April 10, 2014
When you read this, we will only have four days left to do our taxes. Shame on you. Shame on me. This being the case, and in my case a terrible case of malingering, I thought we could do them together. I have some tips for all groups of tax payers.
THE “JOB DOERS” who make minimum wage
I would recommend you do your taxes for starters. You will probably get back all or most of the taxes you paid and, if you made very little and have dependents, you may be able to claim the Earned Income Credit which can return your taxes plus add even more than you paid in. A lot of low-income people do not do their taxes and miss out. Do them. If you need help, call the IRS to walk you through it, ask for help at local churches or call a friend. But do them.
THE “JOB DOERS” who can be called middle class
A lot of you go to tax preparers so you should be OK without a lot of tips from this guy who does his own taxes and commits a math error every four years and also forgets to pay his school tax every year.
We do itemize every year. With local taxes, real estate taxes, mortgage interest, charity, medical and all other deductibles we easily pass the standard deduction on the 1040.
Since we have retired we keep track of the sales tax we paid. I throw all receipts on my wife’s desk and she adds them up for the year. You can see I do the hard part.
At the end of the year we can then claim the sales taxes instead of local taxes. We have found that in most years since we have retired the sales tax will be a larger number than local taxes. Social Security is not taxed in state and local taxes, making them smaller deductions in federal taxes..
I have started using Turbo Tax. It was a pain the first couple of years but it does remind me of stuff I used the year prior and has taken away most of my math errors. It files the federal taxes electronically. We get our refund faster. And its typing looks a lot neater than my so-called hand writing. I don’t let it file my local taxes. It costs too much for such a simple form.
THE “JOB CREATORS” who are the top 5 percent in income
Here I can’t give a lot of advice. I have always been a job doer by trade, as has my wife. Even with promotions and combining our top salaries, we didn’t come close to reaching these heights. But then we did not choose wisely. She was born to farmers, me to a factory worker. No inheritance. No Harvard. No powerful friends of father. Bad choices can haunt you …
Of course not everyone in this 5 percent group is rich by birth. Some are just very good at what they do. Some have worked hard for what they’ve got. To these people, with the exception of hedge fund managers and dot com over-night millionaires, I apologize for the inheritance crack.
This part of American society really doesn’t need my tax help. Most of you have tax advisers all through the year so I will just give you some reminders:
Have you deducted all your business expenses? The yacht you may take customers on? Your Hummer? Yes, it costs $100,00 but the taxpayer will pay $35,000 of it. Isn’t that great? Your private plane you may use to take a customer someplace? The loge in the taxpayer-paid stadium that you may invite customers to? Vacations and parties for customers and employees and sometimes wives? Your sumptuous office? The limos? Don’t forget these are all legitimate business expenses and therefore deductible, a lot like child care expenses for working mothers.
Have you done what every American does? Avoided taxes legally? Do you know how to hide your income overseas? Have you asked your friends who the best lawyers and bankers are who can tell you how to do this? Do you have friends in the category below to ask?
THE “JOB CREATORS DELUXE” the top 1 percent in income
Again, who am I to give you advice? Every one of you has created scores of high paying jobs to do just this. So, despite all evidence in the last four years of economic boom, you do create jobs.
Read more of Jack Robinson’s work at voiceforthe99percent.blogspot.com