1999 is over, or is it?; I had $45,000 in taxable income, what did it cost?; and whose tax plan is better?
1. California is the largest state and first in tax audits.
The statistics are in, and California is number one in tax audits with Southern California leading the way. The answer is very simple: lots of high paid independents or consultants, if you will, filing Schedule C's on their IRS Form 1040"s. The IRS thinks they cook the books.
2. What does a $45,000 net self employment income cost.
A friend of ours who is on Social Security, over 72, made $45,000 and after adding back some of his Social Security it was over $50,000. His state and federal taxes were over $16,000 or 33 1/3%+. What would they have been if he worked out of his home and was incorporated? About $4,000 or less, for a savings of $1,000 per month. Could he have used the $1,000 per month? We think so since his rent went from $1,000 per month to $1,500. His gasoline costs have gone up 150%, along with everything else.
3. Bush and Gore have tax plans, whose are better?
The Marriage Penalty will be the test, with the question of whether raising the 15% bracket or the 28% bracket double for married couples is a plan for the rich.
The best is not to have income at ll, and thus we like the Chapter Headings, Alternative to 'Earned Income' in Jeff A. Schnepper's HOW TO PAY ZERO TAXES 2000 EDITION. The problem, most of the items he talks about are "employee fringe benefits" which are not available if you are self-employed. We also like his 'tax audit program' which allows you to establish a home-based business by getting your friends and neighbors to join. We think that really is 'in your face' tax planning.
By the way our friend who made $45,000 paid medical expenses but took the standard deduction, which could have been paid by his employer if he was incorporated. He could have taken meals and lodging and many other things, like education of children, on the job training, and automobile. The best news is he could have a corporation with a January 31st year-end and deferred one year's income, but he would rather complain about it.
P.S. we were sent the following URL's that we think may be interesting: The first is for those who like FREE music, the second is for those that like English humor and gossip, and the last is for those who may have wanted to buy Apple Stock at $13. It closed at $123 yesterday with sales and profits at an all time high.
Jim Schneider, LL.M.
The Taxman86 Speaks... is copyright 1998-2010 by James E. Schneider, LL.M. Inc.