July 29, 2009 Survival Tips From the Donald
With the economy still on shaky ground, Donald Trump gave the following tips on how to survive and save during the recession:
- Cut back on booze
- Spend only on the true necessities. Frugality should be a way of life (look who’s talking!)
- Be careful whose financial advice you take. Listen to the experts but “do your own research before you invest any money”.
- Stay positive. “the economy is cyclical, so the ups and downs are natural. Focus on the good things in life, and keep moving forward.
www.LifeandStyleMag.com
Electronic Tax Payment Fees Deductible
Reassessing its previous position, the IRS has concluded that credit and debit card convenience fees charged for paying federal individual income taxes electronically are deductible for taxpayers who itemize their deductions. The fees are deductible as miscellaneous itemized deductions subject to the 2% floor. Refinancing a Pension Plan Loan
The fees are deductible in the tax year they occur. Individuals who paid convenience fee should consider filing amended tax returns for the year of occurrence. IRS Release 2009-37 4/7/09
causes a deemed taxable distribution subject to 10% additional tax. In a recent Tax Court case, a New York City employee refinanced an outstanding plan loan with the result that the maximum loan limitation was exceeded. The Tax Court concluded that the amount by which the maximum loan limit was exceeded became a deemed taxable distribution. The deemed distribution was taxed as ordinary income as well as the 10% additional tax of IRC 72(t). Marquez TC Summary Opinion 2009-80
Random IRS Audits of Employment Tax Returns
will start this November with 1500 being commenced in November and a total of 4500 over the next three years. The IRS will keep an eye out for firms violating worker classification rules, the tax rules for employee fringe benefits and executive compensation, and S Corporations that pay their owner little or no salaries. Kiplinger Tax Letter 4/3/09
Making Energy Saving Improvements
to your principal residence? The IRS is giving a temporary respite. The economic stimulus law triples the energy tax credit to 30% and the lifetime cap rises to $1,500 for property placed into use in 2009 and 2010. The $200 cap in windows is also eliminated. Kiplinger Tax Letter 5/1/09
2037
is the year the Social Security Trustees have announced the fund worth $2,200,000,000,000 will be worth nothing. This is down from 2041 as announced in 2007. A zero trust fund does not mean the payment of Social Security benefits will go to zero, but rather they will drop to 76% of their originally promised levels. Social Security Administration 5/20/09 How Social Security Works
What I find interesting is that no one I know is aware that there is no money in Social Security or how it works. Simply put, funds withheld from paychecks are remitted to Social Security. The excess funds after paying current Social Security benefits are then lent to the U.S. Treasury @ 1% per year. These funds are then placed into the General Fund and spent on defense, entitlements and anything else in the U.S. Budget. Each year, less and less is loaned to the U.S. Treasury. In approximately 2017 there will not be any excess to lend to the U.S. Treasury; at that time, the U.S. Treasury will have to start paying Social Security back with interest. This will only add to the budget deficit. At that time, when there isn’t enough money, the U.S. will have to make a decision, do we pay old people or invest in our future!
There is no lock box!
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