Tax Guru – Ker$tetter Letter

I received the following from someone who was shocked to learn that states other than his home state would hit him with income taxes.

I’m not sure who to contact on this question, I get different answers depending on who I talk to. I’m a computer consultant that travels and last year the company I work for said that they have to take state taxes out of my paycheck for work I’ve perform in each of the states I was in. Which means this year I will have to fill out state taxes for 3 states, Michigan, where I live, Pennsylvania and West Virginia where I worked. Is this right? If it is right what happened to the words “taxation without representation”, because I cannot vote in those states and I have no access to whatever benefits people living there may get

My reply:

If you were working as a W-2 employee, it is correct that you will have to file part-year or non-resident income tax returns with each of the states in which you earned income for the year.

All states that have income taxes require taxes and tax returns on income earned from services provided inside the state as well as from property located inside the state (rentals).

You are right that you have no recourse against the elected officials in those states; and that is why they love to tax tourists and other non-residents. It’s not anywhere close to being fair; but it is how things are.

It’s not as bad as you may think. You won’t end up paying three state taxes on the same income. On your home state return (Michigan), you will be able to claim a credit for the state taxes paid to PA and WV. You will need to attach copies of those state income tax returns to your Michigan tax return in order to properly document your eligibility for that credit.

If you were an independent contractor or incorporated, there are ways to possibly avoid the other state taxes; but that didn’t sound like your situation. When you are a W-2 wage slave, your tax savings options are very limited.

Good luck.

Consumers dig to record debt depth – Two trillion dollars in consumer debt – it’s the American way.

The major difference between death and taxes is that Congress can’t make death any worse than it is.

Courtesy of the Dribbleglass newsletter.

Unlike those financial gurus who claim to have a crystal ball view of the future, my only predictions for those extreme risk takers who have a majority of their wealth invested in the stock market is that there will be plenty of mood swings.

IRS Job Cuts to Make Way for New Hires – This is really just a shifting of IRS personnel between different tasks and locales. They have been shifting their workload again among the service centers around the country. Also, the increase in people filing their returns electronically has reduced the need for data entry on the IRS side.

In fact, everyone needs to be careful where they send their income tax returns this filing season; as the appropriate service centers have been changed for many filers. Here in Arkansas, we will now be sending our 1040s to Austin or Dallas instead of the Memphis service center. To make things even more confusing, there are now different addresses to use depending on whether the taxpayers prepare their own returns or use the services of paid preparers. There are also different addresses depending on whether the return includes a payment or not.

I normally explain to people that the true blame for the messy complicated tax system lies with our rulers in Congress who draw up the idiotic and illogical laws. However, IRS isn’t completely innocent in this regard, as illustrated by this new level of complexity with so many different new filing addresses. I am going to give IRS the benefit of the doubt and assume that returns sent to the wrong address will eventually find their way to the proper processing location.

You can get to the appropriate addresses from the IRS website

There is also an easier to use guide to the new filing addresses in the latest QuickFinder handbook which just arrived a few days ago. Any tax pro who doesn’t have this is most likely wasting huge amounts of time looking things up that the QuickFinder book literally has at our fingertips.

Schwarzenegger throws down gauntlet on taxes, spending cuts

For the DemonRats, it’s a “top this” game of who can screw the evil rich the most.

Reverse Tax Reform. Wesley Clark proposes a Clintonian hike–only much bigger.

Senator Kerry Attacks Dean, Gephardt On Tax Issue –

Democratic Rivals Split on Tax Plans

Companies consider pension freezes – When you work for someone else, you are at their mercy for current and future compensation.

What’s Wrong With Income Inequality? – Too many government programs, including much of the tax code, are based on the underlying premise that it is inherently evil for any person to have one dime more than anyone else. Utopia in the minds of leftists is everyone always having the exact same amount of wealth. Until we reach that point, they will never give up trying to use the force and power of government to work towards achieving it.

The Howard Dean Tax Calculator – Now everyone can see how much more they will be paying for the privilege of having that Vermont hot-head with a Napoleon Complex in the Oval Office.

Bush Administration Confident Surging Economy Will Help Cut Deficit in Half by 2005, Snow Says – The DemonRats’ worst nightmare, and their reason for opposing the tax cuts, is coming true.

This is a pretty good article with things to consider from Women’s Wall Street

I still believe in the issues I covered a few years ago. We constantly hear horror stories caused by people using tax pros just because they are local or because they are comfortable with the same person they’ve been using for several years. I can’t say how much such convenience is worth; but many people reconsider it when they discover they’ve been paying tens of thousands of dollars more in taxes each year than they would have if they had been working with a more knowledgeable and creative tax pro.

As strange as it may sound, there are times when an IRS audit is actually requested. The most frequent examples I have seen have been with estate tax returns (706), where the administrator and heirs want formal IRS acceptance of the figures so they don’t have to worry about any surprises later on.

How to Spot a Loaded Mutual Fund – Many mutual funds disguise their true costs.

It seems that Howard Dean’s own public comments are as good an ad against him as anything a third party could put out. Dean’s repeated calls for repeal of the Bush tax cuts are reason enough to oppose this idiot. His support of Usama bin Laden is just icing on the cake of proving his mental incompetence for any position higher than hamburger flipper at Micky D’s.

Tax-Cut Group Launching Anti-Dean TV Ads

Dean in Denial. Bush raised taxes?

The Clinton hand puppet from Arkansas is just another DemonRat endorsing Marxism. His plan to turn over our military protection to the USA hating United Nations puts him in treasonous territory already.

Clark tax plan soaks rich

Clark proposes shifts in tax code

Clark Offers ‘Simple’ Yet Sweeping Tax Reform

Clark Offers Plan to Overhaul Tax System

Clark Unveils $30 Billion Tax-Cut Plan

States out of the red but still seeing red

U.S. offers tips on avoiding overtime pay

The art of thievery – When the free market doesn’t support certain projects, it’s time for our rulers to steal money from the little people and redistribute it according to their whims.