*** Ask TaxMama Volume 6, Issue #285 November 26, 2004 ***
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Deadlines LOOMING - http://taxmama.com/taxcalendar.html
December 31, 2004 - Last day to open KEOGH for 2004
December 31, 2004 - Last day for charitable contributions for 2004
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VISIT OUR NEW JOBS PAGES http://taxmama.careerbank.com/
Run a city in Idaho as their Controller - get away from it all!
http://taxmama.careerbank.com/seeker/view_job.cfm?id=80999
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Dear Family,
Family is fun to be with. And this is definitely a time
for the turkeys - the really delicious one at my brother's
house, as well as the ones on the highways. I can still
taste the turkey Marie roasted. Somehow, it was so moist
all the way through, that it almost tasted as if it been
smoked. They were talking about how it seems to be a new
fad to brine your bird. But, ah folks, kosher homes have
always brined their meat. It's done to draw out all the
blood, which we're not permitted to eat. OK, so it has
some other benefits, too.
There was some talk, again this year about deep-frying
turkeys. Have you ever tasted such a beast? I wouldn't
go to the trouble of doing that myself, but...I'd love
to taste it.
And speaking of good things...I finally put together a
special shop for Aha! T-shirts and things.
http://www.cafepress.com/taxmama/433099
Since my buddy, Boogie Jack ( www.boogiejack.com ) has
been calling Small Business Taxes Made Easy, the book
with the Aha! factor...I thought it would be fun to make
some Aha! stuff for you. In fact, you'll even be able
to score a $10 discount on a $50.00 purchase if you
use this special code - 4CPCASH . The discount is only
good until December 1st.
Oh, and you may have noticed that I've put the Amazon link
to The Book up on the site. Gee they've got a low price.
http://www.amazon.com/exec/obidos/tg/detail/-/0071441689/mywishlistA/
McGraw-Hill tells me it will be rolling off the presses
on Monday. They'll be in the stores by the middle of next
month. (Some of you might find your names in the book...
check out the acknowledgements.) Well, looks like it's
time to see about hitting the radio circuit. I'll do my
best to let you know where you can tune in.
Oh yes, I made a oopsie in last week's issue, when it
came to the mileage rates. Two angels were nice enough
to set me straight - Bill Giedeman, EA and David Mellem
http://www.taxmama.com/AskTaxMama/284/irsnews.html
(See...it's time to get my eyes checked. I've been putting
it off since last November.)
Have a great weekend...and enjoy this time off.
We need days like this, don't we.
Best wishes,
Eva Rosenberg, EA
Your TaxMama is watching...out for you.
P.S. Remember, TaxMama's Secrets is now available on CD
http://www.cafeshops.com/taxmama.6819226
P.S.S. Drop by TaxMama's Shopping pages
http://taxmama.com/resources/shopping.html
P.P.S. TaxMama is starting to schedule speaking/teaching
engagements for next year.
http://www.speakermatch.com/showcase/speakerinfo.asp?id=-667529472
P.P.S. If you're using spam blocker software, please add
taxmama.com to your approved list. I don't have time
to keep responding to each request for authentication.
I get hundreds.
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To comment on any articles in this issue, please,
DON'T send me back the whole issue. Send a note to
mailto:taxmama@taxmama.com?subject=AskTaxMamaComment
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ADDRESS CHANGES - Please, do NOT send them to me to do.
There is a link at the bottom of this issue. Please click
on it and you will be able to make updates and changes
yourself. And faster.
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In 2003, Americans OVERPAID their taxes by more than $500 MILLION!
Play a simple, two minute game and learn what tax professionals call
"the most overlooked tax deduction in America." ItsDeductible will put
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Giving Thanks to friends and Newest Skills
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From: TaxMama:
As I struggle through the year, in my quixotic battles with
computers, my valiant efforts to help clients with IRS
problems, and trying to keep being somewhat entertaining
and helpful...YOU inspire me. Your notes and comments
and quips keep me energized, excited and encouraged.
There are so many times I just can't bear to write a word,
or do another tax return, or put up another page...
then I think of you.
Thank you for being there for me all year.
Eva
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From Linda M:
I have to give thanks first to The Good Lord who has helped
me through a very tough year. Also to a long lost friend
from high school, and to my great sister who has been so
sweet to me. God bless her in her upcoming marriage.
And last but not least my wonderful husband and his family.
You guys are the best.
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From the Trumantor:
My newest skill is getting friends and family out of
computer fixes - just before I retired, but I do not
receive any compensation - Off to Mammoth for Thanksgiving
- you and yours have a Happy Holiday!
//////
From Jacqueline in Volcanoland:
My newest most surprising skill?
Our black kitty got his eye scratched, no doubt from
tussling with one of the animals that are CLEARLY
on the "Animals We Can NOT Catch" list posted at
cat-level on the bottom of our fridge door.
Nonetheless, he needed drops put in his eye twice a day.
Thank goodness his eyes are all better now!
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Radio Tour
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Tune in to the Small Business Advocate, with Jim Blasingame
on Friday morning, December 17th at 5:30 a.m. EST.
We'll be kicking off the new book...and giving away free copies.
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Saints on Wheels
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From: North Carolina
Hi Tax Mama,
I saw the new mileage rates in Issue 284.
My question is about the Charity mileage rate.
I am a member of the Christian Motorcyclists Association
(CMA) www.cmausa.org and
we travel to many events each
year both locally and nationally, ministering to
motorcyclists and assisting other groups with benefits,
rallies, etc.
I want to share with our local chapter members and others
what is deductible on the mileage we travel volunteering
in CMA.
We are going somewhere almost every weekend and have
some members that are ministering in prisons weekly.
What can we deduct?
Is the mileage to attend our monthly meetings deductible
or just when we go somewhere else representing CMA and
doing CMA work?
Thank You,
Chuck Denton
<TaxMama Replies>
Dear Chuck
It sounds like your group has a lot of fun and does
a lot of good!
The charity mileage rates are set by Congress,
so they haven't changed for the year. They are
still limited to 14 cents per mile. (See the
explanation in last week's issue.)
http://www.taxmama.com/AskTaxMama/284/irsnews.html
Now the question is, which miles are charity?
Certainly, anytime you go to events and prisons.
Add in times you go to meetings.
Add in times you go shopping to pick
up supplies and gifts and donations.
Essentially, Chuck, anytime you're doing something
to help out, or that's related to the mission of
CMA, count the mileage.
Due to the movies, many people still think bikers
are rogues. And that the only way to be cool is
to be an outlaw. Clearly, this is not so!
All the ones I've known have been stand-up guys.
Even my husband...well, at least until he totaled
the bike and decided to get his truck. (Oh, he's
still a good guy - just bikeless.)
But, seriously, you're performing a valuable service
as role models for prisoners and others.
I applaud you! Keep on rolling along.
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
Small Business Taxes Made Easy http://snipurl.com/74dv or from Amazon.com
http://www.amazon.com/exec/obidos/tg/detail/-/0071441689/mywishlistA/
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Tax-Free Rewards - Frequent Flier Miles
Visit Tim Winship's FrequentFlier.com to get lots of them
http://frequentflier.com/cgi-local/pl.cgi?sub
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Pets R Us?
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From: Lake Worth, FL
Dear TaxMama,
Dear taxmama
I am a young girl and I want to start my own pet store.
I have tried to study up, but nothing I read is too helpful.
So my question is, how do you start a pet store?
Logan
<TaxMama Replies>
Dear Logan,
Well, the first thing you need to do is look up
the licensing information in your town and in your state.
Find out what kind of regulations you'll be
dealing with - for instance, business license,
zoning, health department, sales taxes.
You can find all that information by either searching
the city's and the state's website - or going into
City Hall and asking the Clerk's office to help you.
You might also consider talking to the advisors are
SCORE - that's the Service Corps of Retired Executives.
http://www.score.org/
They'll give you free advice - and help you develop a
business plan and explain some of the specifics about
running a retail business.
Get your parent's involved. You'll need their help.
Working with pets, live beings, well, that may be fun,
but it's a huuuuuge responsibility. It's much more
work and more of a commitment than any other
kind of retail business. Remember - there are live
animals you have to take care of - all the time.
Even at night, or when you are in school.
It's an ambitious project. But if you really want
to do it - and can get your friends or others to
work for you and help you care for the animals -
you can achieve it.
Good luck.
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
================================================
Hey! Look at your teeth. Come on - get them cleaned.
http://www.qksrv.net/click-241922-8219039
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Roommates and Rents
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From: Mesa, AZ
Dear TaxMama,
In March of this year (2004), I bought a house for $249,900.
The mortgage payment on the house was about $2350.
But I only make about $2270 a month from my job, gross.
So, I moved into the house in March with a friend of mine.
I paid a total of $750/month toward the mortgage and
he paid the rest of it (approx $1600/month) directly to
me,not to the lender.
I know that I can write off the interest on the
mortgage. However, because of the amount of the mortgage
payment ($2352) and the payment arrangement with my
roommate, I am not sure what to do.
Clearly, with my income, I do not pay anywhere near
that amount in taxes, so I would end up writing off
much more than I would owe.
I do want to take advantage of the tax benefits of home
ownership, but I don't want to get in trouble with the
IRS.
Should I write off the interest (or any portion of it)?
Thank you for any and all advice
David
<TaxMama Replies>
Hey David,
You, my friend, have rental income.
With housing prices so high these days,
hardly anyone can afford a home in the city
without a second income. So, if there's no
spouse, there's usually a roommate.
And when a roommate pays part of the costs,
that usually ends up being rent.
You'll need to file a Schedule E to report the
rent that your roommate pays you.
You'll need to find the appraisal of the property
to get the value of the land and building.
You will be depreciating the building using the
residential depreciation tables. I explain how to
use them - and how to report rentals in the book.
http://www.amazon.com/exec/obidos/ASIN/0071441689/mywishlistA/
When you fill out the form, split the property taxes
and interest in half. Put half on your Schedule A,
where you itemize your deductions. Put the other
half on Schedule E.
That should solve your problem about not having
enough income to account for the high interest
you're paying.
But, there's more!
In addition to deducting the property tax and interest
on Schedule E, you'll also be able to deduct half the
cost of utilities, insurance, gardener, cleaning and
any other kind of maintenance or repairs. And if you
did any major improvements or remodeling, you'll
be able to depreciate half the cost of that, too.
This will probably end up wiping out the income from
the rents...without really reducing your personal income
level so low as to attract attention.
Clearly, I can't cover it all for you. You'll want to
get a tax professional to prepare your tax return this
year - at least the first year that you
start doing this.
Enjoy your new home.
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
http://www.iHelpMate.com
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Because We Care
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Don't let yourself or your friend feel helpless.
Share the Power - SCHOLARSHIPS FOR SELF-DEFENSE TRAINING AVAILABLE
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A.N.G.E.L.S. DAY
Helping Seniors keep their pets
http://angelsday.org/
Talk to Linda Baker for more information
(310) 680-0798 LBaker6343@aol.com
==========
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Today, many of these people outlive their parents. And therein
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The Jeremiah Society, is working to help enhance and enrich the
lives of developmentally disabled teens and adults in the Jewish
Community Please Call Rose Lacher, (714) 997-8193
http://www.jccoc.org/adults.html
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MONEY FUNNIES
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‘Twas Right After Thanksgiving
(in California)
And all through the house,
Not a channel was showing any shows worth the price.
The men stood outside with their chests very bare,
And the steaks they were grilling were still oh so rare.
Johnny’s backgammon board was all covered with reds
While his little brothers watched and kept scratching their heads
Sally in the den, sitting in Momma’s lap,
All cozy together, listening to rap.
When through the front door walked a man with platter,
Piled up with carbs, cuz the calories don’t matter.
His tasty offerings made such a very big splash
That hardly anything was left to put in the black trash.
by Eva Rosenberg
TaxMama.com
[If you want to add your own lines...please do - and send them
back to me. I'll credit everyone who does! Hugs Eva
You can find the rest of the original stanzas here
http://www.christmas-tree.com/stories/nightbeforechristmas.html ]
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IRS NEWS
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IRS Issues Guidance on When Income is Subject to FICA Taxes
[Excerpt from Revenue Ruling 2004-109]
Situation 1 - Baseball Club negotiates an employment contract
with an individual player. It is the first contract between
the Club and the player. The contract provides that the
player receives a signing bonus if he reports for spring
training at the time and place directed by the Club. The
contract provides that the signing bonus is not contingent
on the player's future performance of services.
Answer - Under the facts presented in Situation 1, the
individual receives the signing bonus in connection
with establishing the employer-employee relationship.
The individual does not provide clear, separate, and
adequate consideration for the payment that is not
dependent upon the employer-employee relationship and
its component terms and conditions. Thus, the signing
bonus is part of the compensation the Baseball Club
pays as remuneration for employment, making it wages
regardless of the fact that the contract provides that
the bonus is not contingent on the performance of future
services.
---
Situation 2 - An employer negotiates a collective bargaining
agreement (CBA) with a union representing a group of its
employees. The CBA will take effect on the "ratification
date," which is the date it is ratified by a majority of the
union members covered by the agreement. The CBA provides
that each employee covered by the terms of the agreement who
is employed by the employer as of the ratification date
receives a bonus.
Each such employee is paid the same amount regardless of
compensation, seniority, position and whether or not the
employee voted for ratification. In addition, each
eligible employee receives the payment even if the employee
had not performed services for the employer before the
ratification date. Finally, the CBA provides that the
payment is not contingent on the employee's future
performance of services.
Answer - Under the facts presented in Situation 2, the
employees receive the ratification bonus payments as part
of a bargain that establishes the terms and conditions of
the employment relationship with all of the employees
covered by the CBA. The employees do not provide clear,
separate, and adequate consideration for the employer's
payments that is not dependent upon the employer-employee
relationship and its component terms and conditions.
The payments are part of the compensation the employer
pays as remuneration for employment. Thus, the ratification
bonuses are wages regardless of the fact that they are
uniform in amount, do not vary based on seniority or
position or any other factor, and are not explicitly
contingent on the performance of services.
[TaxMama - Interesting. This contradicts the spirit of
previous rulings. Clearly, IRS is under pressure to do
their best to replenish the Social Security coffers.
You may want to read this whole analysis to see how
they arrived at this decision.
These rulings will appear in Internal Revenue Bulletin
2004-50, dated December 13, 2004 ]
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Great information about Website, Marketing and Publishing
http://taxmama.com/EBook/101tips.exe
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For more:
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eBook - TaxMama's Secrets:
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For more:
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TaxAnxiety Inc. P.O. Box 280549, Northridge, CA 91328
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