Pulitzer Prize for tax series from New York Times

By on April 19, 2012 in Creative, Deductions, Internal Revenue Service, Tax Policy

Is the tax code deep, dark, confusing and unfair? Sure it is. Can you get a good story out of it? How about a series of stories good enough to win a Pulitzer Prize?

new york times 150x150 Pulitzer Prize for tax series from New York TimesAll hail David Kocieniewski, who waded shoulder-deep into the U.S. tax system and came out with a stunning group of stories for The New York Times about how corporations and the wealthiest Americans are able to dramatically and legally slash their taxes. His series, “But Nobody Pays That”, has won the 2012 Pulitzer Prize for explanatory journalism.

Here’s a link to a list of all the 2012 Pulitzer Prize winners (you can also access many of the winning pieces directly from the article). It’s a tour of the best of American journalism.

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The Democratic convention windfall: Not just rental income — tax-free rental income!

By on March 11, 2012 in Creative, Democracy in Action, Politics, Tax Advice

The New York Times says that homeowners in Charlotte, NC are increasingly wondering whether they could reap a mini-windfall by renting out their houses for the Democratic National Convention

A tax loophole may help them decide: The money they get could be free of all federal income tax.

Here’s the deal: While all rental income ordinarily has to be declared, there’s a little loophole for anyone renting our their home (or second home, for that matter) for no more than 14 days during the year. Keep that rental use to no more than two weeks, and the rent you take in is tax-free. You also don’t have to keep track of any expenses related to the rental, of course.

The 14-day test is the key. It doesn’t matter if you get $100 a night or $10,000 a night — it’s all tax-free. But if you rent your property out a total of 15 or more days during the year, the loophole closes.

I think of this as the Masters Loophole, because it is very popular with people who own pleasant homes that become extremely attractive rentals for brief periods of time. Think the week of the Masters Golf Tournament in Augusta, Georgia.

When will this little loophole be closed? Probably when there are no longer any Congresspeople who have vacation homes that they’d like to rent out tax-free for a couple of weeks a year.

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Mitt Romney, through the funhouse mirror

By on March 4, 2012 in Elections, idiot candidates, Politics

Mitt Romney famously told a heckler on the campaign trail that corporations are people, too.

A fellow named Geoff Sugerman was paying attention.

Here’s his proposal: If corporations are people, why can’t people be corporations–with all the tax benefits of corporations

Geoff has a website, peoplearecorporations.org., where he also promotes his political action committee, People Are Corporations Too (PACPAC.)

Contributions are not tax-deductible. Not even if you’re a corporation.

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Tax pandering season in high gear

By on February 22, 2012 in Elections, Politics

The tax pandering season got into high gear with both President Obama and Presumptive-Nominee-In-His-Own-Mind Mitt Romney coming out with tax reform proposals on Wednesday.

As The Washington Post points out, Romney would cut all individual income tax rates by 20%.

But beware! Here’s Joe the Tax Guy’s Rule Of Across-the-Board Tax Cuts: Across-the-board cuts favor the Top 1%. A 20% tax cut for someone earning $10 million is enough to pay cash for an extra vacation home or two. A 20% cut for someone earning $50,000 is enough for an extra Happy Meal or two.

Obama would cut the top corporate tax rate from 35% to 28%, with the loss in revenue made up by closing loopholes that already effectively leave most corporations paying significantly less than 35%. As The New York Times points out, Republicans and business groups want an even lower rate and no change in the current system of business breaks and loopholes.

Joe the Tax Guy’s Rule of Business Tax Cuts: When proposed rate cuts are supposed to be paid for by closing business tax loopholes, there will probably be new loopholes created…or no change to the old ones.

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Good news for tax-deferred accounts: Retirement plan limits are rising

By on February 1, 2012 in Tax Advice

Trying to pump as much as you can into tax-deferred retirement accounts? The government’s calculation of inflation is coming to help you a bit in 2012.
For this year, most people will be able to put a little more into their retirement accounts and get a current tax break. Here’s a quick summary:
-The top amount you can put into a 401(k) is going from $16,500 in 2011 to $17,000 in 2012.
–Maximum contributions for people who have Simplified Employee Pensions (SEPs), business owners who have 401(k) accounts combined with profit-sharing plans, and other defined contribution plans go to a maximum of $50,000, up from $49,000.
–No changes, though, to the “catch-up” additional contributions for people age 50 and older. And no changes to the maximum contributions allowed for IRAs and Roth IRAs.

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