Monday, December 27, 2010

Taxes and milk

So you are asking how can milk and taxes have anything in common will let me tell you. In Florida they are discussing taking chocolate milk out of the school because so many 10 to 17 year old students are overweight. So their answer is to take it away from them so they don't have to learn moderation. In fact their are very strong studies including The university of Connecticut that shows chocolate milk is very good for you. Doesn't this sound familiar let's tax the wealthy so that more than 50 percent of taxpayers do not have to pay or even worse they can get money back. This is a reward system they rewards those that do not want to achieve anything and it punishes those that succeed. Think about it the tax code says if you are making 40k and you have a child you will get a what is called earned income credit which you must ask why because with the same situation but if you are single you will pay taxes with no earned income credit yet you have earned income why don't you get the same treatment because the tax code rewards failures and punishes success. As far as the school system they should do what they are paid to do and the parents of these children should also do their part that is educate these kids, show them what they can and can not do. Teach them to take responsibility, not to look to someone else to tell them what to eat, where will that lead. What to think, what to wear, where to work how successful you can be. This is the land of opportunity a place where your dreams can come true. Teach our children that they can do anything stop putting limits and let them fly.

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Wednesday, January 27, 2010

Need your attention please!

BE SURE you are current with all your state, county and city taxes because they are now all one!

State/Local Governments Form Partnership to Improve Compliance, Increase Revenue and Simplify Tax Process for Business Owners

NASHVILLE – This past legislative session, the 106th General Assembly enacted Public Chapter 530, shifting the administration and collection of business tax from local municipalities and counties to the Department of Revenue. With this change, the Department of Revenue will use its resources and experience in tax administration to collect the business tax, resulting in greater efficiency in the collection process and increased revenue for the State and for local governments.

"This undertaking is a true partnership between state and the local governments," said Commissioner Reagan Farr. "While increasing revenue through improved tax compliance, we also plan on simplifying the tax process for business owners including developing a new, simplified tax return and initiating major education programs."

Beginning with Classification 1 taxpayers, due Feb. 28, 2010, all business tax returns will now be filed with the Tennessee Department of Revenue. Businesses will continue to obtain business licenses from the county clerks and/or municipal officials.

The Department of Revenue is working closely with local municipalities and counties to make this transition a smooth process. The department is currently gathering registration data from the counties and cities to register the business owners and mail out tax returns by the end of 2009. More information is available at the Department of Revenue’s Web site

The Department of Revenue is responsible for the administration of state tax laws and motor vehicle title and registration laws established by the legislature and the collection of taxes and fees associated with those laws. The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2008-2009 fiscal year, the department collected $10.2 billion in state taxes and fees. In addition to collecting state taxes, $1.9 billion of local sales tax was collected by the department for local governments during the 2008-2009 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to

Tuesday, January 26, 2010

Tax Q&A Time

This was a great question I think a lot of us will learn from:

I lost my job 12-31-08 with my income greatly reduced I fell behind on some loans auto and credit cards I was told by two different companies that my failure to pay these loans would result with them sending a 1099 to the irs as well as me indicating that loans were taxable income. can they legally do this and is it actually reportable income?

The answer is yes it is legal and no one tells anyone about this until they get the 1099.  When you are negotiating your reduction on your loans and credit cards you think great I have just paid off for less than I owed.  But, wham! now you owe taxes on the amount you did not pay and for someone that is already in financial straits this can put you over the top. 

Again this a good time to visit your tax planner before you make these choices to see how it is going to affect your entire financial picture.

Tuesday, January 19, 2010

You're never anonymous

This shouldn't come as much of a surprise but in case you live under a rock, the IRS is using social networking to catch tax evaders.  Thanks to some people's errant Facebook, MySpace and Twitter updates, the IRS has tracked down some tax evaders.
They're mining through posted information such as relocation announcements, professional profiles and financial gains.  Agents at the IRS have been able to collect all sorts of bucks from would-be tax dodgers.  One Nebraska agent was able to collect $2,000 from a disc jockey after he advertised on MySpace that he’d be working at a big public party.

"These new supplements are often far more efficient than the older ones, such as reading the local newspaper or making inquiries at barbershops and church meetings," said Jim Eads, director of the Federation of Tax Administrators. Another agent was able to collect $30,000 of unpaid taxes after a Google search lead him directly to his target.

So, if you’re the type of person that likes to boast about income that hasn’t been reported on Twitter or any status updates you have, think twice. The IRS could be, and probably is, watching.

Tuesday, December 29, 2009

Oh my how I procrastinate!

The holidays got the best of me but here I am right on time because we all know, as soon as the ball drops, it's time to start getting those deductions and tax plans in order!

We had Free Money Part 1 and Free Money Part 2.  Here are the final two tips:

#10 - The best way to save tax dollars is to reduce your income before you pay taxes. So how about getting a miscellaneous fringe benefit from your employer instead of cash? Often an employee wants that green stuff that they often miss the bigger picture.

Not sure what I'm trying to say? Let me explain: You get your paycheck after paying all of your taxes or so to get to work every day you must ride a bus so you buy a pass for $120 dollars a month. Now instead of that let's have your employer give you a discount fare card up to $120 a month.  This is considered a de minimis fringe benefit plan (it's tax free) so not only do you get this for free but it does not show up as income so you are keeping more of your paycheck in your pocket.

#11 - Free Money isn’t always about what you can get for yourself but what you can give to someone else and in return you pay less in taxes therefore you put more money in your pocket. Gifts, Bequests and inheritances do not constitute taxable income but any money you earn from that money is taxable so one way to reduce those taxes is to give some of those earnings to a charity then that will reduce your income and your taxes. Sometimes to give you actual get and this is one of those times. This is also a great way for anyone that itemizes to reduce their taxes.  Just be sure you document what you're giving and if you are using an IRA or some other retirement account have them send the check directly to the organization then you avoid taxes on those distributions.

I do encourage you to always check with your tax planner to be sure you are keeping all or as much as you can of your hard earned money. 

Have a safe, happy new year, and I hope this helps you with reducing your taxes for 2009!

Wednesday, December 16, 2009

More Free Money Tips Part 2

Consider this my Christmas present to you! Picking up where we left off last time...

 - Group Life Insurance
Group term life insurance coverage $50000 or less provided to you by your employer is excludable from your income. You are not taxed on the cost of group term life insurance protection of more than $50000 if the coverage is provided after you have retired and are disabled, Your employer is the beneficiary of the policy for the entire period or the only beneficiary of the amount over $50000.00 is a qualified charitable organization for the entire period the insurance is in force during the tax year by naming a charitable organization as the beneficiary of the policy.

 - With the holidays coming how about making your employee really happy by giving them FREE MONEY that’s right I know too good to be true but you can give your employees a distribution that is excludable from their income if it is not of substantial value and is given for substantially non compensation reasons. So the IRS policy allows you to give each employee up to two non-cash gifts per year, tax-free, for a special occasion Gifts up to $500 per employee so think outside of the box cash isn’t everything and you can sure enjoy thing just as much as money especially when it is FREE.

Also think about setting up awards, be sure all employees can participate the IRS policy is the cost of the awards to $500, including taxes Awards up to $500 per employee.

- Which brings us to Employee Awards/ Achievement Awards

This exclusion applies to the value of any tangible personal property you give to an employee as an award for either length of service or safety achievement. The exclusion does not apply to awards of cash, cash equivalents, gift certificates, or other intangible property such as vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, and other securities. For this exclusion, treat the following individuals as employees: 
  • A current employee.
  • A former common-law employee you maintain coverage for in consideration of or based on an agreement relating to prior service as an employee.
  • A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control.
In addition, the pay must meet both of the following tests.

Test 1. It must be reasonable.
  • The duties performed by the employee.
  • The volume of business handled.
  • The character and amount of responsibility.
  • The complexities of your business.
  • The amount of time required.
  • The cost of living in the locality.
  • The ability and achievements of the individual employee performing the service.
  • The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation.
  • Your policy regarding pay for all your employees.
  • The history of pay for each employee.
Test 2. It must be for services performed.
  • Achievement awards. .
  • Length-of-service award. An award will qualify as a length-of-service award only
  • Safety achievement award.
- EXPENSES of YOUR Employer
The IRS does not tax reimbursement expenses that are true reimbursements for expenses you paid on behalf of your employer. The IRS recognizes the impossible administrative verification problems in auditing such expenses. For whatever reasons, therefore, they are nontaxable. So here is an example let’s say your employer arranges for you to work from 11am to 7pm instead of 9 to 5 and your boss agrees to provide you with dinner money, these personal supper expenses therefore can be converted into nontaxable income. In effect, no matter what tax bracket you are in. you have arranged for the irs to buy you dinner.

Check back, I'll have the rest of the tips for you before Christmas hits!

Thursday, November 19, 2009

Free Money - Part 1 of 16

Hope you all have been enjoying the Free Money tips I've been sharing on the radio!  In case you missed them, I'm going to be transcribing those great tidbits on here.  Let's kick this off with #1 - Hospitalization Premiums:

Hospitalization premiums paid by your employer are excludable from your income. For example if you normally would purchase hospitalization insurance costing $500 a year and you are in the 28% tax bracket, you would require pretax earnings of $694.44 in order to make that purchase. Which means you your have to earn $694.44, and 28% or 194.44 would go to your taxes. In other words having your employer pay your hospitalization premium in the case $500 for you would be saving 194.44.

Now that’s FREE MONEY

Check back soon, we'll have the rest of them up before the holidays so you can settle your tax prep with ease!