Year-End Tax Savings

With less than a week to go in this year, there is still a little time left to reduce your tax bills. The normal strategy of delaying taxes by postponing the receipt of income until next year and accelerating (prepaying) deductions is even more important this year because the tax rates will actually be dropping a little next year, as part of the ten-year tax reduction plan. It's not a big reduction, but at least it's a step in the right direction.

You can see the 2002 tax rates on my website and compare them to the 2001 rates if you want.

One excellent way to save on your taxes is to prepay your tax preparation fee by December 31 so that you can deduct it on your 2001 tax return. Check with your preparer; but most of us gladly accept large prepayments. It won't actually cost us anything in taxes because we just spend the money immediately on supplies and software for the upcoming tax season.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/27/2001 06:07:00 PM Send this post:

 
It's Nine-Eleven, Not Nine-One-One

I'm sure it's the combination of my being a language purist and a numbers-oriented person; but I'm sick of air-heads on the news trying to be oh so clever by referring to the date of the terrorist attacks as Nine-One-One. Who the heck refers to dates in that manner? I can't recall ever saying that my birthday is Eight-One-Eight.

Of course, I find that I'm also one of a very few who refuse to refer to Zeroes as Ohs. This is a definite holdover from my classes in computer programming where that distinction was crucial. The number Zero and the letter O are not at all interchangeable.

As a little more related trivia that most people have forgotten, the reason the universal emergency phone number was changed from Nine-Eleven to Nine-One-One is because there were actual documented cases of people in emergencies who were unable to call for help because they couldn't find the Eleven button on their telephones. True story.

Our educational systems are continuing to churn out more functional illiterates all the time. About a year ago, when Rush Limbaugh set up his new website and was describing it during his radio show, he tried to use what I thought was a very clever shorthand for the first part of the URL. Instead of the very lengthy "W-W-W" he used "Triple-Dub." Rush had to stop using this after a few weeks because too many people were unable to reach his site by typing in "Triple-Dub" in their web browsers. Who says you have to be a member of Mensa to use a computer?

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/23/2001 03:44:00 PM Send this post:

 
Everyone Wants To Reduce Their Personal Tax Burden

Whenever the issue of eliminating the income tax and replacing it with a national sales tax comes up, I am asked what I will do for a career. My answer is that my career will go on just as before. Money is money. Instead of helping people reduce or elminate income taxes, I would be just as busy helping people do the same with their sales taxes.

A long running popular tax savings (aka avoidance, evasion) strategy for people who live in states that have high sales & property taxes is to register their vehicles in tax free states. Oregon is one of the most popular because there is no sales tax nor property tax on vehicles. Just as I warn people who ask about doing this, jealous neighbors usually turn in these people because nobody likes to see someone else avoiding the taxes the rest of us have to pay.

This article in today's Arkansas Democrat is interesting on several levels. The high taxes here in Arkansas have driven many people to register their vehicles in Oregon. There is even a local business providing that service for people, for a fee of $1,000. Just as with the most aggressive tax collection state, California, Arkansas is cracking down on the people it can find avoiding the Arkansas taxes.

The extra ironic thing about this Arkansas case is that the lawbreaker who has been arrested is a judge whose very own paychecks come from the same taxes he evaded.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/14/2001 07:41:00 PM Send this post:

 
QuickBooks 2002 Is Here

I received my copy of the newest version of QuickBooks last Friday. I have been very excited about this version because it is supposed to have some new features allowing better customization and remote access that should make it easier for us to train clients to handle their bookkeeping tasks as efficiently as possible. In fact, for the past month, I had been advising people who were planning to get started on QuickBooks to hold off buying the 2001 version and wait for the 2002 one to come out.

The program is supposed to be available to the public as of today. The best prices I have seen for Quicken & QuickBooks programs are generally at the warehouse stores, such as Sams Club or by clicking one of the QuickBooks banners on my website, which should be functional in the next day or two.

I have QuickBooks 2002 installed on one of my computers & will be working with it as much as possible this week. I will be sharing my tips & observations. If I ever get caught up with my tax return backlog, I also plan on producing an instructional video, similar to the popular one I did a few years ago for Quicken, except that this will be on CD-ROM instead of VHS tape.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/10/2001 02:00:00 PM Send this post:

 
Who Wants Higher Taxes?

It has long been one of my pet peeves that many of the people who support high tax politicians have a very different attitude when it comes to their own personal taxes. The word hypocrisy fits perfectly here.

As a kind of experiment, in the 2000 income tax organizer we sent to our clients, I included a question as to who they voted for in the 2000 presidential election. The purpose wasn't to be any kind of scientific poll or contrast with the Florida recount stats, because I expected most people to be on the same wave-length as me in support of the more anti-tax candidates. That was the case, with most people who answered the question (some did refuse) indicating their votes for George Bush or Harry Browne. However, I have already seen about a half dozen honest (or foolish) enough to indicate that they voted for Al Gore. Now the point. Did these clients ask me to go easy on their tax return and make sure they could do as Al Gore believes, and pay in as much tax as possible? Fat chance of that.

Here in Arkansas, Governor Mike Huckabee is doing a similar thing to expose hypocrisy. As this article in the Washington Times describes, he set up a "Tax Me More Fund." In spite of a daily onslaught of letters to the editor in the Arkansas papers screaming for higher taxes, only $260 has been collected in this new fund. As word gets out about this fund, maybe it will grow; but I doubt if that will happen. High tax advocates only want them for everyone else. According to this report in Arkansas Business, even the Gov is not planning to contribute to this new fund.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/10/2001 12:59:00 PM Send this post:

 
Anti-Tax Songs

For years, I have used George Harrison's song, TaxMan, as my semi-anthem. It is as relevant today as it was back in 1966.

As a life-long music lover, I have to admit to being a bit embarrassed that I wasn't as aware of the other anti-tax songs that had been recorded. Luckily, Bruce Bartlett of National Review is more up on this topic than I am and he shares more references to anti-tax songs in this article.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/05/2001 09:15:00 PM Send this post:

 
Short Sighted Thinking

I have to admit a feeling of smug poetic justice when I read this article in last week's Wall Street Journal describing how expensive it is for US companies to downsize their Mexican workforces. After NAFTA was passed, as Ross Perot had prophesized, US jobs were sucked down below the border. US companies built and expanded manufacturing plants galore and were able to hire workers down there for a small fraction of what they would cost up here in the States.

Either the companies didn't do enough research, or were so optimistic that they never expected to have to ever reduce the size of their workforces; because they seemed to have ignored or been caught off guard by the Mexican rules for laying employees off. They forgot one of the basic elements of both war and business; have an exit strategy.

These companies are having to spend over a billion dollars in severance pay because Mexican law requires that each laid-off employee receive three months' salary plus 20 days' pay for each year of employment.

Maybe next time employers will think the entire process through before they move jobs to areas of supposedly cheaper labor.

KMK
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/03/2001 01:04:00 PM Send this post:

 
PowerLess

One of the trade-offs in living in solitude in the boonies high up in the Ozark Mountains is that we receive the extremes of the weather in the Winter time. It was too good to be true that we had the mildest October & November (almost) since we moved here in 1993. That changed dramatically this past Wednesday, when we were covered with ice; but our electric & telephone services were functioning fine. Subsequent rain, which froze on the trees, was simply too much. Trees were crashing all over the place under the weight of the ice. The roads & driveways were blocked by fallen trees. Power lines were toppled. We lost our power on Thursday afternoon. Since we rely on electricity for almost everything, we couldn't conduct much business or even check email or receive phone calls until the power was restored two & a half days later, late Saturday night.

Luckily, while the power was out, UPS delivered some packages that kept me busy. I was able to assemble the computer components I had ordered from Tiger Direct & build my new powerful computer. I will test it out tomorrow. It never ceases to amaze me how much cheaper everything is each time I order computer parts. An 81.2 gigabyte hard drive was only $179. After this power outage (which will hopefully be the only one for this Winter season), I'm taking another look at alternative power sources. We have a dozen UPSs around the house; but they only give about 15 minutes of power. For more, I'm looking at units such as this, which claims to be able to power a desktop computer for four hours.

I was also able to work on my state required CPE classes that I had ordered from CPE Store. I finished most of the 50 hours while working with kerosene lamps on my desk.

According to this news account (+ this one), we were among several thousands of people who lost their power due to this ice storm. Sherry & I are hoping that Carroll Electric will reevaluate its policy of not clearing the tree limbs in the power line right of ways. A little preventive maintenance could have reduced the number of power outages.

KMK

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/01/2001 10:37:00 PM Send this post: