accounts up on QuickBooks. I will be explaining many of the benefits of doing this, especially for personal non-business accounts, in this blog and on my web site over the next several weeks.

One of the biggest areas where people shortchange themselves in terms of claiming perfectly legitimate deductions, is when credit cards are involved. Most people, when getting their info together for their tax preparer, only look through their checkbooks and completely overlook their credit card activity. There is also a misconception that you can only deduct those charges that have been paid off by the end of the year. Not true. IRS treats credit card charges exactly the same as cash payments. This is not even a grey area and has been official IRS policy for as long as I have been doing taxes (27+ years). You can literally go to Best Buy on December 31 and buy a computer with a credit card and deduct it on that year’s taxes, even though the bill won’t arrive until next year. It also doesn’t matter when, or if, you ever pay off the credit card. An additional benefit is that, if a charge was for legitimate business reasons, all subsequent finance charges on that balance are deductible on the same tax return schedule where the original charge was claimed. This is another often overlooked deduction, because most people are under the assumption that credit card interest is a non-deductible personal expense.

The only way to accurately account for all of your credit card activity is to post all of the transactions in QuickBooks, along with all of your bank accounts. A separate account should be set up for each card and it should be reconciled with the credit card statement each month to ensure completeness. Each charge should be entered into the card’s register and coded to the appropriate expense as of the date of the charge.

KMK

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Posted by taxguru on February 25, 2003

It will take a pretty large roll of tape to take care of all of the liberals in the media and in the JackAss Party who can’t stop lying about the effects of tax rate cuts.


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