Well, dear readers, it’s that time of year, again. Time for a little health check-up of your finances, year-to-date income, and – gulp – your estimated income taxes for 2010.
Readers who’ve kept up with my articles know that I’m a CPA and I love my work. Helping others do “battle against the beast” is challenging but enjoyable.
Around this time last year, I jotted down a few hundred words regarding what I believe to be an important mid-year review of estimated taxes and periodic payment of those taxes. If you wish, dear readers, you can review that article here.
Everything in that article remains true today – that in itself is something quite remarkable! When it comes to adventures in Tax-land, an up-to-date, valid map, showing the correct route, is difficult to find.
I urge all U.S. taxpayers to take a peek at the article. Since almost all readers of this fine e-zine are above average, I’m sure that peek will serve to reinforce you earlier, wise decisions and give you reason to pat yourself on your back.
UPCOMING CHANGES
As I mentioned, the world of taxes is one large, fluctuating blob of confusing rules and regulations. Whenever a Congressman or Congresswomen gets an idea they believe to be better than sliced bread, a change in the tax code usually follows.
Remember, government is a “cost” center, not a “revenue” center and certainly not a “profit” center. Even if government shrunk down to one-tenth or one-ten-thousandth of its current size, it would remain a “cost” center–its cost, though significantly smaller, remains present. Governments do not generate revenue: they obtain revenue from their true source–the taxpayer.
In future articles, I’ll give you the 411 on some of the more involved changes that are coming. Taxes are going up. Reporting and filing returns and reports will be getting even more complex. Even one’s reporting of personal assets in foreign financial institutions is getting tougher. New rules plus changes to existing rules (and unfortunately, no reduction in rules) is the theme of the century so far!
A SHORT ONE
Speaking of changes, this article will be a short one. I’m currently handling quite a few of these check-ups for clients with complex tax situations (ah, the pleasures in life!), so lengthy columns are a luxury I cannot afford this week.
Please use the time saved reading this one by giving yourself a $$$ Check-Up. You may be very happy with what you may discover. For those who may need a little help: Help is no further away than a click on the button at the top of the page (or here).
Paul..hi..I just did my check out for September! The 3rd quarter estimated tax thing..so instead of a check up I did a check out….
Hi Dan – Ah, yes. The old up and out routine. 😉
This year things are a little bit kinder to me, but still in the same check-out boat as you! 😆
Hi Paul;
Again you’ve provided good and sound advice! Now for my question; “As it is I fall below the poverty line, can I ask SAM for more money?” May I use food stamps here in the R.P. I’ll await your response to my questions, but I won’t hold my breath. (lol)
Hi Paul – Well, if you had some earned income while residing in “below-the-poverty-line-ville,” you could get the Earned Income Credit which is refundable. That means, unlike many other tax credits (that can only be applied against tax and is either carried to another year or lost if you don’t have any tax liability in the current year), the EIC can be refunded to you even if you do not have a tax liability. Many low-wage poor workers get an extra boost in their refunds this way.
No, sorry, it has to be earned income – pensions, social security payments, and interest/dividends don’t count. Besides, there are age limits, too!
As to food stamps, you can try and use them – I don’t think anyone will accept them (outside of the notorious element who might try counterfeiting them). The hard part is getting them, not using them!
Hi Paul- i was just reading your article and looking at the pic you posted. Considering the contents of your article I think it would be more appropriate to post a pic of the device they insert in your rectum to inspect your insides [ colonoscopy] – its about the size of an adult make arm, complete with camera and lazer cutter !!! lol
Ooooooo. Geez, Ian, you hit a “sore subject” there. I’m currently in the States going through medical stuff, and I’ve a ‘scoping coming up next week. I’m not looking forward to that at all; I’m just thankful that they sedate patients now. My first couple of ‘scopes were sans sedation. It’s not only “not a pretty sight to see,” but it’s just about the most disturbingly uncomfortable event I can think of.
I’d rather pay taxes! 😆
You got it ! BTW that should have said adult “male” arm. I was lucky- both times they said i would feel uncomfortable, then after they put the IV in my arm i dont remember anything !!
Seems to me that colonoscopies should be given by the IRS since you end up feeling the same way after dealing with both !!! lol
Always choose a female proctologist – smaller fingers and, more importantly, smaller knuckles!
😆
You DOM you Hahahahahahaha Hey, Paul, how about that stuff they make you drink 24 hours before a colonoscopy to make your stomach look like Patrick Duffey’s “pristine crystal waters” lol Have you had the chance to take a look at Patrick’s latest article?
I have two 64 oz. bottles of orange-flavored Gatorade sitting in the refrigerator right now that will be “doctored” with Miralax to make it “Go-Juice.” Also have a few “Super-Duper-Pooper” pills to take during the regimen.”
Yes, I’ve read his article and yes, things will be pristine (hopefully free and clear of all other things, too) while the doc is probing around. That will be either my second to last or third to last medical appointment for this trip. I certainly get as many military retiree benefits as I can while I’m in the States, even if it hurts.
😆
Hi Paul….
Was wondering what the maximum amount one can make before he has to file taxes?
Enjoy your articles…keep up the good work!!
Greg
Hi Greg – The answer to your question is the same as it is for most questions regarding income tax: “It all depends . . . .”
The simplest answer I can give is:
For most people, the maximum income they can receive without paying federal income tax equals the amount of the standard deduction they are entitled to (based on their filing status) plus the amount provided by the number of personal exemptions they are entitled to (including additional exemptions provided due to blindness and to being 65 years old or older).
See what I mean – it all depends, and it’s never simple. An example: A taxpayer aged 63 years old who is not blind and whose filing status is “Single”:
Standard deduction = $5,700
1 personal exemption = $3,650
Maximum this taxpayer can make without paying any income tax = $9,350.
Hi, Paul:
After filing my tax returns for the past 3 years now, the IRS always comes back and tells me that I owe them money, instead of them owing me. I file the returns myself, using standard deductions on my OPM annuity, Social Security, VA disability, some stocks and other investments. According to my calculations the past 3 returns, I overpaid federal taxes. But instead of receiving a refund, IRS say I made an error and owe them money instead. I have had no problem with the state tax, I always get a refund from them. I couldn’t figure out what I am doing wrong, although I follow the instructions meticulously. Note that they always tell me what I have done wrong, but I still couldn’t figure it out. What areas of the returns do you I may have made mistakes? Maybe I should start using H&R Block next year, you think?
Btw, am I suppose to report VA disability compensation as earned income?
Great to see you back, Lakay! How’s the Baket?
Hi John – Will start answers from last to first!
Mabuti, pare, both of us! 😆 Of course, I’m very homesick for Ilocandia.
Your VA disability compensation is nontaxable unearned income and is not reported for federal income tax purposes.
I think you might be a good client for Keating & Chillingsworth, Ltd. We provide “paperless” tax and business services to clients. Our work is reasonably priced and guaranteed. We can take it off-line via the “contact us” button above. I’d be happy to review your last three returns, see what is what, and provide an explanation. 😉
As far as where you may have gone astray might be found in the Alternative Minimum Tax rules.
You don’t have problems with the state, but do with federal income taxes because the two consider different elements of income and deduction in computing their tax. Since most states begin their income tax calculations with federal Adjust Gross Income (which does not include any federal Alternative Minimum Tax) and have their own AMT calculation methodology, you can see things would be different.
Great to see you commenting more often John. Perhaps we can meet up in Zambales some time when you’re visiting (?).
G0t it Keating & Chillingsworth, Ltd. Sounds like the Bombay Company from the Empire For Whom the Sun Never Sets. LOL Do you think Chillingsworth can beat H&R Block’s fees?
Ya, that will be great for us to meet up, but I’d prefer to see you in Pasuquin on my way to check out the cobblestone streets of Vigan. I want to look at your beautiful house , too, and pay my respects to Mrs. Keating. Another thing I’d like to do whenever I get around to visiting the Philippines again is go visit Paul (San Miguel) Thompson up there in the mountains of DinBat. I’d like to see first hand his mountain hideaway that he always talks about. LOL
Not having a schedule of H&R Block’s prices, I can’t say if we’d beat their prices, but off-hand I’d say, “Yes.”
Coming to Pasuquin on your way to Vigan means you came around the other side of Luzon (through the CAR, around the northernmost tip, and coming down the western coast). Pasuquin is about 2 hours north of Vigan.
Doña Nemesia and I would be most happy to have you visit us at Villa Dolores. (Sounds good, doesn’t it bwahahahaha !) What we lack in San Miguel quantity, as compared to Don Paulo de DinBat, we make up in pulutan!
Thanks Paul..
That was my take on it….but always good to hear from an expert……Oh by the way I am only half blind and deaf in one ear….selective hearing I call it.
I am 59 years young and was wondering how much I could draw out of my IRA when I turn 59 1/2 later this year….you gave me a good idea the amount. I assume if I draw out that amount or lesser I will not have to file a return….Am I correct??
Thanks again,
Greg
You’ll have to file a return, Greg. An IRA withdrawal is a transaction that is reported to you and to the IRS via Form 1099-R. You’d have to file just to show that you do not owe any tax on the amount you did withdraw.
Additionally, your IRA custodian may have withheld for income taxes. In this case, you’d want to file that return so that you can claim that withholding as a refund.
Again, “It all depends . . . .”!!! 😉
Paul;
By the time you get all that maintenance done and get your clean bill of health over here in the states you’ll be ready for anything. (I see a major problem looming on the horizon)
When you finally get back home to Ilocos Norte and eat you first full Filipino dinner complete
with San Miguel all supplied by you local vendors. Guess what you body is going to go into meltdown. So you better have some TP and bottle water on hand. 🙂
Glad your in good health let us know how you readjuste to Filipino Life.
By the way were dodging hurricanes here in Fl sooner or latter were going to get hit.
Hi Bruce – Thanks for the kind words. 😉
As to what happens and what will be problematic – I go in for a ‘scoping Thursday. The prep will use up a lot of TP and liquids. The first meal after will likewise be a treat to treat!
Won’t need to readjust much – been keeping custom here plus baket ko (asawa ko) [my wife] continues to cook “home-style” meals.
😆
UPDATE – Changes coming to Internal Revenue Code may affect your tax liability. Will keep all posted.