Today a little break from regular tax saving and planning ideas. Did you know that President Lincoln actually signed the IRS into existance in 1862? He signed a bill creating the Commission of Internal Revenue which was assigned the job of collecting an income tax to fund the civil war. The tax was repealed 10 years later and there has been fighting about income taxes ever since. When the states ‘ratified’ the sixteenth amendment to the constitution in 1913, a federal income tax became constitutional. Because only 4 of the 42 states that ratified the amendment did so word for word (there were typos in the ratifications, mispellings, etc. – but the solicitor in charge ruled that they were minor and the intent was there, and since all other amendments to the Constitution had at least as many problems (if not more), the decision was that the amendment had been ratified) there has always been the argument that the 16th amendment is fraudulent and that you can clain such and not file with the IRS. Do so at your peril. Every challenge to the right of the govement to tax us has been struck down, and to not pay taxes knowingly [...]
Brian’s Tax Musings
By now everyone (including the dog) has heard about Efiling your tax return, mainly because the IRS has been pushing it the last few years. This year they have been even more proactive, requiring preparers who prepare more than 100 tax returns to efile their clients’ returns unless the client signs a form saying they refuse to efile. Next year the number goes down to more than 10, so all preparers will be efiling, which actually is not a bad thing. About 5 years ago my wife was afraid about data security with efiling, so we paper filed our return. Guess what? The IRS lost part of our return, so I had to mail it again. Maybe they were trying to convince me and my wife to efile. Well, it worked, I have efiled my return ever since. If you paper file, there is a person opening the envelope, who then gives it to a key-puncher who puts it into the system. I am sure they do their best, but it is like the guy behind the counter at 7-11; they are thinking about getting off and going out or the weekend or their boyfriend or girlfriend. With all that [...]
Brian’s Tax Musings
Do you use your credit card to pay for charity, business expenses, etc. If you pay off your balance every month you can get rebates on certain cards like I discussed a while back, but there is another advantage. The IRS will let you deduct items when you CHARGE them, not when you pay the bill. If you are short a little cash at the end of the year and want to add a few medical, charitable or business deductions, whip out the credit card and take the deductions this year, then pay them next year.