On Taxes...

"Let me tell you how it will be; There's one for you, nineteen for me."
-- Tax Man from The Beatles Album "Revolver"


With April 15 looming just around the corner like a disgruntled auditor, I thought it appropriate (or apropos, if you prefer the $2 word, though I'm not paying taxes on it) to create an entry regarding taxes and tax publications.

The above lyrics were written by George Harrison, who at age 23 discovered how much he and the other Beatles band members were paying in taxes. (It's an interesting Wikipedia article if you're interested: http://www.wikipedia.org/wiki/Taxman ) Beatles members were in the top 95% of wage earners in England, and at some point, Harrison realized that when you added together not just employment tax -- currently 40% in England for the highest wage earners -- but also sales tax and other taxes paid, he was paying the majority of his income to the government.

The average American doesn't pay quite that much in taxes yet, but one of the most interesting figures released each year is the calculated date Americans have to work until, in order to 'break even.' That is to say, when you add up income taxes, property taxes, gasoline tax, sales tax, use tax, cigarette tax, luxury taxes, and so on, it's the date beyond which the money you get to keep is actually yours as opposed to what federal, state and local governments take from you. Currently that date, last I heard, was some time in May...

Anyway, regarding all this, what would we do without the IRS? Well, probably buy a lot less stuff on credit, that's for sure, but also we wouldn't get all the great advice available through their website www.irs.gov. Currently, they're up to around 850 publications -- TONS of great information like this:

According to Publication 225, the "Farmer's Tax Guide" you're given several reminders -- things like allowable mileage rate deductions and when you have to file certain 1099 forms. But also, the IRS wants to inform you to "set up your record keeping system using an accounting method that clearly shows your income for the tax year." I guess Oliver North's experience could speak to the importance of having your documents readily available for easy shredding, should the need arise...

The publication also explains to farmers the definition of what a plant is, as if they didn't know, and even what a farm is. And get this -- Chart 6-1 on page 31 shows a list of 'Plants with a Preproductive Period of More Than 2 Years'. (If you were planning on farming as an occupation, I've gotta think you already know this stuff, right? Isn't this covered at some point in 4-H???) Things like walnuts, pears, and cherries are listed, is if farmers weren't aware it takes at least 2 years for a pear seedling to grow large enough to bear fruit. But anyway, what I'm not sure about is why this matters -- and what would the IRS do if for some reason a plant became 'productive' in a year it wasn't supposed to? Would another publication be necessary?

Things that make you go hmmm...

And one of my personal favorites among those listed: Pub. 529 titled "Miscellaneous Deductions" suggests, and I'm not making this up, that you may want to keep your Keno receipts, as proof of gambling losses should you decide to write them off. If you play the slot machines, it advises keeping "A record of the machine number and all winnings by date and time the machine was played." (Who is keeping this journal, anyway? Las Vegas, October 11th, 2:36 p.m. played machine 4, put $5 on black, lost; 2:41 p.m. played machine 4 a 2nd time, won $6.)

And then in the same publication, 2 pages letter, it explains you can't deduct health spa expenses, "even if there is a job requirement to stay in excellent physical condition, such as might be required of a law enforcement officer." Word for word, that's what's in there. So, Gambling addiction = acceptable write-off; Staying physically fit, even if required by my job = no write-off; got it...

Is it any wonder Americans are overweight and overstressed???

One last laugh from this publication: "You generally cannot deduct amounts paid or incurred for lobbying expenses." It goes on to explain you can't list deductions incurred in attempting to influence legislation being passed (or, I suppose, not passed); you can't write off expenses incurred while attempting to influence the public vote in election matters; or while communicating with executive branch officials.

But then this exception: "You can deduct certain lobbying expenses if they are ordinary and necessary expenses of carrying on your trade or business."

Like the business of, say, LOBBYING...

So if you're going to lobby your congressman, just remember:

Lobbying is for professionals only. It isn't something to play around with.

And for crying out loud, how many times do I have to remind you:

GET A RECEIPT!!!