Cardinals Rally Squirrel Gets Card

In the bottom of the fifth inning of a Cardinals’ victory against the Philadelphia Phillies in Game 4 of the NL Division Series, a squirrel darted across the Busch Stadium field just as Phillies pitcher Roy Oswalt delivered a pitch to Schumaker.

The squirrel, which became a rallying rodent for Cardinals players and fans during St. Louis’ remarkable run to a World Series title, appears on a Topps 2012 card along with Schumaker’s foot.

According to Beckett Baseball, which covers the collecting business, the card is “one of a few surprise short-printed variation cards to be found in the product, so it’s not really a Rookie Card—but it should be one that commands attention from collectors.” Full story here.

You may think all of this is a bit nutty, but the first eBay auction to end showed the card commanding $319.95 via a Buy it Now. The first auctioned copy of the card is set to end on Tuesday afternoon and stands at a mere $611.99 after 25 bids. See ESPN story.

The Dreaded IRS Audit

If there were a way to guarantee avoidance of an Internal Revenue Service (IRS) audit, there isn’t a person in the country that wouldn’t want to get his hands on that secret sauce.  But there isn’t.  You never know if your return is going to be one of the approximately 1.11% of returns that are selected for audit each year.  However, there are several factors that are known to increase your chance of audit:

  1. High income (particularly income exceeding $200,000)
  2. Large charitable donations
  3. Claiming the home office deduction
  4. Claiming rental losses
  5. Deducting business meals, travel, and entertainment
  6. Claiming 100% business use of vehicle
  7. Running a cash business
  8. Engaging in currency transactions
  9. Taking higher-than-average deductions

Of course if you try to pull shenanigans on your tax return then you open yourself up to greater scrutiny too.  For instance, don’t try any of the following:

  1. Failing to report all taxable income
  2. Writing off hobby losses
  3. Failing to report a foreign bank account

An audit can be a simple, single-issue question, or it can be a complicated, tedious process that results in an assessment of additional taxes.  If the assessment causes a tax debt that cannot be paid, a tax relief attorney may need to be retained.

Obama Staffers are Human: They Owe $834k in Back Taxes

The IRS released data showing the tax debt statistics of federal employees, and it has created just a little buzz. I realize that most of the stories circulating around the web these past few days carry the more impressive headline of “3.4 billion owed,” but that includes ALL federal employees, even retirees. There are a lot of federal employees around the nation. I think it is more impressive to focus on those closer to the president.

36 of the approximate 1,800 Obama staffers owe a combined $834,000, which equates to roughly 2% of all executive office employees. Of course this wouldn’t be nearly as big a deal if President Obama had not been focusing so much on tax equality and the need to fix the tax code so that everybody is required to pay their fair share. Many news sources are seeing this as an opportunity to find flaws with Obama and his administration.

However, for me, more than anything, this story is a reminder of how pervasive tax problems are in this country. Literally anyone can find themselves in a situation where they cannot afford to pay what they owe when they owe it. It is not uncommon for ordinary folks to incur a little tax debt at some point in their lives, and factors like race, gender, economic status, and education do not accurately predict who will owe. If an employee of the US Senate can owe back taxes (and according to the report, 217 of them do), then you could owe too.

Ai Weiwei’s Story Told in New Documentary Film

Filmmaker, Alison Klayman, has documented the life and work of Ai Weiwei in a film that premiered at Sundance this past weekend. Ai is known on this blog for his tax problems (“problems” that were likely invented by the Chinese government as a way to appear to incarcerate him for legitimate reasons), but is recognized around the world as one of China’s most outspoken dissidents.

“Ai Weiwei: Never Sorry” tells the story of Ai through exclusive interviews of the artist himself and those that are close to him. See a high quality preview of the film here: ai-weiwei-evolution-of-a-dissident.html.

“Individual freedom . . . independent thinking and expression . . . those are the core values of my activities.

~ Ai Weiwei

Ai often uses his art to make strong political statements. This is a man who knows he could be snatched up at any moment by Chinese authorities for his provocative art and opinions. He knows that his life (or death) is in the hands of the government he criticizes. His courage and ambition are inspiring.

Estimated Tax Payments

Many of our clients find themselves burdened with a tax debt because they did not keep up on their Estimated Tax Payments (ETPs).  Most people think that ETPs are only for the self-employed.  But did you know that you may be required to make ETPs even if you are a wage earner and your employer withholds taxes from your pay?

According to IRS Form 1040-ES, “Estimated tax is the method used to pay tax on income that is not subject to withholding.”  You must pay estimated tax in 2012 if both of the following apply:

  1. You expect to owe at least $1,000 in tax for 2012, after subtracting your withholding and refundable credits.
  2. You expect your withholding and refundable credits to be less than 90% of the tax on your 2012 return or less than 100% of the tax on your 2011 return, whichever is smaller.

This is just the general rule. Special rules apply to farmers, fishermen, household employers, and higher income taxpayers.  The instructions for Form 1040-ES explain how to calculate the amounts of your ETPs and the due dates are as follows:

  • 1st Payment – April 17
  • 2nd Payment – June 15
  • 3rd Payment – September 17
  • 4th Payment – January 15

Are Frequent-Flier Miles Taxable?

Frequent-flier miles definitely provide a financial benefit, but are they taxable? Don’t even bother reading this post if you are hoping to find an answer to this tax problem.  There is no answer here.

Today the LA Times reported that a number of folks were offered frequent-flier miles as an incentive for opening up checking and savings accounts with Citibank last year. What they weren’t told is that Citibank would be reporting the miles to the IRS as income — 2.5 cents per mile, to be precise. Getting a 1099-MISC (miscellaneous income) in the mail was a shocker for these Citibank customers, but tax professionals found it odd as well.

It is not clear where the IRS stands on this issue. The 2012 instructions for Form 1099-MISC, state that income tax must be paid if at least $600 in “prizes and awards” is received. However, a 2002 policy statement suggests otherwise:

[The IRS] has not pursued a tax enforcement program with respect to promotional benefits such as frequent-flier miles. Consistent with prior practice, the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent-flier miles or other in-kind promotional benefits attributable to the taxpayer’s business or official travel.

Citibank is clearly just protecting itself due to the lack of clarity in the law.

F.C. Manager on Trial for Tax Evasion

Harry Redknapp, former manager of the Tottenham Hotspur F.C., was recently accused of tax evasion related to a bung he received for player transfers. What!?  I know, English news articles are fun, but sometimes difficult to decipher.

Translation for American readers:

  • Harry Redknapp is the current manager of the Tottenham Hotspur Football Club. The spherical kind of football, not the prolate spheroid with pointed ends so popular around this time of year in the United States.
  • Tottenham Hotspur has been around since 1882, often referred to as the “Spurs.”
  • A “bung” is an English word used to mean a BRIBE.

Redknapp allegedly hid his bonuses in an offshore account in Monaco which he named “Rosie 47″ after his dog and his own birth year. Once again we see that people will do whatever it takes to find tax relief these days, even if it means resorting to nefarious tricks and schemes. Full story here.

Norris Likes Newt for President

Chuck Norris may be able to cut through a hot knife with butter and a million other fantastic feats, but he still only gets to cast his vote once. And this time around he’ll be voting for Newton Leroy Gingrich.

Yes, today the legendary martial artist, actor, author, and political activist, Chuck Norris announced his endorsement of Newt Gingrich for president.

“I’m tired of watching our country being torn to shreds by those who think the answer is more government debt and control. I’m tired of being in bondage to a tax system that robs U.S. citizens like the King of England did before the Revolution. I’m tired of watching our sovereignty being sold by foreign loans and loose borders. And I will not sit back and merely watch this decay and degradation of the U.S. and then hand it over to my children and grandchildren to deal with.

~ Chuck Norris

Newt is obviously thrilled by the endorsement. Doesn’t the Chuck Norris endorsement pretty much guarantee he’ll win the nomination? See full story here.

Cat Lady is Better with Taxes than with Cats

Oakland’s “Cat Lady” may have found tax relief by beating the IRS, but now the Alameda County District Attorney is pursuing felony animal cruelty charges against her.

You may remember the story of Jan Van Dusen and all her cats. She, at one time, was keeping nearly 100 cats in a 1,500 square foot home in West Oakland. Her tax case was focused on the $10,000/year expenses for cat food, shots, cleaning, etc. that she claimed to be tax exempt. The IRS refused to allow her deductions at the  administrative level. But a Tax Court overturned the IRS in finding that Van Dusen did in fact qualify for her claimed charitable contribution deductions.

Allegedly her foster pets were not being cared for properly, which is no surprise — how could one person take care of so many cats? Local animal control officers confiscated her pets in October and the district attorney’s office is now pursuing the uncommonly severe felony animal abuse charge. More details here.

The Cat Lady faces up to 3 years in prison and a $20,000 fine if convicted. She has pleaded not guilty.

Our Next President Shouldn’t Be a Tax Schmuck

When Mitt Romney announced that he would probably follow tradition by disclosing his tax return sometime in April, he also confirmed that his effective tax rate is around 15%.  Yes, it is low.  Yes, Romney takes full advantage of every opportunity available to him within the Tax Code to pay less taxes.  Isn’t that what anyone would do?  Here is the Tax Girl’s view:

“The thing is, I want my President – no matter who it is – to either know enough about fiscal and tax policy to make smart decisions or to surround himself (or herself) with people who can make those smart decisions. Having someone who consistently makes poor decisions about their own taxes directing tax policy seems like, I don’t know, asking Newt Gingrich for relationship advice.

~ Kelly Phillips Erb, Forbes writer / blogger

I guess the Gingrich comment was added for a little extra spice.  Ouch.