Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for January, 2014

Posted by taxguru on January 30, 2014

From Argus Hamilton:

 NSA agents do not use the data it collects against the president’s political opponents, that’s the IRS’s job and they’re in a different union.


The Postal Service announced a two-cent increase for the price of a postage stamp that will go into effect Sunday. They’ve certainly earned it. The Postal Service reported it lost five billion dollars last year, making it by far the most profitable branch of the U.S. government.


Colorado’s licensed pot shops were reported running out of marijuana due to the huge demand. State lawmakers responded by suggesting a thirty-five percent sales tax on every ounce sold. Leave it to a state legislature to make the Mexican drug cartel look not so greedy.


President Obama asked Congress to help spread the Wall Street prosperity to working Americans. His and Congress’s job approval are way down. Wall Street’s biggest concern is that the value of politicians will drop so low that ordinary citizens can afford to buy them too.


The Riviera Country club is the site of this week’s Northern Trust Open in the exclusive Los Angeles suburb of Brentwood. How nice is this town? Last year, somebody embezzled fifty thousand dollars from the Bank of Brentwood and the cops are still looking for a motive.


The State of the Union speech focused attention on the economic divide in America on Tuesday. Wall Streeters played a drinking game during the telecast . Every time Democrats said the words income inequality, they drank a glass of Louis XIII Grande Champagne Cognac.


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Posted by taxguru on January 29, 2014

From Fred Thompson:

New research by Daniel Borota of the Johns Hopkins University suggests that caffeine may help to boost long-term memory. Can we get a round of double-espressos for the witnesses at the IRS/Tea Party hearings? 


 A new book by feline-researcher Dr. John Bradshaw says that cats think of humans “as though they were the mama cat”. Ah… sorta the same way liberals see government. 


Google is accused of using sensitive personal information in violation of privacy law in Canada. That would never fly in America. That’s the IRS’s job.


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Worst Tax States

Posted by taxguru on January 29, 2014

For those considering relocating, The Fiscal Times has this interesting slide show of what they have ranked as the ten worst tax states for 2014, along with details on their tax rates. 

They are:

1.  New York

2.  New Jersey

3.  California

4.  Minnesota

5.  Rhode Island

6.  Vermont

7.  North Carolina

8.  Wisconsin

9.  Connecticut

10.  Maryland


TaxCoach Software: Are you giving your clients what they really want?


Posted in StateTaxes | Comments Off on Worst Tax States

Super Taxes

Posted by taxguru on January 28, 2014

New Jersey Taxes Could Eat Up All Of Peyton Manning’s Super Bowl Earnings – Holding the game in the highest tax state in the country will cost all of the players a lot of extra taxes compared to what they would be if the game were played down here in Florida. The much nicer weather down here would be an added bonus for everyone.


Posted in StateTaxes | Comments Off on Super Taxes

Pawn Shop or IRS?

Posted by taxguru on January 27, 2014

Every day, I receive emails from public relations people trying to interest me in doing articles on their clients’ books, products or services.  This recent one really missed the boat when she wrote to me twice to push the concept of pawning personal items to pay IRS.


Email 1:

Subject: Re: Alternative ways to pay taxes

Hi Kerry,

With tax season around the corner, many people may find themselves in a
position where they owe back more than they can afford. What they may
not realize, is that getting fast cash for the watches or jewelry you
have lying around is easier than you think.

Personal asset lender, borro, offers cash in less than 24 hours with no
credit checks. Might you be interested in speaking with Paul Aitken, CEO
of borro, about why individuals turn to them as an alternative during
tax season?

Brittany Kelly


Email 2:

Subject: Re: Alternative ways to pay taxes

Hi Kerry,

Just wanted to check and see if you’d be interested in speaking with
Paul Aitken, CEO of personal asset lender borro, about how individuals
are using their platform to pay their taxes.

Brittany Kelly


My reply:


I’ll pass.  In fact, your angle of using pawn shop loans to pay off IRS debts is misguided.  It make no logical sense.

I checked out the website for and it appears to just be a web-based pawn shop, charging interest of three to four percent per month, plus additional setup fees of from three to five percent of the asset’s value.

When the IRS is only charging three percent interest per year on back taxes, why would anyone want to pay the 36% to 48% rate that your client charges?  In addition, IRS allows installment payment plans of up to six years, while borro’s loans are six months in duration.

Good luck.

Kerry Kerstetter


Need Business Checks Cheap?


Posted in Uncategorized | Comments Off on Pawn Shop or IRS?

Posted by taxguru on January 27, 2014

Some excellent commentaries from Rush Limbaugh:

In Defense of the Working Rich

The Private Sector Makes What the Government Takes 


The IRS attacks are just one aspect of the use of government powers to stifle opposition to the BHO Regime.

Obama Eliminating Opposing Voices by Using Dictatorial Practices 

Leaning Right in Hollywood, Under a Lens

Obama Uses Government To Harass, Intimidate Foes 


Silicon Valley billionaire compares treatment of America’s rich to Nazi persecution of Jews – It’s actually not a bad comparison to the current drumbeat from the Left regarding income and wealth “inequality” as a means of justifying the confiscation of assets from those the BHO Regime considers to be evil rich.


Congressional inquiry on Christine O’Donnell tax records heats up, but truth may stay hidden – A reminder that anyone running against the Dims may have their confidential tax records exposed to the public.  IRS is a tool of the Big Government Left to protect against any reduction in their power.


How to Minimize Taxes When You Inherit an IRA – Some good ideas. As a minimum, consult with your own professional tax advisor ASAP.


New York Finds High Taxes Send State’s Wealthy Fleeing – An obvious consequence of raising tax rates.  Why the population of Florida continues to increase.


In Their Own Words: Lenin, Stalin, Obama, and Hillary – It’s hard to tell them apart.

Hillary or Karl – verifies that Hitlary made those Marxist statements. 


Maryland Lawmakers Finally Consider Repealing So-Called ‘Rain Tax’ – Another illustration of how devious our rulers are in devising new ways to steal money from their subjects. There is nothing that they won’t try to tax.


Republican Party to vote for repeal of U.S. anti-tax dodging law – Regarding offshore accounts. Not a big issue for most people; but a good sign that some in the GOP are willing to oppose the DemonRats on anything.


Study: Most sponsors of minimum wage hike bill don’t pay interns – Just another example of the disconnect between those of us in the real world and our imperial rulers on the Planet Washington DC.



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NewsBusted Jokes

Posted by taxguru on January 25, 2014

I put together this assortment of jokes from the past few weeks’ episodes of NewsBusted. 

Be sure to check out the full length episodes of NewsBusted on their YouTube channel.





Posted in NewsBusted, video | Comments Off on NewsBusted Jokes

Do not send 1099s & W-2s to IRS too early

Posted by taxguru on January 24, 2014

Every year at this time, I need to remind people that being quick to prepare and send 1099s to IRS can lead to problems, such as in this email I sent to a client.

In regard to filing W-2s and 1099s, a common mistake people make is sending them too soon to the IRS and State.  The due dates are staggered for a very good reason.

By January 31, you are supposed to send copies of the W-2s and 1099s to the payees.  If they see any problems with any of the info on the forms, they need to get back to you and have you correct them.

It’s not until Feb 28 that the IRS and DFA are supposed to be sent their copies.

Big problems happen if you send in W-2s and 1099s with errors on them too soon.  You will then have to prepare Corrected forms and send those in.  What often happens is that IRS misses the checked Corrected box and sees two 1099s or W-2s for the payee and sends them tax due notices for not reporting the income from both the original and corrected forms.  I have seen this happen a lot.

The best way to avoid this is to only send IRS and DFA one original form and try to avoid sending in corrected ones.  When I send out 1099s, I include a note to the payee to get back to me ASAP with any corrections.  If they wait until after Feb 28 to notify me of mistakes, the hassles they will face with IRS mishandling of corrected forms will be their fault.  Also, to make it easier for them to see how the amounts were determined, I include a printout of their payments from my QuickBooks file.

I hope this helps.  Let me know if you have any other questions.



TaxCoach Software: Finally! Plain-English Tax Planning That Builds Your Business!

Posted in 1099, IRS, W-2 | Comments Off on Do not send 1099s & W-2s to IRS too early

Posted by taxguru on January 21, 2014

Higher-income Americans hit hardest by tax changes – For obvious reasons. The more you earn, the larger the target on your bank account.


Lawmakers Seek Investigation into DOJ’s Handling of IRS Investigation – From CCH 


14 IRS Audit Red Flags – An experienced tax professional can minimize the risk of any of these things actually triggering an audit. 


US tech firms make eleventh-hour attempt to halt tax avoidance reforms – Lobbying for tax breaks is big business all over the world. 


As Obama hammers ‘income inequality,’ gap grows under his presidency – Nothing new here.  The truth won’t stop him from spouting his tired old Marxist rhetoric to justify destroying the private sector and growing the size and control of government.


Spending bill bans IRS targeting – This sounds good, but means absolutely nothing in the real world.  If the BHO Regime wants to continue using the IRS to harass their opponents, nobody can stop them. 


Identity thieves gear up to steal your tax refund – Here’s where the private sector is competing with the IRS to take our money from us. From a practical sense, it is getting harder and harder to protect our identities, when we are required to give our SSNs to more people for 1099 and other government reporting purposes. 


 Will IRS bully people to sign up for Obamacare? – Well, that is what they are best at doing. 


Businesses Threatened By Raft Of New ObamaCare Taxes – Not by accident. Destroying the private sector has been Job One for the BHO Regime from Day One.


Posted in Uncategorized | Comments Off on

Entertaining Educational Tax Videos

Posted by taxguru on January 15, 2014

From a reader:

Subject: Tax Time Entertainment!

Hi Kerry (aka Tax Guru),

Two things:

a) Love your blog! I just started following you, and I really appreciate the great content you put out there for tax-conscious humans like me. Keep it up, and I will continue to be a loyal follower!

b) I am a big tax nerd who really wants to help make tax time as painless as possible, so along with my accountant friend Josh of Westwood Tax & Consulting, we are creating a series of easy-to-follow, and more importantly, entertaining tax videos to break down the terrifying monster under the bed, and show people that taxes are not so scary.

If you could take just 2 minutes (ok, one and a half) to check out our latest episode (the beginning of a series for entrepreneurs) at, and let me know what you think, I would be much obliged. I gladly welcome any feedback you have, and I would ask you to consider incorporating these videos into your site or a post to spread the Tax Yak series to people who would get the most out of them.

I look forward to hearing from you.

Paige Wilhide

My reply:


I finally had a chance to check out your video, “Sole Prop v. LLC v. S-Corp” and you are correct that it is very entertaining and well produced.  I will be glad to post a mention of your videos on my blog and encourage others to subscribe to your YouTube channel, as I have done.

From a technical content perspective, I have always been a big fan of C corps, and was wondering why you failed to include that as one of the optional entity choices.  I have long found people jump right into S corps without considering all of the consequences, so I wrote an article comparing C & S corps a long time ago.  I still receive a lot of positive feedback on it.

You might want to do a video on this.

Thanks for sharing your video channel and keep up the excellent work on them.

Kerry Kerstetter


Hey Kerry,

Thank you so much for taking time to check out the video and for your feedback. I enjoyed your article very much, and I do agree that C corps are a good option for businesses. In fact, we  work with several C Corp clients, but we decided to skip it in this video for due to time constraints. And the majority of our clients are LLC’s, S Corps and sole proprietorships so we wanted to focus on them. We are discussing on doing a video on C corps per your suggestion. I’ll let you know the progress!

Posted in video | Comments Off on Entertaining Educational Tax Videos