Archive for the ‘Taxes’ Category

Service of Deadlines: Divorce American Style

Thursday, July 19th, 2018

Photo: thepitcher.org

Most people must meet deadlines at work and/or at home. There are plenty associated with product introductions that, in turn, trigger marketing and media rollouts and, of course, news deadlines. Some whisk out restaurant and school meals at lunch in record time. Others note coupon redemption days; plan and attend weddings; catch trains or planes and return library books for starters.

Here’s a deadline from left field: For tax reasons you’d better hurry up and finalize your divorce according to Jim Tankersley in his New York Times article, “Wedded Bliss Lost Its Ring? Rich Should End It in ’18.” You have 5½ months before the Republican tax law kicks in.

Photo: illinoislegalaid.org

If you split after December 31, you will no longer be able to take the full amount of alimony off your Federal income taxes. This is a very big deal especially for the wealthy and think–the benefit could last for decades. In fact, from 2019 on, alimony-payers won’t be taking off a cent.

By removing the tax break Federal revenues should benefit by $7 billion over ten years.

IRS records show that 600,000 get that deduction each year, reported Tankersley. He wrote that “about 20 percent of taxpayers who currently claim the deductions are in the top 5 percent of household income earners.”

Photo: nstp.org

There are other repercussions in addition to the obvious one. The higher earning ex spouse, once the deductibility is gone, might agree to pay less alimony to compensate for the loss of the tax benefit. This will impact women and some children. “Child support payments are not deductible, but so-called unallocated support—payments that are meant to help a divorcing spouse and children at the same time—is deductible.”

Some experts predict that the new tax law might reduce the number of divorces that women initiate if it adversely impacts their alimony/income.

Photo: 80snostalgia.com

But take heart: Financial planners for the wealthiest “will have ways of working around the change.” Some spouses “may choose to forgo alimony payments and instead accept more lucrative real estate, larger shares in tax-deferred retirement accounts or some complex combination of the two that maximizes tax advantages.”

What about everyone else? Surprise surprise: “Middle-class and lower-income taxpayers have fewer of those assets—and less ability to recapture potentially lost benefits of the alimony deduction,” Tankersley wrote.

What deadlines do you find hardest to meet? Do you wait until the last minute? Have you benefited from the new tax law? Do you think that lawmakers take into consideration the repercussions that the changes they make have on citizens’ lives? The pundits couldn’t forecast whether there will be a flurry of divorces before year’s end. Do you think that there might be?

Photo: defymca.org

 

Service of Small Towns: Chaos and The 2017 Republican Tax Bill

Tuesday, January 2nd, 2018

Photo: fedsmith.com

 

We have yet to see the fallout caused by the Republican tax bill passed so close to year’s end. For one thing, citizens and communities were unprepared, making plenty of mistakes amid chaos especially for those trying to save a buck by prepaying local taxes in states with hefty ones.

In New York State, for example, the governor signed an executive order on December 22, permitting citizens to pre-pay state and local property taxes which many did because of the $10,000 cap that kicks in next year. But this order happened five days before Federal guidelines were posted and plenty of folks moved fast, as New Yorkers tend to do, to take tax advantage one last time so they may not have submitted what they needed so they wasted their time.

The guidelines stated that “those prepayments could be deducted only in limited circumstances, a decision that appeared to invalidate many taxpayers’ efforts and raised the prospect that local governments could come under pressure to refund millions of dollars,” according to Washington Post reporters Peter Jamison, Jeff Stein and Patricia Sullivan.

“‘This is not the way to do legislation that will massively impact the entire economy. It sets off a flurry of action from people trying to save money, and they act as rash as the legislators who pushed this thing through,’ said Philip Hackney, a tax expert at Louisiana State University.”

After the executive order but before the Federal guidelines, local news reported people waiting in the cold for over an hour in certain Long Island towns. When we called our town clerk an administrator gave us the amount and she asked us to get the check to the office by noon two days later, Friday, the last working day of 2017. We could not prepay any of the school tax and had to pay all of the rest [no option, as in some communities, to make a partial payment].

Gov. Cuomo

When we spoke, the administrator hadn’t yet been informed, and we didn’t yet know, that to count, we needed the 2018 assessment to accompany the check. We subsequently found that out, once reporters got wind of the guidelines, and in time. I posit that many sent or delivered a check without the bill. Others based the amount of their check on a previous assessment. No go.

The day after we called, we visited the clerk’s office. The staff of two had neat files and boxes filled with bills on tables. Their work hours are only 9 a.m. to 3 p.m., Monday through Friday, and yet they were ready.

This city slicker was impressed at how buttoned up and prepared they were.

Normally, our property tax is paid by our mortgage company—it’s part of what we send them monthly—so we notified the company that we had prepaid. The town clerk’s office will also verify this and we expect the mortgage company will refund our payment. Fingers crossed.

Jamison, Stein and Sullivan wrote that Virginia counties don’t mail their assessments until February [and no doubt counties all over the country are in similar binds]. In addition, “The tax law explicitly states that the $10,000 deduction cap cannot be avoided by prepayment of 2018 income taxes but had left open the question of whether it applied to prepaid property taxes.”

So who knows if prepayment will eventually be disallowed? Think of the mess and confusion refunds and tax revisions would cause.

  • Will the fact that some have prepaid because they could and others can’t, for whatever reason, disqualify all who tried to save money?
  • Will a governor’s executive order count in the end?

This is one tiny example of the fallout from such a sweeping change followed by so little time to implement guidelines. Did those who voted for the bill realize the bedlam they were creating by their last minute vote simply to satisfy their egos to show they got something done in 2017?

In a country where big rules and is most admired, can you think of other instances where small works more efficiently?

 

Photo: community.aras.com

Service of Why Don’t You Say So?

Tuesday, February 21st, 2017

Say so

Communications is often not our strong suit. The cost? Customers pay the price in wasted time and/or mistakes.

Taxing

I ordered an item online from a high end men’s store and noticed, in checking out, that I was charged tax. For clothing that costs $110 or less, New York residents don’t pay tax. While it wasn’t much, it irritated me that tax appeared on my bill but because it was the last day of a super sale, I approved the order and wrote customer service [which was closed on the weekend].

TaxFirst thing Monday I got a response telling me that they will charge the correct total {without the tax} “when the order is ready to ship.” I was notified, but the tax was still there. So I whipped out another note–thank goodness for cut and paste and email. The correction was made.

Given that the store has a NY branch and that I assume more than one customer orders from NY, it would have been easier to note on the invoice that NY residents won’t pay tax for items under $110. Staff in billing should be similarly instructed….although I suspect that I may be the only one to care.

Check this out

I was having an annual checkup and on arrival dropped into the ladies room to wash the subway off my hands. There was a note warning patients not to urinate if they were having a sonogram. The office offers sonograms in a few parts of the body so out of curiosity I asked one of the technicians whether this directive applies to all sonograms. She said that it only applies to pelvic ones. So couldn’t that one word have been added to the warning?

Do it yourself and guess

USPS self service and binI used the do-it-yourself package mailing system at the Grand Central post office. One of the questions is “Will your package fit in the bin?” which it would. When done, I tried to open the adjacent bin and it was locked shut. So I had to wait in line anyway to find out where to put the stamped package. An exasperated postal worker, who looked at me as though I was dumb, pointed in the direction of a large canvas container on wheels placed well below the counter where nobody would see it with nobody nearby to secure it, either.

Was there a note stating what to do with a package on the bin parked next to the scale/shipping computer? No. Was there a note above the hidden container that collected packages? No. US Postal Service customers take note: Bring along your ESP next time you drop by.

Cross street please

When a business posts its NYC address on its website, if on an avenue, please note the nearest cross street.  I’ve lived in NYC most of my life and I don’t always know this information. [See 666 Fifth Ave and 546 Broadway, in photo below.]

Have you noticed that increasingly few businesses put themselves in their customer’s shoes in planning websites or procedures by anticipating questions or sharing clear instructions in the first place? Do you have other examples?

 Cross street please turned

 

Service of There’s a New Scam Every Day: IRS’s Latest

Thursday, October 6th, 2016

IRS

Most working people pay Federal taxes, [even if a prominent presidential candidate apparently doesn’t], which must be why there’s yet another IRS scam in the land. The number of potential targets is huge and boy is it profitable. According to Laura Saunders in “The New IRS Email Scam,” in The Wall Street Journal, since 2013 almost 9,000 people have forked over $47 million +.

We’ve previously written about the phone swindle that threatens jail and worse if the prospective victim doesn’t respond immediately to a voice message and pay up. Saunders wrote: “Just recently, a new scam has started involving fake tax bills tied to the Affordable Care Act.” If you get an email CP-2000 notice you’ll know it’s fake because the IRS doesn’t communicate with you that way.”

However, the clever scammers are also mailing printed notices via standard mail which is how the IRS communicates. “Genuine versions of such notices are computer-generated letters asking for payment based on a mismatch between a taxpayer’s return and what’s reported by a third party, such as interest on a bank account. The fake notices typically ask victims to pay a balance due in connection with Affordable Care Act health coverage for 2014. Taxpayers without proper coverage owe a penalty.”

Saunders reported that CP-2000 notices are usually six to sevenFederal Taxes pages while the fake, in one instance, included a payment voucher and was three. Language and typeface mimic the real ones. Another crucial difference: The fake asks victims to make out checks to I.R.S.; the legitimate to the U.S. Treasury. Some IRS scammers ask to be paid by prepaid debit card or iTunes gift card!

According to Saunders the IRS warns anyone who receives such an email not to reply or open any attachments or links but should forward the email to phishing@irs.gov.

The threatening robocalls followed us from upstate New York to Manhattan where we received another one as recently as a week ago but we don’t know anyone who got a fake CP-2000 tax notice email or letter so far—and you?

Phishing

Service of Freebies

Thursday, August 21st, 2014

free

In one of my first real jobs after college the policy was clear: If you interview someone who works for a match manufacturer, don’t let anyone even light your cigarette and don’t accept a book of them. I subscribe to this philosophy for myself today although I’m not always book of matchesas strict when observing others’ behavior.

Standing in line at a service station to pay for milk and a lotto ticket last week the cashier waved at a State Trooper, who’d made himself a cup of coffee, and called out, “Go on!” He did, without paying. Didn’t bother me. My husband thought he should have paid.

In “P.R. pros evaluate mayor’s free rides,” on crainsny.com, Andrew J. Hawkins reported that New York Mayor Bill de Blasio doesn’t pay for his subway rides. I don’t think that police staff or MTA workers do either. So that didn’t bother me.

ItalyWhat did was when I read Michael Howard Saul’s article in The Wall Street Journal that taxpayers covered the cost of his white Mercedes and driver during his vacation in Italy, [his spokesperson wouldn’t tell Saul what it cost]; his travel expenses to a family funeral in Massachusetts last weekend and to Atlantic City for non-work related reasons in May.

I thought of the matches when I read earlier that his children were given coveted City Hall internships–a leg up on any young person’s resume even if unpaid. The Mayor got the OK from the conflict of interest board. Legality isn’t the issue.

Back to Hawkins who wrote: “Other elected officials said they reimbursed the city for non-official travel, but the mayor’s office pointed to a ruling that allows him to travel on the public’s dime.” I wonder if employers/clients would welcome taxi/car rental charges from employees/consultant’s vacations on expense/out of pocket reports? Sure it happens. But should it? Remember the matches.

Where do you draw the line? Should public officials be models of behavior? Am I too straight-laced on the subject?

draw the line

Service of Equality: Free School Breakfast, Lunch and iPads

Monday, September 9th, 2013

 apple

I want my taxes to cover the breakfast and lunch of children whose parents can’t afford to feed them. Currently in NYC, according to Stan Brooks on 1010 WINS radio, NY:  “The free meals are only available in a quarter of city schools, and only one-third of eligible students are eating them. On Wednesday [August 21], the City Council passed two resolutions by a vote of 42-2, asking the state legislature to take action.”

WCBS 880′s Rich Lamb reported: “‘Currently, only 34 percent of New York City schoolchildren who qualify for free or reduced lunch eat breakfast at school. When compared with other big cities across the country, Newark, for example, at 87.2 percent or Houston at 79.1 percent, our performance in abysmal,’ City Councilman Stephen Levin (D-Brooklyn) said at an education committee hearing on Wednesday.” Lamb quoted Levin as saying because we don’t spend it we return $50 million to Washington. He also wrote that NYC Mayoral candidate Christine Quinn reported that: “Only about 28% of elementary school students, 15% of middle school students and 12% of high school students participate in the school breakfast program.”

healthy breakfastWhile Mayor Bloomberg thinks all the children should have a free breakfast, the Mayor is concerned about overfeeding the some 40 percent of obese NYC children. Wouldn’t this be an opportunity to teach the children about eating healthy food by serving it to them?

However, I think that the children whose parents can afford to pay for breakfast and lunch should do so.

kids using iPadsSimilarly, I have a bone to pick with politicians such as NYC Mayoral candidate Christine Quinn who feel that every child in public school should be given an iPad. It’s happening in LA to help erase the divide between rich and poor. If it’s imperative for every child to own a tablet, there’s nothing wrong with a Nook or a Kindle both of which have access to email and apps, a savings of hundreds of dollars per child.

Should the adults who’d like a tablet and can’t afford even one of the cheaper ones pay taxes for kids to get the luxury version? Won’t there always be a colleague, team member, neighbor or relative who has more goodies than you? Is it up to the government to even up such inequities? Should we not spend tax money to teach kids so they can become the ones who can afford the equivalent of the iPad if they want one rather than giving them a fancy gadget and expect it to do the work?

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