Benjamin Franklin said two things were inevitable in life: death and taxes. And the nice thing about death is that there is no recall election.
The year started out with America going to war because of “weapons of mass destruction” only to discover that Sadaam Hussein was hiding them in North Korea.
California started out the year with a wishy-washy Governor Davis relieved to have won his election. Wishy-washy? Shouldn’t the people have realized this before? His name is “Gray” for God’s sake. And then ended up with a governor who when he speaks there are subtitles underneath. At least we can now say that our governor can beat up your governor.
Arnold Schwarzenegger has given new meaning to the political expression “hands on” executive.
Scientists have somehow calculated that the sound of a black hole in outer space is 25,000 octaves below that of a piano. I prefer to think that it’s just Johnny Cash singing in heaven.
Capital gains is no longer an endangered species.
Hollywood is choosing sides in the upcoming presidential election. Republicans flock to “Master and Commander:Far Side of the World” while Democrats refer to the president as “Looney Tunes:Back in Action.”
Kobe Bryant has given new meaning to the basketball expression, “backdoor pass.” To help out the economy Kobe added to the lexicon the term “adultery ring.” It should be 1/3 of your salary or four million dollars whichever is less. Don’t worry. He can afford it with his income tax cut.
Spike Lee sued Spike Television for use of his name. L.A. Tax Service is currently suing L.A. City for use of our name.
Rush Limbaugh. Turns out that his first name is too apropos. He found an interesting way to lower his taxes by taking an extra large deduction for prescription drugs. Non-prescription drugs are not deductible. Don’t worry he can afford it with his income tax cut.
Iraqis are now enrolled in Democracy 101. Certain fringe Iraqi students of democracy got very excited when they learned that America was started with a revolution when a small group of dissidents overthrew a despot named George.
William Bennett just completed his new book of virtues. “The Virtues of Video Poker.” Don’t worry with his tax cut he can afford his losses. Gambling losses are deductible only to the extent they offset gambling wins.
David Nelson is the most common name used by terrorists wanting to board airplanes. Ozzie, Harriett and Little Ricky are the next three most common.
Arnold Schwarzenegger turned down $200,000 in governor’s salary. Don’t worry. He saved more than that by repealing the car tax on his hummer.
Our relationship with the French is on the upswing. A lot of people have been trying to book themselves into Paris Hilton.
John Kerry has revitalized his campaign three times in the past six months. Bill Clinton advised John that he’s missing something for the voters to forgive. He’s married to the billionairess philanthropist Teresa Heinz. She said there’s 57 ways for John to be president. Don’t worry. He will save more money from the tax cut than he would receive as president.
On May 28, 2003, President Bush signed into law the Jobs and Growth Tax Act of 2003. This along with his 2002 tax legislation has given us the new “don’t worry, be happy” tax deductions. So welcome to the “WEAPONS OF MASS DEDUCTIONS.”
BACK TO THE FUTURE. Tax rate reductions have been accelerated into 2003. The ten per cent tax bracket has gone from the first $6,000 in income for a single person to the first $7,000. Double this for married people. A tax savings of up to $50 single ($100 married). People who were once in the 39.6 per cent bracket are now in the 35 per cent bracket. A savings from $5,000 to infinity. (See Warren Buffet’s tax return).
IT’S ALMOST BETTER TO BE MARRIED THAN REMAIN SINGLE. Unless you’ve married into the Heinz family. For married couples who do not itemize the 15% bracket has been expanded to now become twice the single filing bracket. There is no penalty relief for those in higher brackets. So it’s better to marry poor which is why J-Lo and Ben Affleck are postponing their marriage. Even they are waiting for a better tax break or for Ben’s career to continue downhill until he’s poor.
“LET THEM BUY STOCK”. There is great tax savings for both rich and poor alike for buying stocks with dividends. Most dividends will be taxed at either 5% or 15% depending on ones’ income. The five Wal Mart heirs will receive about $500,000,000 in dividend income. They will have $1,180,000 in tax savings. They will be able to hire more illegal aliens with this money.
CHEAPER BY THE DOZEN. It’s a remake of an old movie and another way to lower your taxes. Each exemption is now $3050.
SOCIAL SECURITY OR INSECURITY. If you want to figure out whether to retire at 62 or 66? You can check this on the new retirement benefit calculator at http://www/ssa/gov/retire.
COVERT GOVERNMENT ACTIVITY. Is it the CIA or Terrorists? Actually it’s the alternative minimum tax. This is the tax monster that lurks underneath every tax return waiting to come out. It started out innocent enough. Its purpose is to insure that taxpayers who take advantage of tax shelters still pay their “fair share.” However, it is now a tax that is calculated to make sure that you pay your “fair share”. If you have too much state tax withholding, property taxes, refinancing when you get extra money out, itemized business deductions, capital gains and other passive income, you may be subject to this added on tax. You may or may not need to prepay your state and property taxes. To pay or prepay that is the question. Child exemptions don’t help either. Those of you who want to give back your children this may be a good time.
OR IT MAY BE A BAD TIME. FINALLY THE DEPENDENT CARE CREDIT HAS GONE UP. It has been $2,400 since Rover had a litter of puppies. And she was mad that it only covered two puppies. The figure is now $3,000 a qualifying individual with a maximum of $6000. The credit is between 20 and 35 per cent of these amounts with a lot of phase outs attached to it. Too many credits can bring out the alternative minimum tax monster.
THE CZECH’S IN THE MAIL. If you’ve adopted a Czech child or have one or more of your own on your 2002 tax return and the child is born after 1987, you probably received an extra $400 for each of your qualifying children. If not, then you can claim the extra $400 credit on your 2003 return.
MEDICAL DEDUCTION WORTH WAITING FOR. The Tax Relief Act of 1997 gradually increased the 30% for self-employed to 100% in 2003. This is an above the line deduction. Of course, soon we will reach the point that no one will be able to afford health insurance. As an itemized deduction, medical doesn’t count until it reaches 7 ½ per cent of your adjusted gross income. Only six per cent of people are able to use it. In the beginning of life, egg donor costs are deductible. At the end, long term care is a medical deduction as long as it is not provided by a relative or spouse.
HE WHO IS NOT BUSY BEING BORN IS NOT BUSY DEDUCTING. Education qualifies for a credit that is 20% of up to $10,000 of expenses. Now if we can just figure out a way of having the schools stop raising the tuition.
IT’S BETTER TO GIVE THAN TO RECEIVE EXCEPT IN REAL LIFE. The IRS now allows people to give away $11,000 without any gift tax consequences. This is not a deduction for the person who gives and it is not income to the person receiving the gift. It helps in estate taxes. Kobe’s wife did not have to pay taxes on the gift.
IRA’S STILL HAVE A MAXIUMUM OF $3000 ($3500 FOR THOSE LUCKY ENOUGH TO BE OVER 50)
LOW INCOME WITH MONEY FOR RETIREMENT. Sounds like an oxymoron? Kind of like when Marie Antoinette was told that the poor didn’t have bread to eat, she replied, “Let them eat cake.” If she was alive and in power now, she would have said let them put money in retirement programs. And to help out she would have given them a credit for doing so. Of course if she were from California she would say forget bread, carbs aren’t good for anyone.
THERE’S NO BUSINESS LIKE BUSINESS. This is a good tax bill for businesses. There is a 50% first year bonus depreciation on all business equipment bought after 5/5/03. This has nothing to do with the Cinco de Mayo celebrations.
Equipment can be expensed up to $100,000 a year.
TIME TO BUY A NEW CAR FOR BUSINESS. No matter what those salesmen tell you it does not pay to lease. The first year luxury auto depreciation is increased from $4600 to $7650 multiplied by the percentage of business use. Incidentally, a “luxury” car is $15,300 and up. This increase in deductions is only for new cars.
ECOLOGICAL POLICY? Any car over 6,000 pounds curb weight qualifies to be expensed up to the first $100,000 multiplied by the percentage of business use. You can check if a car or truck qualifies by checking with http://www.intellichoice.com.
STANDARD MILEAGE FOR BUSINESS IS 36 CENTS A MILE. The average car cost with depreciation, gas, insurance, repairs, AAA and car washes is about 63 cents a mile.
CELL PHONES NEED A LOG KEPT. So while driving in one’s car talking on the cell phone, when the call is terminated, one should write down on a piece of paper the reason for the call. It would be nice if accidents while doing something related to business were tax deductible. At least keep the bills and mark why they were business related.
LONG TERM CAPITAL GAINS REDUCED TO 5% AND 15%. Now lower income people can buy stock, keep it for a year and then sell it at a profit and only pay 5% tax on the gain. Those in more than a fifteen per cent regular tax bracket will pay 15% capital gains. This is only for all sales after 5/5/03.
TEACHER RETENTION CREDIT IS BACK AFTER A TWO YEAR RECESS. The California credit for elementary and high school teachers is back again in full force. This is for teachers who have been teaching with a credential for the past four years. For those teachers with twenty years of service, the credit is $1500 on your state taxes. They will need this since they will have 95 students in their classes next year.
SELL A PIECE OF PROPERTY IN CALIFORNIA THAT’S NOT YOUR PRIMARY RESIDENCE? California has withheld 3.33 per cent of the gross proceeds. You will probably get most of it back come tax filing. Bring your escrow statements with you when you file.
HIRE A GROPE INVESTIGATOR. Many men following in Arnold Schwarzenegger’s footsteps have hired an investigator to see how many people they have groped in their lifetime. This is not a deduction. This is the real reason why the governor cancelled this investigation.
YEAR END PLANNING? A little different this year. It may not be better to send your state estimated tax in early because of alternative minimum tax. You can still use your credit cards for charitable, medical and business related deductions. Since tax rates are going down in 2004, your deductions will be worth more in 2003.
ELECTRONIC FILING? It’s now a requirement in the state of California. You will be getting your refunds in a shorter period of time. Of course, there’s no money in the state coffers. So you may end up with an I.O.U. But you’ll get it quicker. Note: that was just a joke you will get your refund of course it may be in discounts to state parks and universities.
DON’T HAVE TO COME BACK AND SIGN? That’s right. We will be sending virtually every virtual return by e-file and your refunds can be deposited directly. We will have you sign the e-file declaration when you finish your appointment. No return trip. Because of this and accounting factors, we are requesting that you pay your tax return preparation fee at the time of your appointment. We accept checks, credit cards, PayPal or you can have your refund checks sent here and we can exchange checks.
BUSINESS MANAGEMENT? We’ve been offering this service for the past eleven years. We can pay your bills, invoice your clients and keep your books. We can handle both Quicken and QuickBooks on PC or Mac. We even do Windows. 2000 that is.
L.A. Tax Service is finally becoming an adult at 21 years of age. To celebrate, we are moving entirely upstairs. We have kicked out the “parents” and will be taking over the apartment next door in addition to the other rooms upstairs that we have occupied for so many years. So our new slogan will be “Computerized accuracy with even more of a personal touch.” We’ll even have four bathrooms. Of course, remodeling isn’t cheap so we will be using tax returns instead of toilet paper. Dom, our office manager is making sure that our transition into adulthood runs smoothly. Patty says no matter how old we get, she will keep telling jokes until someone gets them. Actually she’s the funniest person here if you believe her. Jim manages our business management section so well that he should be running a Big 8 Accounting firm except there are none left. Hadas, who puts the chic in the letter C in CPA, says that it’s about time L.A. Tax Service became an adult. Mercy, payroll aficionado, is worried that she’s being kicked upstairs but we prefer to see it as moving up the corporate stairwell. And our new receptionist, Claudia a.k.a. Kihui is a Jill of all trades, thought she was hired by adults. She learned otherwise. But we’re all looking forward to the upcoming tax season, filled with laughter and deductions. Who could ask for anything more?