Benjamin Franklin said that there are two things inevitable in life: death and taxes. But the nice thing about death is there are no picket lines.
2008. A leap year. The only leaping we seemed to be doing is back to 1929.Things are so tough that the old sixty is today’s sixty-five.
Madonna’s getting divorced. Guy Ritchie found out that she was cheating on him. Because in her new act, she started singing,’Like a Yankeee. For the very first time.’ When Alex Rodriguez’ cap fell off in a game, he was wearing a yamakah.
The election lines were so long that some people swear by the time they got to vote, Sarah Palin was running for president.
Two new singers entered show business. Joe the Plumber signed a recording contract. So did Ashley Dupre. She was the escort of former New York governor Eliot Spitzer. So while politics make strange bedfellows, it also makes strange singers.
General Motors is now on the endangered species list.
Michelle Obama’s mother is moving into the White House. This has ecological ramifications. Now a thousand years of mother-in-law jokes can be recycled.
The Chinese seemed to have invented pre-natal gymnastics.
401 K’s have shrunk to just 1K’s.
Iceland melted in the recession.
Gas got so high that people had to sell their cars to afford the gas. Now that prices have gone back down, everyone can afford to drive but no one can afford to park. People in cars now cruise around the Beverly Center afraid to stop and shop.
The U.S. big 3 auto CEO’s flew to Washington in their private jets. They drove to the airport in Japanese made cars.
Circuit City was unplugged.
I checked an old 1931 L.A. Tax Service Newsletter. It read. ”We shouldn’t have voted for Herbert Hoover. We should have voted for Hoover, the vacuum. At least it would have done something.”
Why are lame duck presidents lame?
I don’t know about you but I’m worried that the government will want their stimulus check back. It obviously didn’t work.
The Star asked the question that we all want to know. Is Barak Obama anorexic?
For those of you who are addicted to presidential polls, the next presidential election is in 1415 days. But there is a Sri Lanka election next week that we can all follow.
The expression ”you can bank on it” is no longer used.
Some Democrats want to give Alaska back to the Russians.
In probably the most interesting poll of 2008, British women prefer to date accountants over James Bond. Their number one movie this week is ”Quantum of Tax Preparation.”
And now it’s time for TAX LAW CHANGES FOR 2008. There are so many of them that a new song could be ”Brother Can You Spare Me a Deduction?”
THE HIGHLIGHTS AND LOWLIGHTS:
POSSIBLE ZERO CAPITAL GAINS RATES? If you are in a 10 or 15% tax bracket ($32,500 for singles and $43,650 for married filing jointly), you will have no tax on capital gains. Unfortunately, with the current economy capital gains is an endangered species. Note: you are limited to a $3,000 a year loss. Anything more than that carries forward into the following year.
LEAVING THE COUNTRY TO WORK? The foreign-earned income exclusion is $87,600 in 2008 and $91,400 in 2009. You have to stay out of the U.S. for 330 out of 365 days. Those of you who want to escape global warming and work at the South Pole are out of luck. It’s considered part of this country.
TEACHABLE MOMENT. Educators can still take $250 of unreimbursed expenses as a deduction off the top of their income. Now, no more teachers’ dirty looks.
STANDARD DEDUCTION FOR PROPERTY TAXES. If you own property but don’t itemize, you can take $500 of your property taxes if you’re single and $1,000 if you married off the top of your income. Perfect for older people and people who buy their home at the end of a tax year.
IT PAYS TO BE SICK. Medical mileage rates are 19 cents a mile for the first six months of 2008 and 27 cents for the last six months. It’s the same for moving. You can not take a double deduction if you moved because you’re sick of L.A.
IT MAY BE BETTER TO GIVE THAN RECEIVE BUT IT’S ALSO MORE DIFFICULT. All cash and check donations must be substantiated even if under $250. You will also need a receipt from the charity for all non-cash contributions. Your clothing contributions must be in good condition.
G.M. just cancelled the endorsement deal with Tiger Woods. I guess he’ll have to stop driving his Buick.
IF YOU’RE GOING TO HAVE A CASULTY, HAVE ONE IN A FEDERALLY DECLARED DISASTER AREA. If you do, the entire loss comes off the top of your income tax. If not, then the only deduction that counts is your loss minus 10% of your adjusted gross income minus $100. So having a casualty loss may take some planning.
YOUR KIDDIES GET OLDER. The kiddie tax now pertains to students up to the age of 24. So this gives you more reason to toss them out of the house.
YET IF THEY ARE UNDER 17, THEY MAY BE WORTH $1,000 EACH ON YOUR TAX RETURN. This is known as the Old Mother Hubbard credit. This works if your adjustable gross income is under $75,000 if you’re single and married filing jointly under $150,000. Just as a note, it costs $600,000 to raise a child through college.
THE GOVERNMENT WANTS YOU TO BUY A HOUSE. There is a new homebuyer credit where you can get back the lesser of 10% of the house and $7,500. The only problem is that you can to give the money back ratably over a 15 year period interest free. There are also income limitations. If you buy a house up till July 1, 2009, you can amend your 2008 and take the credit. The only problem is getting a bank to loan you the money to buy it.
NANNY TAX THRESHOLD FOR 2008 IS $1600. If you pay your nanny more than that you must withhold social security taxes. One way around this is to employ a revolving nanny service. Your child needs to grow accustomed to change.
KEEP YOUR RICH AUNT ALIVE. In 2010 the estate tax is scheduled to expire. Though the rules will probably change by then.
JUST WHEN YOU THOUGHT WASHINGTON WASN’T DOING ANYTHING THERE WAS THE MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007. If you owe more money on your house than it is worth and you walk away, there can be a cancellation of debt. This is usually income to you. This Act will forgive you of your forgiveness of debt. This does not cover home equity debt or even credit card debt. That will still be your responsibility. The qualified principal indebtedness is limited to 2 million dollars. If you have any questions regarding this, please let us know.
So it seems that the government wants you to buy a house on one hand and then wants you to be walk away from it on the other hand.
TO STIMULATE THE ECONOMY, THE GOVERNMENT GIVES BUSINESS A BONUS. In depreciation. Taxpayers are permitted to claim 50% first year bonus depreciation of qualifying equipment placed in service in 2008.
AND THERE’S EVEN BETTER NEWS. The first $250,000 in equipment purchased can be expensed on your tax return. Now all you have to do is come up with $250,000 for equipment.
DRIVE FOR BUSINESS AND MAKE A PROFIT. The standard mileage rate is now 58 ½ cents a mile for the last six months of 2008. It was 50.5 cents a mile. The increase was due to the price of gas. Now that the price is down, you can take advantage of it by driving more for business. Some people have been getting lost going to business locations just to save money. Remember commuting to work is not tax deductible. Even if you get lost.
RETIREMENT IS GETTING EASY WITH IRA INCREASES. In 2008 and 2009 IRA contributions have been increased to $5,000. If you are over 50, you can contribute $6,000. The extra $1,000 is called a catch-up contribution. With today’s economy, we may need more than $1,000 to catch up on our retirement.
2009 SHOULD HAVE A LOT OF CHANGES. But high-incomers should take a deep breath. It looks like they will not have to pay more taxes in 2009. 2010 will probably be another story.
MIDDLE-INCOMERS SHOULD GET SOME TAX RELIEF. There probably will be an expansion on the earned income credit, child and dependent care credits will be fully refundable and exempting seniors from income tax if they have income of less than $50,000. And in lieu of a rebate, there may be a modest payroll tax credit that will be in one’s weekly payroll check. But we will have to see. Maybe we will have YES WE CAN BUT SOME OF YOU CAN’T TAX LEGISLATION.
WHAT RECORDS YOU SHOULD KEEP. I still have my old Dylan ones. You need to keep tax returns, fax correspondence, audit reports and contracts forever. Keep bank statements and sales records for six years. Tax receipts for four years, longer if it’s regarding property or equipment. Keep stocks purchases three years after you sell the stocks. In the recent discovery of a pyramid, tax receipts were found with the Pharaoh.
END OF THE YEAR PLANNING. If you’re not subject to minimum tax, (line 45 on your 2007 tax return) , then it pays to pay your property taxes and your state estimated taxes by December 31st. You can still use your credit cards for charitable, medical and business deductions. It’s the date of the charge that counts. Make sure you keep the actual receipt for your purchase. Having a credit card statement isn’t good enough proof for an audit.
L.A. CITY TAX ENFORCERS ARE NOW PART OF THE AXIS OF EVIL. You need to file for a city business license if you have any business income that is not on a W-2.
Since we are now officially in a recession, you will be comforted to know that L.A. Tax Service is staffed with a group of super-heroes. Dom is known as ”The Dominator”: Able to look at ten thousand random numbers and know which one is out of place. Able to calm anyone with a single smile. Then there’s Patty a.k.a ”The Joker”: Able to staple, talk on the phone and tell a joke to the client standing in front of her. All in two languages. In her case the smile is real. Natalya a.k.a., ”The Master.” With the speed of Karpov, she works our computer system with total mastery and tenacity. She is constantly thinking five moves in advance. When faced with opposition, she smiles and whispers ”checkmate.” Olivia a.k.a. The ”Quickbooks Slayer”. With the software called machete, she has hacked her way through Quickbooks. It’s now called Slow Books. That leaves us with Hadas a.k.a. ”The Fashion Assassin.” With international expertise, she has been able to out trick agents and double agents of every government. And she looks great in a trench coat.
Personal Note:
In the spirit of the 2008 election, I decided to have my family vetted. And the results are not pretty.
My daughter, Sara, has been seen hanging around methamphetamine addicts in Sacramento. She claims it’s her job as a therapist but I have my suspicions.
Sean, her husband, has spent a lot of time in front of judges. He claims to be a lawyer but I have my suspicions.
Aaron, my son, spends late nights staring into a camera in his computer in Boston. I think he’s working as a spy. He claims he’s tutoring students in California for his fourth job that he does concurrently with the others. The other jobs are teaching students with psychological problems, doing accounting for a tennis club where he also plays tennis with people without partners. But I have my suspicions.
Devo, my wife, has been seen heard mumbling to friends about being involved with a Serial Killer. She claims that she’s just working on directing a movie. You can check her out at www.deveronpix.com. But I have my suspicions. I now sleep with my eyes open.
My dog Bo. Short for Bo Diddley has been seen wandering through Hollywood hanging around with suspicious people. He claims that he was just doing a short called ”Strike Doody” about the Writer’s Strike. He says you can check him out at www.strikedoody.com. But I have my suspicions.
My mom, Shirley, was so involved in the recent election that she’s expecting an ambassadorship to France She’s currently trying to add her vote to the Minnesota senatorial election. I’m always telling her that I’m a good son. But she has her suspicions.
It’s been a magical and very difficult year for the world. But the stars still twinkle at night. Pluto revolves around the sun. Remembering the time it was a planet.
Looking forward to seeing you in 2009. Thank you for helping me paint my universe.
Tags: Benjamin Franklin Line, Capital Gains, Foreign-Earned Income, Madonna, Property Taxes