Guidance Imminent on Hardship Distributions From Deferred Comp Plans for Katrina Victims – If there’s ever a time when tapping into retirement accounts makes sense – and shouldn’t be penalized – it’s this.

U.S. Treasury Urges Waiver of ATM Surcharges for Katrina Evacuees – It will be interesting to see how many banks honor this humanitarian request.

IRS, Treasury Announce Measures to Aid Hurricane Relief – Interesting way to donate pay for vacation days to charity.  Taking this off of W-2 pay is actually a much better tax savings than the normal Schedule A cash contributions.  Anything that reduces adjusted gross income (AGI) generates much more tax savings than itemized deductions do because there are so many tax penalties based on the level of AGI.  Official IRS announcement.

The Feds have busted some more phony trust tax scams.

Survival of the Stupidest
Cheating on your taxes is stupid enough.  Forgetting to declare over a million dollars that everyone in the country (especially the IRS) knows you won takes a level of stupidity very few people possess.  Richard Hatch must be hoping to follow Martha Stewart’s path and land his own reality show during or after his stay in the Federal gray bar hotel to be such an idiot.   I don’t have a much higher regard for the accountant who prepared that tax return for hatch, even if he did mark it as “informational.”  If he signed it in the paid preparer section, he is probably looking at some severe sanctions as well.

Spidell just released this update to their earlier article about Illinois and other states requiring licensing of nonresident CPAs who prepare their income tax returns, which I discussed here.

Home, Business Owners Affected by Hurricane Katrina Can Get Federal Tax Relief – Good summary from CCH of the tax ramifications of the hurricane, including how to account for any assistance payments received.

Even the superior QuickBooks programs can’t make money appear out of nowhere.

Those people in New Orleans are rank amateurs when it comes to looting from the taxpayers. Nobody does it worse than our rulers in DC.

Look Back in Claiming Losses from Katrina – As with any presidentially declared disaster, victims are allowed to claim their losses on the previous year’s tax return in order to recover some much needed cash ASAP. 

While I have done this on numerous occasions for clients who had earthquake and fire damages back in the PRC, things are a little different right now in regard to how IRS handles amended tax returns claiming refunds, as I’ve discussed on several occasions here. 

For those hurricane victims who have not yet filed their original 2004 income tax returns, and can ascertain the amount of their unrecoverable losses, claiming them on their 2004 1040 would probably be a wise move.  However, those people who have already filed their 2004 1040 may want to hold off claiming the losses until their 2005 1040.  Asking IRS for a refund could still trigger a full blown audit, which in this case would be even more dangerous than normal, if records have been lost in the hurricane, flood and fires that Katrina brought.  It would be one more disaster on top of what those people have already gone through.  

Of course, as always, specific plans on how to handle deducting these kinds of disaster losses should be done with the assistance of competent tax professionals and not attempted on one’s own.

Fall Tax Agenda Anything but Settled, Starting With Estate Tax

Three Separate Reconciliation Bills on Tap for Fall Session

GOP Not Giving Up on Social Security Reform

It is obviously not politically correct at this time to mention this; but I have already grown sick of the weenies who want to back off from the moves to repeal the estate tax and allow personal ownership of Social Security accounts because of Hurricane Katrina.  Their devotion to the imperial federal government is sickening when they try to defend immoral activity just for the sake of tax revenue. 

Allowing the government to continue its Marxist grave robberies is just plain wrong, regardless of what the money may be used for.  Likewise, forcing people to continue throwing their money down the Social Security Ponzi rat-hole is also nothing less than indefensible theft.  Justifying it based on the rebuilding that is needed for the gulf coast doesn’t make either of these current systems any less immoral or despicable. 

Of course, as always, the toughest part will be finding enough elected officials in DC with the guts to stand up for what is morally right and not cave in to the extreme political pressure to back off from their reform plans. The GOP’s full blown embrace of wild big government spending doesn’t give us much reason for optimism in this regard.