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Vladmir Putin, Goldman Sachs, and Mikhail Khodorkovsky

mikhail

Mikhail Khodorkovsky, the former Yukos CEO and Russian billionaire, has just recently been released from jail. If I were him, my first act of new-found freedom would be to sue Goldman Sachs for billions of dollars. Watch out, Goldman Sachs investors!

I am a liberty-loving free market individual, which means I am generally pro-business. But as I have indicated so many times before, crony-capitalism is not free market, and thus it should be called out. Unfortunately, that cronyism does not entirely escape the upper echelons of the finance world and a horrific lack of integrity sometimes seeps into Wall Street. The story of Mikhail Khordorkovsky and Goldman Sachs is such an example.

First, a parallel story: in the late 1980’s, the State of Washington issued Washington Power Public Service bonds (commonly called “WPPSS”) to finance a number of nuclear power plants. The bonds were considered very high quality as they were guaranteed 1) not only by the project, but 2) also unconditionally by the State of Washington, and 3) even regardless of whether the plants ever actually got constructed.

First Boston was a lead underwriter of this issue.

When oil and gas prices dropped sharply a few years later, the State of Washington decided to renege on its guarantee and default to the tune of $2.25 billion. It argued (incredibly) that they didn’t have the right to make such a guarantee. The Washington Courts upheld this point of view (naturally), and the Supreme Court (ridiculously) claimed that it was a state matter, despite the fact that many little old ladies — like my mother — pension funds, and other investors from all around the country were devastated by this “fraud”. This was undeniably gross negligence.

The most frustrating part of the matter, however, happened after the decision was issued. The State of Washington needed to raise money by issuing new bonds. And who do you think was the lead underwriter this time around, despite the scam that had cost their customers hundreds of millions of dollars….

You guessed it — First Boston again, a stunning lack of integrity from world of government and finance. But this fraud pales in comparison to that of Mikhail Kordorkovsky and Vladmir Putin.

I was reminded of the WPPSS affair (also known as “Whoops”) when in 2003, in a brazen act of thievery, Vladimir Putin “confiscated” the controlling interest in shares of the Yukos Oil Company held by Mikhail Khodorkovsky.

Khordorkovsky built a company that grew in wealth and stature upon the collapse of the Soviet Union. Shortly after Kordorkovsky was named “Person of the Year” by the Russian business magazine “Expert”, he was arrested.

There were laughable “criminal” and “tax cheating” charges leveled against Khodorkovsky, for which he has been in jail for a decade until just last month.

As Khordorkovsky’s popularity grew while in prison, Putin suddenly and obviously made a public relations decision in connection with the Olympics to release the famed Khordorkovsky. (Indeed, just in the last week, Khordorkovsky’s business partner was also released from his prison sentence.)

Everyone knew that the criminal charges were just a very thinly veiled justification for President (Dictator) Putin to steal the company for himself and the Russian people. I get it – that is his nature. But what has this to do with integrity, finance, or even WPPSS?

Underwriters.

Just as First Boston underwrote the first WPPSS project that fraudulently defaulted and was able to (incredibly) underwrite for the State of Washington again, Putin was able to perform his grand confiscation with the help of a major underwriter.

Upon restructuring the oil company following the arrest of Khodorkovsky, that fact that Vladmir Putin could then go to Goldman Sachs, who would gladly orchestrate the largest underwriting of stolen goods and fraud the world has ever seen, is utterly staggering.

Just as incredible, First Boston — later known as Credit Suisse during the time of the confiscating and beyond — also got in on the action (among others).

But the coziness between Putin and Goldman doesn’t end there. Just last winter, Goldman Sachs renewed its relationship with Putin by signing a three-year agreement with Russia’s Economy Ministry and the Russian Direct Investment Fund.

During that time, Goldman Sachs will be paid $500,000 to help Putin attract foreign investors. This latest partnership has been slammed by the Human Rights Foundation.

Now that Khodorkovsky is a free man once again, it wouldn’t take much for him to highlight the close relationship between Vladmir Putin and Goldman Sachs. I’m not a lawyer, but one would think that Goldman might have reason to be concerned about a potential lawsuit from Mr. Khodorkovsky for aiding and abetting the confiscation of his company.

Errors and Omissions: Protecting the State of the Union From the Statements the President Made

HOTAIR
Errors and omissions (E&O) is the coverage that protects you from another individual or company that wants to hold you responsible for something that you provided which does not give expected results. Does the President have coverage?

There were many statements made last night during the State of the Union that didn’t seem to match up with reality for many Americans. Going through the transcript of the State of the Union, it was easy to point out problems in Obama’s address. Below, I’ve gone through the speech, and outlined in italics the exact words he said used.

Looks like Obama needs insurance! I’m providing the errors and omissions coverage for Obama for the State of the Union he gave to everyday America.
____________
Tonight, this chamber speaks with one voice to the people we represent: it is you, our citizens, who make the state of our union strong.

>>> This chamber speaks with one voice because of the growing (mis)use of Executive Action used, and threatened to be used, by Obama during his Presidency.

Here are the results of your efforts: The lowest unemployment rate in over five years.

>>> It’s the lowest unemployment rate in over 5 years because of the amount of people who have stopped looking for a job. Obama fails to mention that this is also the lowest number of workers in the workforce since the early 1960s.

Our deficits – cut by more than half

>> Deficits have been cut only this year because of non-policy reasons (Large Fannie/Freddie payments to the Treasury in 2012 and accelerated tax transactions at the end of 2012 that count on this fiscal year). Also, we still have had yearly $1 trillion deficits, which was never seen before Obama became president.

And for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.

>> No, actually this year, America fell out of the top ten list for the first time in twenty years on the Index of Economic Freedom.

In the coming months, let’s see where else we can make progress together. Let’s make this a year of action. That’s what most Americans want – for all of us in this chamber to focus on their lives, their hopes, their aspirations.

>>> Most Americans don’t want Congress to take action for the sake of action. Most people want Congress to get out of the way so that they can make their own destiny.

Today, after four years of economic growth

>>> Economic growth has slowed to a crawl

and those at the top have never done better

>> Those at the top have lost more wealth than any other income bracket and have also seen their taxes rise due to legislation passed during Obama’s presidency

But average wages have barely budged.

>>> Businesses can’t afford to pay their workers more due to excessive regulations, higher taxes, and Obamacare changes — all which have hindered their ability to operate day-to-day and more importantly, plan long-term.

And too many still aren’t working at all.

>>> This is first true statement of the night<<< So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.

>>> Bypassing the Constitution is not how American families elected the President to operate.

Opportunity is who we are. And the defining project of our generation is to restore that promise.

>>> Debt is who we are. We can’t restore opportunity with this generation or the next because of the staggering amount of debt — more than $50,000 per man, woman, and child

So let’s make that decision easier for more companies. Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad.

>>> Please cite the loophole. American businesses are actually punished with the highest corporate tax rate in the world. They move businesses abroad so that they can keep more of their hard earned money themselves.

But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible.

>>>Is this before or after we start the “Shovel-Ready” projects?

Federally-funded research helped lead to the ideas and inventions behind Google and smartphones. That’s why Congress should undo the damage done by last year’s cuts to basic research.

>>> Federally funded research — like Green Energy companies or NIH “studies”?

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.

>> That strategy of subsidizing companies like Solyndra, Satcon Technology, and A123 systems?

One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas.

>>>While shuttering the coal industry by imposing overreaching and impossible regulations to run them out of business.

Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.

>> Lets continue with a smarter tax policy that stops giving billions of our taxpayer money to subsidize companies that still manage to go bankrupt

And even as we’ve increased energy production, we’ve partnered with businesses, builders, and local communities to reduce the energy we consume.

>>> By taking away our regular lightbulbs

When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.

>>> So that the price of cars goes up for consumers, and so that state legislatures can imposes fees on hybrids and electric cars because they are not bringing in as much revenue from fuel-efficient cars via the gas tax.

But the debate is settled. Climate change is a fact.

>>> It’s Global Warming when it is warm, and Climate Change when it is cold. It must be a polar vortex out there

So let’s get immigration reform done this year.

>>> If you want immigration reform done, try doing it through Congress, not by Executive Fiat.

Two years ago, as the auto industry came roaring back

>>> How did it come “roaring back” again? Cash for Clunkers cost taxpayers money, taxpayers had to bail out the auto industry, and production of the “new” electric cars is sluggish or has stopped altogether

And if Congress wants to help, you can concentrate funding on proven programs that connect more ready-to-work Americans with ready-to-be-filled jobs.

>>>What are these ambiguous and undetailed “programs”, and if they are so “proven”, why are record numbers of Americans still not working?

I’m also convinced we can help Americans return to the workforce faster by reforming unemployment insurance so that it’s more effective in today’s economy. But first, this Congress needs to restore the unemployment insurance you just let expire for 1.6 million people.

>>>99 weeks of unemployment isn’t enough?

Five years ago, we set out to change the odds for all our kids. We worked with lenders to reform student loans, and today, more young people are earning college degrees than ever before.

>>Obama’s reform was that the rates on federal student loans just doubled. And more young people are in debt than ever before just out of college with dismal job prospects — thanks to Obama’s economy.

And as Congress decides what it’s going to do, I’m going to pull together a coalition of elected officials, business leaders, and philanthropists willing to help more kids access the high-quality pre-K they need.

>>> Because or current K-12 education system is already leading the world in education, right, so we can focus on pre-K?

Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment. A woman deserves equal pay for equal work.

>>> Unless you work for the White House. Obama’s own White House staff still underpays its women compared to men.

In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.

>>> That’s giving Federal Workers a 42% pay raise unilaterally with my tax dollars.

Tom Harkin and George Miller have a bill to fix that by lifting the minimum wage to $10.10. This will help families. It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise.

>>> Businesses will not be able to absorb a minimum wage hike of up to 42% without cutting jobs to make up the balance sheet. That will give Americans more unemployment.

And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans.

>>> Please state the big tax breaks to save? The wealthy pay a 39.6% of their income to the government (not counting state and local taxes) plus the Obamacare surtaxes that started this year, also only for the wealthy. That means they save less of their money because more gets taken in taxes to fund the government.

Send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans.

>>> Americans footed the bill for the housing crisis in the form of TARP (which Obama voted for as Senator) and ARRA (which Obama signed as President). Obama could have paid the mortgage off for every homeowner in America and still have spent less taxpayer money overall. Talk about economic stimulus and the dream of homeownership!

One last point on financial security. For decades, few things exposed hard-working families to economic hardship more than a broken healthcare system. And in case you haven’t heard, we’re in the process of fixing that.

>>> After we fix the website, the application process, the security holes, and the healthplans…

That’s what health insurance reform is all about – the peace of mind that if misfortune strikes, you don’t have to lose everything.

>>> Not everything. But you can lose your health plan, and you can lose your doctor

Already, because of the Affordable Care Act, more than three million Americans under age 26 have gained coverage under their parents’ plans. More than nine million Americans have signed up for private health insurance or Medicaid coverage.

>>> Signed up means “Placed in the shopping cart”. And millions more have lost their plans and haven’t signed up with Obamacare

And here’s another number: zero. We did all this while adding years to Medicare’s finances, keeping Medicare premiums flat, and lowering prescription costs for millions of seniors.

>>> Here’s another number: Trillions. Obama added trillions to Medicare’s entitlement deficit and trillions to our deficit to pay for Obamacare

So again, if you have specific plans to cut costs, cover more people, and increase choice – tell America what you’d do differently. Let’s see if the numbers add up. But let’s not have another forty-something votes to repeal a law that’s already helping millions of Americans like Amanda. The first forty were plenty. We got it. We all owe it to the American people to say what we’re for, not just what we’re against.

>>> We’ve polled the American people and the majority of the American people are for repealing Obamacare.

That’s why, tonight, I ask every American who knows someone without health insurance to help them get covered by March 31st. Moms, get on your kids to sign up. Kids, call your mom and walk her through the application.

>>> Because the enrollment numbers are so low, the President has to actually beg the American people to sign up, use millions in taxpayer money to run ads, and use Hollywood to promote Obamacare

It should be the power of our vote, not the size of our bank account, that drives our democracy.

>>> We are a Republic, not a democracy, Mr. President

And I know this chamber agrees that few Americans give more to their country than our diplomats and the men and women of the United States Armed Forces.

>>> Obama cares so much for the military that he just announced a 42% pay increase for federal workers, after just making cuts to military pensions.

But I will not send our troops into harm’s way unless truly necessary

>>> Yes, we saw that policy with Benghazi

That’s why I’ve imposed prudent limits on the use of drones – for we will not be safer if people abroad believe we strike within their countries without regard for the consequence.

>>> What about being safer domestically? Obama fails to mention that the first US citizen was killed yesterday via drones because of a dispute over 3 cows that belonged to a neighbor.

That’s why, working with this Congress, I will reform our surveillance programs – because the vital work of our intelligence community depends on public confidence, here and abroad, that the privacy of ordinary people is not being violated.

>>> Translation: If you like your privacy, you can keep your privacy, just like your health plan and doctor.

And it is American diplomacy, backed by pressure, that has halted the progress of Iran’s nuclear program – and rolled parts of that program back – for the very first time in a decade. As we gather here tonight, Iran has begun to eliminate its stockpile of higher levels of enriched uranium. It is not installing advanced centrifuges. Unprecedented inspections help the world verify, every day, that Iran is not building a bomb. And with our allies and partners, we’re engaged in negotiations to see if we can peacefully achieve a goal we all share: preventing Iran from obtaining a nuclear weapon.

>> That’s not what Iran says. Please show us the agreement signed between our two nations. Obama has yet to do that.

And we all continue to join forces to honor and support our remarkable military families.

>>> Obama honors them by making reductions to their pensions and going after military chaplains’ ability to minister to troops

The America we want for our kids – a rising America where honest work is plentiful and communities are strong; where prosperity is widely shared and opportunity for all lets us go as far as our dreams and toil will take us – none of it is easy. But if we work together; if we summon what is best in us, with our feet planted firmly in today but our eyes cast towards tomorrow – I know it’s within our reach.

>>> As Obama reaches for his pen — not to work together under the Constitution, but unilaterally by Executive Order like he stated repeatedly during this address.

Believe it.

>>> As Obama asked us to believe him on Benghazi, the IRS, Fast and Furious, Obamacare, our doctors, and our health plans, to name a few.

God bless you, and God bless the United States of America.

Ongoing ObamaCare Lies

obama-laugh-lies

Obama has lied to this country. Most recently and most memorably, he lied to when he told “you can keep your health plan” and “you can keep your doctor”. But charging that someone “lied” implies that they knew it was untrue when they said it, so how can anyone be sure?

Records dating back to 2010 discussed the fallout from ObamaCare implementation that would render most plans obsolete and doctor choices restricted. If Obama truly believed that individuals could keep their health plan and doctor under ObamaCare, this belief had to come from being lied to or intentionally misled by one or more advisors.

However, if he was lied to or misled by his advisor(s), the individual(s) responsible would have been immediately fired by President Obama. The President of the United States can never tolerate the Office having its integrity undermined by lesser staff.

Therefore there are no explanations for the President not firing a lying advisor on the spot other than 1) these individuals had information regarding what the President knew and when he knew it, which would be exposed if they were fired; or 2) in fact, the truth had been conveyed to the President (and the President lied to us anyway).

On the other hand, you can contrast Obama’s behavior with Chris Christie. Say what you will about Chris Christie, but consider this: upon learning that he had been misled in the George Washington Bridge lane closing matter, Christie immediately fired the several individuals involved. He did not tolerate his office being denigrated by staffers who were not forthcoming to their governor.

How could it be, then, that President Obama did not have the necessity or integrity to fire anybody because for lying about ObamaCare? Because they probably didn’t lie.

It is not a new thing for our President to intentionally misrepresent the truth on many issues regarding ObamaCare — he does so on almost a daily basis now because ObamaCare was his signature legislation and it is an unmitigated disaster.

One of the most oft-repeated distortions is his recurring theme that ObamaCare will result in a net reduction in the federal debt. At a Clinton Global Initiative recently, the President said “It is a net reduction of our deficit. The irony of those who are talking about repealing Obamacare because of, it’s so wildly expensive, is if they actually repealed the law, it would add to the deficit.” What a joke.

Everyone – including the President – full well knows that the original concept of reducing the deficit was based on underestimating costs and overstating revenues. On top of that, fiscal changes made both by Congress (such as repealing the 1099 initiative) and the President (implementation delays) have guaranteed that ObamaCare will seriously add to the National Debt. So, clearly, at the time of the Clinton Global Initiative, the President knew his comment was a lie.

What’s worse, the pathetic, anemic enrollment numbers (yet another item being played with loose and fast by the Administration) means that ObamaCare costs will soar in this country because not nearly enough people have wanted to enroll. ObamaCare, and President Obama, are rife with — not inconsistencies, not misstatements, but intentional lies.

The President certainly knows it. And we know it too.

Changes on the IRS 1040 for Tax Year 2013, Part III: The Medicare Surcharge

medicare-tax

Do you make above $250,000 (married joint filer) or $200,000 (individual filer)? For 2013 filers, you get to pay an additional tax starting this year.

Prior to tax year 2013, the Medicare Payroll tax was 2.9%. Self-employed taxpaxers pay the entire 2.9% themselves. Non self-employed taxpayers pay this tax split evenly between employer and employee, each paying 1.45%

The new surtax that starts this year was implemented as part of paying for Obamacare. It tacks on an additional 0.9% tax for filers above the aforementioned thresholds. Additionally, if you are married filing separately, the threshold is $125,000. See below:

Previous Law:

Employer/Employee 1.45%/1.45%
Self-employed 2.9%

Obamacare Tax Hike, 0.9% Surtax

Individual: First $200,000 (same as old law)
Married/Joint: First $250,000 (same as old law)
Married/Separately: First $125,000 (same as old law)

Individual: Above $200,000
Married/Joint: Above $250,000
Married/Separately: Above $125,000

Employer/Employee 1.45%/2.35%
Self-employed 3.8%

This additional tax is found on pages 2000-2003 of the PPACA.

If you think you may owe the new 0.9% tax, you should fill out the “Additional Medicare Tax” Form, which is also called Form 8959

The Lost Art of Investing in Our Future

10-Tips-for-Investing-in-Green-Art1

It seems like the White House and media these days are spending a lot of their energy discussing disparity between the haves- and have-nots. The phrase “income inequality” is especially being used more frequently as a means to continue the class warfare rhetoric and is absolutely certain to be a major theme of Obama’s State of the Union Address this month.

Many explanations are bandied about in an attempt to show that “devious policies” are causing the wide gulf between higher and lower income earners. They include the vague and general terms such as “special tax benefits for the wealthy”, “corporate welfare”, and a “tax system that favors those with higher incomes”. Though these targets are great for talking points, they fail solidly on substance.

There are no virtually no special benefits for the wealthy — only higher tax rates, phased out tax deductions, and added surtaxes that lower income earners do not have to contend with. As for corporate welfare, though it does exist, it only affects a few crony capitalist-type industries and companies out of the millions of small businesses which form the backbone of our economy (think: GE, green energy, electric cars). What’s more, the tax system clearly favors those with lower incomes, not higher, with lesser rates and more deductions and tax credits available. It has been shown clearly and indisputably that the US has – by a large margin – the most progressive taxes in the world (yes, far more progressive than even Europe and the Scandinavian countries). Though there is income inequality in America, why it exists is not what you think.

The simple reason is this: unlike people in the fastest growing countries, and unlike our own citizens in prior generations, the current middle and lower income classes in America have lost their inclination to personally invest in their future. I would argue that much of this is because the growing government welfare system is stripping individuals of their need to prepare and plan ahead, and a wide safety net also exists. For the most part, it is only the upper middle and higher income individuals — those who are not the beneficiaries of government welfare and those with more entrepreneurial orientation — that are forcing themselves to save and put this money at risk into investments for their future.

Much of China’s current economic success can be directly attributed to the financial attitude of their citizens with regard to investing. Almost all earners, including and especially the middle and lower income ones, keep a certain amount of income each month and invest it in both entrepreneurial endeavors and the existing equity markets. It is common for even the minimum wage earners to save at least 10% of their income! Large or small sum, they regard investment as a priority and a path to prosperity.

I have a close relative who is an owner and executive of a substantial manufacturing operation that he started in Shenzhen, China because of its business friendly environment. I’ve heard from him many times that he went into business, not to comply with government regulations, but to make things. And part of that business friendly environment is the people. He has been pleasantly surprised by the careful frugality of the owners and their passion to invest and grow– a sentiment extends to, and is practiced by, even their lowest paid workers.

Contrast this to the present state of affairs in our country. We have not been saving– we have been borrowing for more than a generation now. Citizens have mortgaged their future by consuming continuously — while investing nothing — and passing on that example to the next generation. We are turning into a country where people will begin to wonder why they should invest, if it’s just going to be taken away from them in the long run by those who do not, or go into a market that is wholly unstable.

People are encouraged to spend as if consumption is a good thing , but truly, it is investing that is far better for individuals and for the economy as a whole. When our government pushes measures such as extending unemployment benefits, food stamps and other welfare programs, it reinforces prolonged financial dependency. It is government policy aimed in the wrong direction as recipients have harder, not easier, obstacles to overcome.

The biggest problem that this country has to deal with regard to moving people away from a culture of dependency is that it continues to be demagogued by the Left for the precise reason that it easily mischaracterizes those who might being against such policies as “insensitive” and as being against the “less well off”. But many who are opposed to such policies merely recognize that success of investment, independence, and upward mobility are making other countries greater while we persist our slide into wider dependencies and economic decline.

In order to get the middle class back on track, we must focus our efforts and rhetoric on reminding ourselves that this country was built upon those who were willing to invest their time and money to become great. It is the true source of upward mobility – and those that do not do their fair share will be left behind by those who do. This is what truly drives at the heart of income inequality in our country.

Investment is what made our country thrive and it is the only thing that will properly sustain our country’s financial future.

_________________________
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To Owe or Not To Owe (Taxes)


moneytaxtime
Most people like receiving a tax refund – it’s kind of like a windfall for many people, especially those for whom saving is a difficult discipline. However, getting a big tax refund from the IRS may not necessarily be the best thing for you in certain situations.

Try to think about your refund in a different way. Essentially, you are giving the government an interest-free loan, which they give back to you when you file your taxes. There’s really no reason to do that, other than you like the surprise surplus.

A lot of people don’t like the idea of owing the government, or are afraid they will not have the money available at tax time to pay the bill. That is a valid concern. However, if you adjust your withholding enough so that you owe on April 15th, that also means you have more money in your paycheck each month.

In reality, whether you owe the government or they owe you, the amount of tax collected is virtually the same. The difference is whether you have your taxes paid for you via your paycheck, and have a smaller paycheck because of it (and a refund in the spring), or whether you set the money aside on your own and have a little bit more to take home from work every pay period.

If you set your withholding so that you’ll owe at tax time, you are in essence holding your own money longer. This can be helpful in situations such as being in debt, where payments are due every month. By having extra in your paycheck due to having less money deducted for taxes, you could use the extra money to pay a little more on your debt, thereby reducing the amount of interest you pay in the long run. Some people prefer this approach. 

One potential thing to worry about with regard to waiting on federal tax returns. We have seen situations where state governments have delayed issuing refunds in the recent past due to staffing, fiscal woes, and other such problems. Even the federal government last year delayed receiving returns until Jan 31st last year (and therefore remitting refunds) — though that was due to the Fiscal Cliff. However, since the example has been seen in some states, and since the IRS apparently understaffed, it is not an unlikely possible scenario that the federal government might also delay issuing refunds on a larger scale in the future.

At the end of the day, whether you like to keep your own money until tax time or whether you prefer the windfall method, you can achieve this your preference by going to visit your Human Resources administrator. If you want more money in your paycheck – and possibly owing the IRS, claim more dependents. If you prefer a refund, claim fewer dependents. The form to make changes on is called a W-4.

It’s always good practice once a year to review your tax and financial situation and make adjustments as necessary.

______________________
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If you did, I hope you’ll join my Secret Tax Club.
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If you want to join, visit my Secret Tax Club page.

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Changes on the IRS 1040 for Tax Year 2013, Part II

1040 ready

New Changes to the Itemized Medical Deduction

For years, taxpayers have been able to claim an itemized deduction on their taxes for medical expenses. That deduction still exists, but the threshold has been increased starting this years, as part of the implemenation of Obamacare taxes.

When a taxpayer, spouse, and/or dependents accumulate large medical bills in a given year, the ability to deduct them comes as a welcome relief to many family. The rule-of-thumb was that the sum of medical expenses totalled 7.5% or more of the Adjusted Gross Income (AGI). So for instance, if a family’s AGI was $50,000, they could claim an itemized deduction of medical expenses if it was at least $3,500 (not including insurance premiums, etc).

Now beginning this year and beyond, the threshold has been raised to 10% AGI. That same family making $50,000 AGI needs to have accumulated $5,000 worth of qualifying medical expenses before they can claim that deduction on their tax return.

There is one group for which the floor is still 7.5%; that is persons who are age 65 and above. The 7.5% AGI calculation will remain as such for another 4 years until 2017.

For data through 2009 from the IRS, 10 million families used this tax deduction. Raising the threshold was a means to limit the amount of deductions taxpayers would claim starting this year, thereby raising more tax revenue to pay for Obamacare.

This change is found of found on pages 1,994-1,995 of the PPACA.

——————————-
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I periodically send out information such as tax tips, reading suggestions, articles and more, and the information is not always available anywhere else, even on my own website.

If you want to join, visit my Secret Tax Club page.

Thanks for visiting Tax Politix

Changes on the IRS 1040 for Tax Year 2013, Part I

1040 ready

Most items on this year’s 1040 are the same for last year. However, a few changes should be noted — mainly related to adjustments for inflation.

The new Standard Deduction amounts are as follows:

Single: $6,100
Married Filing Separate: $6,100
Married Filing Joint: $12,200
Head of Household: $8,950
Dependent: the greater value of either 1) earned income plus $350 or 2) $1,000. This cannot exceed $6,100

There are additional Standard Deduction amounts for filers with special status: 1) age 65 and older or 2) blind. These amounts are as follows:

Single or Head of Household: $1,500
Married, Joint: $1,200
Married, Separate: $1,200

Look for Part II on IRS 1040 Changes coming up soon.

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